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501(c)(8) organizations are fraternal beneficiary societies. They provide a unique opportunity for individuals with shared interests or vocations to unite and support each other through various benefits and charitable activities.
This guide explores the definition, eligibility criteria, and steps to establish a 501(c)(8) organization. Explore how to create a thriving fraternal society that positively impacts its members and the community.
Table of Contents
What is a 501(c)(8) Nonprofit Organization?
Eligibility Criteria for 501(c)(8) Organizations
501(c)(8) vs 501(c)(3): Similarities and Differences
6 Steps to Start a 501(c)(8) Organization
Final Thoughts on 501(c)(8) Organizations
What is a 501(c)(8) Nonprofit Organization?
A 501(c)(8) nonprofit organization is a fraternal beneficiary society that must provide for the payment of life, sick, accident, or other benefits. These societies operate under a lodge system, where members share common bonds, principles, or callings.
The IRS recognizes 501(c)(8) organizations as tax-exempt, allowing them to focus on supporting their members and engaging in charitable activities.
501(c)(8) organizations may pay directly for their members’ insurance or other benefits. They often partner with third-party insurance companies to offer insurance services.
Like 501(c)(4) or 501(c)(6) nonprofits, fraternal benefit societies can participate in political activities, but it cannot be their primary purpose. The money spent on such activities is not tax-deductible.
Examples of 501(c)(8) Organizations
- Knights of Columbus
The organization started in 1882 as a congregation of Catholic men in 1882. The members are connected by their catholic beliefs, and their primary principles are charity, unity, fraternity, and patriotism.
- Elks
The organization was formerly known as the “Jolly Corks” and started in 1868 as a group of actors and theatre professionals. It operates on the principles of charity, justice, brotherly love, and fidelity. The organization provides scholarships, veterans’ services, and drug awareness programs.
- Royal Neighbors of America
It was started in 1895 by nine women to support other women. The organization protects its members and offers benefits like life insurance and annuities.
- Modern Woodmen of America
This is a member-owned fraternal financial services organization established in 1883. It has nearly 730,000 members and focuses on touching lives and securing futures.
Eligibility Criteria for 501(c)(8) Organizations
The IRS enlists several requirements for nonprofit organizations to acquire a 501(6c)(8) tax-exempt status:
- Have a fraternal purpose, which means its membership is based on a shared interest, goal, or background. The organization must also have a substantial program of fraternal activities that aligns with this common purpose.
- Operate under a lodge system consisting of a parent organization and subordinate units (lodges or branches). These subordinate units must follow the parent organization's bylaws, membership levels, rights, and privileges. some text
- Parent organization
- Self-governing subordinate organizations (called lodges or branches) are chartered by the parent.
- Provide life, sick, or accident insurance and other benefits to members of the society or their dependents.
- Have clearly defined membership standards, including membership tiers, admission process, and a list of rights and privileges.
501(c)(8) vs 501(c)(3): Similarities and Differences
6 Steps to Start a 501(c)(8) Organization
Step 1: Choose Your Organization’s Name
Step 2: Create Your Mission Statement
Step 3: Establish the Nonprofit Board
Step 5: Apply for an Employer Identification Number (EIN)
1. Choose Your Organization’s Name
Your nonprofit’s name must showcase its purpose and what it intends to accomplish. Pick a name that will be memorable. Check your state’s criteria before choosing your nonprofit’s name.
2. Create Your Mission Statement
The mission statement should clearly define what your nonprofit does and how it helps improve people’s lives. You can use your mission statement to spread awareness about your nonprofit through marketing channels.
3. Establish the Nonprofit Board
Form a Board of Directors to help you finalize your mission statement and bylaws, among other responsibilities.
Your board members will lead the entire team and should be able to support your nonprofit’s operations and fundraising efforts.
4. Define Your Bylaws
When creating bylaws for your 501(c)(8) organization, include essential information such as:
- Organization's name
- Purpose
- Board member roles and responsibilities
- Membership details
- Meeting frequency
- Conflict of interest policies
- Dissolution procedures
Note: If you are a subordinate unit in a lodge system, your bylaws may mirror those of the parent organization.
5. Apply for an Employer Identification Number (EIN)
Applying for an EIN is necessary to fill out IRS Form 1024, even if you do not plan on hiring team members.
6. Submit Form 1024
You must file Form 1024 with the IRS to claim a tax exemption.
Unlike 501(c)(3) nonprofits, there is no deadline to file for tax-exempt status. If you do not receive your letter of determination from the IRS after submitting the form, you must file tax Form 990.
If you start as a small 501(c)(8) nonprofit in a lodge system, your parent organization might have completed some of these steps. Contact your parent group to clarify the steps you must complete.
Case study: How Knights of Columbus Lexington Council 94, a 501(c)(8) Organization Raised Over $3,800 Using Zeffy
Knights of Columbus Lexington Council 94 successfully organized their "K'Night at the Races" event using Zeffy's 100% free ticketing system. By leveraging Zeffy's user-friendly platform, they raised over $2,500 through ticket sales. saving $125 in fees.
The council also secured corporate sponsorships totaling $1,370, saving an additional $70 in fees. 501(c)(8) organizations can organize events and initiatives like the Knights of Columbus Lexington Council 94 did by using Zeffy's 100% free and comprehensive features.
Final Thoughts on 501(c)(8) Organizations
Establishing a 501(c)(8) organization can be a fulfilling way to create a strong community of like-minded individuals. By providing benefits and engaging in charitable activities, your domestic fraternal society can make a significant difference.
As you start creating a 501(c)(8) organization, having the right tools and resources is crucial for managing your operations and fundraising efforts effectively. Zeffy is one such platform that makes fundraising easier for nonprofits. Use Zeffy’s comprehensive platform to manage and grow your 501(c)(8) organization - all at no cost!
FAQs on 501(c)(8) Status
What is a 501(c)(8) organization?
501(c)(8) organizations are fraternal beneficiary societies with members with a shared purpose and vocation. Their activities focus on benefiting all their members.
Are donations to 501(c)(8) organizations tax-deductible?
Donations to 501(c)(8) organizations are tax-deductible only if the funds are used for charitable activities like a 501(c)(3) tax-exempt organization.
What are the requirements for maintaining 501(c)(8) status?
To maintain 501(c)(8) status, an organization must operate under a lodge system, provide benefits to its members, and engage in fraternal activities such as rituals and ceremonies. It must also comply with IRS regulations regarding membership and benefits.
What activities can 501(c)(8) organizations engage in?
These organizations can provide various benefits to their members, including life, sick, and accident insurance, scholarships, and educational programs. They also engage in social and recreational activities as part of their fraternal mission.
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