Non-Profit Status

U.S. Government Federal Recognition

To be exempt under IRC 501(c)(8), a domestic fraternal society, order, or association must meet the following requirements:

For more information about IRC 501(c)(8) click here. For more information about Fraternal Organizations: What Constitutes a Lodge System? (click here)

1. Fraternal Purpose

  1. An organization has a fraternal purpose if:
  2. Membership is based on a common tie or the pursuit of a common object
  3. The organization maintains a substantial program of fraternal activities

2. Lodge System Operation

  1. The organization must operate under the lodge system, which requires at minimum:
  2. A parent organization; and
  3. A subordinate organization (lodge, branch, chapter, or similar) chartered by the parent and largely self-governing
  4. Note: Organizations operating “for the exclusive benefit of the members of a fraternity itself operating under the lodge system” may also qualify.

3. Provision of Member Benefits (Key Distinction from 501(c)(10))

Unlike 501(c)(10) organizations, a 501(c)(8) MUST provide for the payment of life, sick, accident, or other benefits to its members or their dependents.

    1. Permissible benefits include:
    2. Life insurance benefits (including whole life with investment features)
    3. Sick benefits compensating for income loss during illness
    4. Accident benefits for loss of earning power due to injury
    5. “Other benefits” similar in nature—such as legal defense funds for employment-related matters, orphanage support for deceased members’ children, or annuities protecting against loss of earning power
    6. Important: Benefits must automatically accrue to members as part of dues paid. Merely arranging optional insurance through third-party companies does not satisfy this requirement.

    4. Net Earnings Devotion

    1. Net earnings must be devoted exclusively to religious, charitable, scientific, literary, educational, and/or fraternal purposes.

    5. Domestic Organization

    1. The society must be organized in the United States.

    6. Membership & Benefits Eligibility

    1. Most (not necessarily all) members must be eligible for benefits

    1. Organizations may maintain non-beneficial membership classes if the distinction furthers fraternal purposes and substantially all members remain eligible for benefits