Fraternal Purpose and Activities
“Fraternal”
Means a
Common Tie or
Goal
Since the Code does not define a “fraternal beneficiary society,” we presume
that Congress used the term in the ordinary sense, and according to its legal
significance, at the time the 1909 Act was passed. See U.S. v. Cambridge
Loan and Building Co., 278 U.S. 55 (1923); Commercial Travelers’ Life &
Accident Ass’n v. Rodway, 235 F. 370 (N.D. Ohio 1913). The court in
National Union v. Marlow, 74 F. 775, 778-79 (8th Cir. 1896) summed up the
nature of a fraternal beneficiary society as follows:
A fraternal beneficiary society … would be one whose members
have adopted the same, or a very similar calling, avocation, or
profession, or who are working in union to accomplish some
worthy object, and who for that reason have banded themselves
together as an association or society to aid and assist one another,
and to promote the common cause. The term “fraternal” can
properly be applied to such an association for the reason that the
pursuit of a common object, calling, or profession usually has a
tendency to create a brotherly feeling among those who are thus
engaged. It is a well-known fact that there are at the present time
many voluntary or incorporated societies which are made up
exclusively of persons who are engaged in the same avocation.
As a general rule, such associations have been formed for the
purpose of promoting the social, moral, and intellectual welfare of
the members of such associations and their families, as well as for
advancing their interests in other ways and in other respects….
Many of these associations make a practice of assisting their sick
and disabled members, and of extending substantial aid to the
families of deceased members. Their work is at the same time of
a beneficial and fraternal character because they aim to improve
the condition of a class of persons who are engaged in a common
pursuit, and to unite them by a stronger bond of sympathy and
interest.
In one case, the court found a common tie among members of an association
based on their common ethnic background. It also found that members had a
common goal to improve their social, moral, and intellectual welfare. See
Hip Sing Ass’n, Inc. v. Comm’r
, T.C. Memo. 1982-203. Likewise, persons
who join together to promote a common interest, such as a particular method
of fortune telling, can be said to have a common tie. See Rev. Rul. 77-258,
1977-2 C.B. 195. However, mere recitation of common ties in the governing
instrument is not enough; there must be a common tie in fact among the
members.
Continued on next page
IRC 501(c)(8) Fraternal Beneficiary Societies and
IRC 501(c)(10) Domestic Fraternal Societies
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