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There are many types of nonprofits, so what is a 501(c)(8)? 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 start a nonprofit 501(c)(8) organization. It also explores how to create a thriving fraternal society that positively impacts its members and the community and how to gain tax exempt status.
The Internal Revenue Code (IRC) defines a 501(c)(8) nonprofit organization as a fraternal beneficiary society that must pay for life, sickness, 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), fraternal 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 with tax exemption, 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.
The organization started in 1882 as a congregation of Catholic men. Its members are connected by their Catholic beliefs, and its primary principles are charity, unity, fraternity, and patriotism.
The organization, formerly known as the “Jolly Corks,” was started in 1868 as a group of actors and theatre professionals. It operates on charity, justice, brotherly love, and fidelity. The organization provides scholarships, veterans’ services, and drug awareness programs.
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.
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.
The IRS enlists several requirements for nonprofit organizations to acquire a 501(6c)(8) tax-exempt status:
An organization must 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.
An organization must 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. The parent charters are self-governing subordinate organizations (called lodges or branches).
An organization must provide life, sick, or accident insurance and other benefits to members of the society or their dependents.
An organization must 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
501c8
Category
501(c)(3)
501(c)(8)
Definition
A nonprofit for the public operated solely for religious, scientific, educational, or charitable purposes- or to prevent child and animal abuse and support national and international sports.
Fraternal benefit societies provide life sickness accident and other benefits to their members. They must operate under a lodge system where memberships are based on common ties or interests. They are largely self governing.
Notable Examples
New York Cancer Foundation, United Way, Metropolitan Museum of Art, etc.
Elks, Knights of Columbus, Modern Woodmen of America, etc.
Donation tax deduction eligibility
Donations are entirely tax-deductible.
Only donations used for the 501(c)(3) fraternal purpose are tax-deductible.
Tax-exemption
Nonprofits are tax-exempt from federal, state, and local income taxes.
Nonprofits are exempt from federal income taxes, which exclude the funds spent on political activities.
Membership details
Having members is optional.
All members must share a common vocation. All membership standards must be recorded, including membership tiers, admission process, membership privileges, etc. Most members must be eligible for the benefits.
Donor disclosure on Form 990
Private foundations and public charities must disclose donor information for $5000 or more contributions on Schedule B.
Not required.
Donor disclosure to the public
Only private foundations need to disclose donor information to the public.
Not required.
Political campaigning
They can campaign for the organization’s purpose without influencing legislation or supporting a political candidate.
Can participate in political activities if it is not the primary purpose.
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. Determine if you need a parent organization
Local branches of 501(c)(8) organizations must be chartered by a parent organization. Even though they are self-governing, knowing which way you'd like to operate is helpful.
5. Define Your Bylaws
When creating bylaws for your 501(c)(8) organization, the Internal Revenue Code asks that you include essential information such as:
Organization's name
Purpose of the fraternal benefit society
Board member roles and responsibilities
Membership details
Meeting frequency
Conflict of interest policies
Dissolution procedures
If you are a subordinate unit in a lodge system of fraternal societies, your bylaws may mirror those of the parent organization.
6. 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. Fraternal societies will require this information.
7. Submit Form 1024 to become a tax exempt organization
You must file Form 1024 with the IRS to claim tax exempt status.
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 and saved $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 using Zeffy's 100% free and comprehensive features.
Start Your 501(c)(8) Organization for Free With Zeffy
As you start creating a 501(c)(8) organization, having the right support can make all the difference. Instead of paying nearly $2,000 in legal fees, allow the experts at Zeffy to guide you through gathering documentation to officially file for your 501(c)(8) status.
All you’ll need to cover are the state and IRS filing fees. That way, you can see more money go into your mission.
Establishing a 501(c)(8) nonprofit organization can be fulfilling to create a strong community of like-minded individuals. Your domestic fraternal society can make a significant difference by providing benefits and engaging in charitable activities.
501(c)(8) organizations are fraternal beneficiary societies with members who share a purpose and vocation. Their activities focus on benefiting all members.
Donations to 501(c)(8) fraternal societies are tax-deductible only if the funds are used for charitable activities like a 501(c)(3) tax-exempt organization.
The lodge system is a structure that a domestic fraternal society can use to elect members into local units, which they refer to as lodges. Each lodge holds meetings to achieve its goals together.
To maintain status as a 501(c)(8) fraternal benefit society, an organization must operate under a lodge system, benefit its members, and engage in fraternal activities such as rituals and ceremonies. It must also comply with IRS regulations regarding membership and benefits.
These organizations can benefit their members, including life, sick, accident insurance, scholarships, and educational programs. They also engage in social and recreational activities as part of their fraternal mission.
The only 100% free fundraising platform for nonprofits
What You Need to Know About 501(c)(7): Social Club Organizations
501(c)(7) organizations are social clubs organized for recreation, pleasure, and other such purposes. Learn how to get your nonprofit's 501(c)(7) status.
What is 501(c)(9) or Voluntary Employees’ Beneficiary Association
Forming a 501(c)(9) organization is a great way to offer employees health benefits while reducing tax liabilities. Here’s how to get your 501(c)(9) status.
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