We’ve all heard about 501(c)(8) nonprofits, even if we don’t realize it. Closely related to 501(c)(10)s, these are fraternal benefit societies. Some of them can trace their lineage all the way back to medieval guilds!
It may sound intimidating to start one, but if you’re interested in providing direct benefits to people like yourself, then you’ll find that the process to begin is more straightforward than you think—even if it does involve sending forms to the IRS.
What is a 501(c)(8)?
A 501(c)(8) organization is a fraternal society that provides benefits to its members. It must consist of a set of members who share a specific vocation or calling (beyond social activities), and have been created to support the common good.
Like a 501c4, 501c5, or 501c6, a fraternal society can participate directly in politics. However, that cannot be the organization’s primary purpose, and the money spent on it is not tax-exempt.
Many of these societies were founded by immigrants or other underserved groups, and they have since become important contributors to their communities. The largest of these organizations have revenues of several billion dollars.
Well-known 501(c)(8) nonprofit examples include the Elks Lodge and the Knights of Columbus.
Rules of a 501c8 Organization
In order to qualify for tax exemption under the c8 code, an institution’s membership must be based on a common fraternal purpose. The society must have their membership standards written down, along with membership tiers, a process of admission, and a list of rights and privileges.
The 501c8 must operate under the “lodge system.” That means that it consists of a parent body made up of delegates from smaller “lodges” that are mostly self-governing, like chapters of a sorority or fraternity.
Finally, it must offer benefits to its members, like health or life insurance, scholarships, educational or travel opportunities, or discount programs. This is what differentiates it from a 501c10, which expressly cannot offer benefits.
How to Run a 501c8 Nonprofit Organization
In order to form a nonprofit fraternal society, you must submit a Form 1024 to the IRS, and disclose all of your financial dealings in a Form 990 every subsequent year after approval. In both of these forms, be as thorough as possible with your answers, and always be sure to include all the necessary documents.
If you need help organizing, running, and scaling your 501c8 organization, but are not sure where to start, we’re here for you. BryteBridge Nonprofit Solutions has assisted over 30,000 people with their nonprofits, and we can walk you through the process to help you get it done right the first time.
Give us a call and schedule your consultation today to find out how we can help you help others!