A benefit society, fraternal benefit society, fraternal benefit order, friendly society, or mutual aid society is a society, an organization or a voluntary association formed to provide mutual aid, benefit, for instance insurance for relief from sundry difficulties. Such organizations may be formally organized with charters and established customs, or may arise ad hoc to meet unique needs of a particular time and place. Many major financial institutions existing today, particularly some insurance companies, mutual savings banks, and credit unions, trace their origins back to benefit societies, as can many modern fraternal organizations and fraternal orders which are now viewed as being primarily social; the modern legal system essentially requires all such organizations of appreciable size to incorporate as one of these forms or another to continue to exist on an ongoing basis.
Benefit societies may be organized around a shared ethnic background, religion, occupation, geographical region or other basis. Benefits may include financial security and/or assistance for education, unemployment, birth of a baby, sickness and medical expenses, retirement and funerals. Often benefit societies provide a social or educational framework for members and their families to support each other and contribute to the wider community.
Examples of benefit societies include trade unions, burial societies, friendly societies, cooperatives, credit unions, self-help groups, landsmanshaftn, immigrant hometown societies, fraternal organizations built upon the models of fraternal orders such as the Freemasons and the Oddfellows, some coworking communities, and many others.
A benefit society can be characterized by
- members having equivalent opportunity for a say in the organization
- members having potentially equivalent benefits
- aid going to those in need (strong helping the weak)
- a collection fund for payment of benefits
- educating others about a group's interest
- preserving cultural traditions
- mutual deference
History of benefit societies
Examples of benefit societies can be found throughout history, including among secret societies of the Tang Dynasty in China and among African-Americans during the post-revolutionary years, such as those who organized the Free African Society of Philadedelphia.
Philadelphia's first black organization, the Free African Society was established in 1787 by two African American former slaves, Absalom Jones and Richard Allen. These two men were Methodist converts from evangelical masters, who gave these men permission to purchase their freedom in the early 1780s.
Mutual aid was a foundation of social welfare in the United States until the early 20th Century. Early societies not only shared material resources, but often advanced social values related to self-reliance and moral character. Many fraternal organizations were first organized as mutual aid societies when government at the state and local level supplemented private aid societies more than the converse of this being true. In 1890, 112,000 American residents lived in private charitable institutions, while only 73,000 resided in public almshouses. Towards the latter part of the nineteenth century, public aid was reduced as it was seen as contributing to sloth and dependency while private aid was judiciously provided with greater checks for reform and recovery. Writing in 1890, Jacob Riis, commenting on the extent of private charity, says: "New York is, I firmly believe, the most charitable city in the world. Nowhere is there so eager a readiness to help ..."
- "To become a gildsman,..it was necessary to pay certain initiation fees,..(and to take) an oath of fealty to the fraternity, swearing to observe its laws, to uphold its privileges, not to divulge its counsels, to obey its officers, and not to aid any non-gildsman under cover of the newly-acquired 'freedom.'" (C Gross, The Gild Merchant, (1927))
This charter shows the importance of 'brotherhood', and the principles of discipline, conviviality and benevolence. The structure of fraternity in the guild forms the basis for orders such as Freemasonry and other fraternal orders, friendly societies and modern trade unions. Joining such an organisation a member gained the 'freedom' of the craft, and the exclusive benefits that the organisation could confer on members.
Historically, benefit societies have emphasised the importance of social discipline, in conforming to the rules of the organisation and society, and acting in a morally uplifting and ethical manner. Conviviality and benevolence are important principles. Fraternal societies differed from public and private hierarchical aid organizations by employing an "ethical principle of reciprocity." This removed the stigma of charity.
During the eighteenth and nineteenth centuries benefit societies in the form of friendly societies and trade unions were essential in providing social assistance for sickness and unemployment, and improving social conditions for a large part of the working population. With the introduction in the early twentieth century of state social welfare programs, and industrial, health and welfare regulation, the influence and membership of benefit societies have declined in importance, but remains significant. Nevertheless, in many countries, for example in Europe, mutual benefit societies continue to provide statutory and supplementary healthcare coverage.
Oaths, secret signs and knowledge, and regalia were historically an important part of many benefit societies, but declined in use in most benefit societies during the late nineteenth and early twentieth centuries. Conversely, signs and ceremony have become the mainstay of fraternal societies that no longer focus as much on mutual aid.
Current benefit societies
Many of the features of benefit organizations today have been assimilated into organizations that rely on the corporate and political structures of our time. Insurance companies, religious charities, credit unions and democratic governments now perform many of the same functions that were once the purview of ethnically- or culturally-affiliated mutual benefit associations.
New technologies have provided yet more new opportunities for humanity to support itself through mutual aid. Recent authors have described the networked affiliations that produce collaborative projects. In modern Asia rotating credit associations organized within communities or workplaces were widespread through the early twentieth century and continue in our time. Habitat for Humanity in the United States is a leading example of shared credit and labor pooled to help low-income people afford adequate housing.
In post-disaster reactions, formal benefit societies of our time often lend aid to others outside their immediate membership, while ad hoc benefit associations form among neighbors or refugees, generally lasting only as long as the emergency exists. Ad hoc mutual aid associations have been seen organized among strangers facing shared challenges in such disparate settings as the Woodstock Music and Arts Festival in New York in 1969, during the Beijing Tiananmen square protests of 1989, for neighborhood defense during the Los Angeles Riots of 1992, and work of the organization Common Ground Collective which formed in New Orleans after Hurricane Katrina in 2005. The Rainbow Family organizes gatherings in National Forests of the United States each year around age old models of ad hoc mutual aid.
Benefit societies, fraternal benefit societies or "fraternals" are not-for-profit membership organizations that have a representative form of government and are organized through a lodge system, commonly represented in the societies of North America. to carry out social, intellectual, educational, charitable, benevolent, moral, fraternal, patriotic or religious purposes. "Fraternals" provide members with life insurance and other financial protection benefits in accordance with state law and use the earnings to fund member-supported community activities. Fraternals are chartered by state law and have been exempt from income tax under Section 501(c)(8) of the United States Tax Code since 1909.
Fraternal Benefit Societies trace their lineage back through mutual societies, friendly societies and eventually to medieval guilds. Many fraternal benefit societies were founded to serve the needs of immigrants and other under-served groups who shared common bonds of religion, ethnicity, gender, occupation or shared values. The first modern American fraternal benefit society was the Ancient Order of United Workmen, founded by John J. Upchurch in 1868. "The Order of Knights of Pythias is a great international fraternity which was founded in Washington, DC, February 19, 1864, by Justus H. Rathbone..." The Knights had an "Endowment Rank" which included life, health and disability insurance.
As Walter Bayse wrote in his history of fraternals:
“the American fraternal system had its beginning as a result of the fraternal desire of men to cooperate for their mutual welfare and happiness, and that the benefit plan they introduced followed an innate prompting to protect their dependents.”
Model Fraternal Code
The Model Fraternal Code which has been adopted in some form by most states defines fraternals as follows:
Section 1. FRATERNAL BENEFIT SOCIETIES. Any incorporated society, order or supreme lodge, without capital stock, including one exempted under the provisions of Section 38(a)(2) of this Article whether incorporated or not, conducted solely for the benefit of its members and their beneficiaries and not for profit, operated on a lodge system with ritualistic form of work, having a representative form of government, and which provides benefits in accordance with this Article, is hereby declared to be a fraternal benefit society.
National Union v. Marlow
A fraternal-beneficial 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. *** 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.
As indicated in this case, a fraternal benefit society is required to have a "common bond" among its members. Further, a society is required to specify in its laws the eligibility standards for membership, as well as classes of membership, the process of admission, and the rights and privileges of members.
A fraternal benefit society is operating under a lodge system if it has a supreme governing body and subordinate lodges into which members are elected, initiated or admitted in accordance with its laws. A society has a representative form of government if its supreme governing body is an assembly composed of delegates elected directly by members or intermediate assemblies, or a board similarly elected.
Fraternal benefit societies provide insurance benefits to their members including life insurance and endowments, annuities, disability, hospital, medical and nursing benefits, and such other benefits authorized for life insurers that are not inconsistent with the general fraternal laws.
In the 21st century, fraternal benefit societies remain active in the United States. In addition to the mutual benefits provided to members, many fraternal benefit societies engage in charitable and volunteer efforts of lodge members in the broader community. There are more than 80 fraternal benefit societies operating in the United States and Canada today, with over 9 million members and with $380 billion of life insurance in force.
Select past and present benefit societies
- Catholic Financial Life
- Canadian Fraternal Association
- Free African Union Society, Newport, Rhode Island
- Independent Order of Foresters
- Gleaner Life Insurance Society
- Knights of Pythias
- Knights of Columbus
- Knights of Peter Claver
- Modern Woodmen of America
- Woodmen of the World
- Thrivent Financial
- Royal Neighbors of America
- Umberto Primo Society
- Sons of Norway
- Vasa Order of America
- Odd Fellows
- Teachers Life
- International Order of Twelve Knights and Daughters of Tabor
- Faith Life
- Order of Chosen Friends
- The National Grange of the Order of Patrons of Husbandry
- Order of United Commercial Travelers of America
- Woman's Life Insurance Society
- White, Deborah Gray (2013). Freedom on my Mind: a History of African Americans (Volume 1 ed.). Boston: Bedford/ St. Martin's. p. 179. ISBN 978-0-312-64883-1.
- Kelley, David (1998). A Life of One's Own: Individual Rights and the Welfare State. Cato Institute. p. 37. ISBN 1-882577-70-1.
- (Olasky 1994, p. 100)
- (Beito 2000, p. 3)
- "Mutual aid societies Dialog from the H-Asia list, October 1995", Hartford-hwp.com.
- Internal Revenue Service. "IRS Rule 1.501(c)(8)-1, Operating Under the Lodge System, Lodge System Defined" (PDF). p. 6.
- "501(c)(8) Fraternal Beneficiary Societies and Domestic Fraternal Societies". Internal Revenue Service. February 23, 2011. Retrieved March 18, 2013.
- "Historical Background and Development of Social Security". Archived from the original on 2016-01-02.
- Statistics of Fraternal Benefit Societies, 117th Edition (2011); American Fraternal Alliance, p. iv.
- Ancient Order of United Workmen - History at Phoenix Masonic Museum
- "Archived copy". Archived from the original on 2016-02-03. Retrieved 2016-01-30.CS1 maint: archived copy as title (link)- The Order, Knights of Pythias
- Walter Bayse (1919). History and operation of fraternal insurance. Rochester, N.Y. : Fraternal monitor. p. 39.
- "Model Fratneral Code" (PDF).[dead link]
- "National Union v. Marlow 374 F. 775, 778 (1896)".
- Internal Revenue Service (1997-09-24). "Fraternal Beneficiary Society Defined".
- "Modern Fraternal Code Section 6" (PDF).[dead link]
- "Modern Fraternal Code Section 2" (PDF).[dead link]
- "Modern Fraternal Code Section 3" (PDF).[dead link]
- "Modern Fraternal Code Section 16" (PDF).[dead link]
- Phillip L. Swagel (2010). Economic and Societal Impacts of Fraternal Benefit Societies. p. 5.
- Kropotkin, Peter (1902) Mutual Aid: A Factor of Evolution
- Beito, David T. (2000), From Mutual Aid to the Welfare State: Fraternal Societies and Social Services, 1890-1967, University of North Carolina Press, ISBN 978-0807825310
- Beito, David T. (2000) From Mutual Aid to Welfare State: How Fraternal Societies Fought Poverty and Taught Character
- Beito, David T.; Gordon, Peter; Tabarrok, Alexander eds. (2002) The Voluntary City: Choice, Community, and Civil Society
- Barber, Benjamin (2002) "Mutual Aid Society on a Grand Scale"
- Olasky, Marvin (1994), The Tragedy of American Compassion, Crossway Books, ISBN 978-0891078630