Take a look at the THIS ARTICLE that appeared in the February 27, 2012, issue of the Wall Street Journal. The headline – “Tangled Tax Code Primed for Pruning” – says all that needs to be said about the value of your society’s membership in the Alliance. Just in case you don’t want to read the entire article, let me highlight the first three sentences of the story for you here:
President Barack Obama’s business-tax-overhaul plan underscores the growing likelihood of a serious effort to revamp the nation’s much-criticized tax system, no matter who wins the White House. The question now isn’t whether a tax rewrite will happen, but how far it will go, and whether it will stop at business rules or also extend to individuals. Increasingly the answer appears to be that the entire tax code, all 70,000 pages, could be in play. Asked about the odds of a comprehensive overhaul next year, Rep. Pat Tiberi (R., Ohio), the chairman of a key House Ways and Means subcommittee, replied: “I’d say over 50%.”
70,000 pages of law – all of which are “in play” – with a better than 50 percent chance of being overhauled. This is shaping up to be a legislative “cage match” with the political philosophies of the Republicans and Democrats squaring off in a head-to-head battle over the fiscal future of our nation. Add the complications of 1,000 different sub-plots within each political party, with special interest groups competing with one another to preserve or enhance their own tax status, and you can see the witches’ brew that will be on the congressional menu.
As in every legislative debate, there will be winners and losers. It will be an ultimate exercise in sausage making; some will end up nicely packaged in a protective casing, while others will be turned into scrapple on the Senate floor.
There is one provision included in those 70,000 pages in which every reader of this blog should be keenly interested. It’s the one that establishes fraternals’ tax-exempt status – Section 501(c)(8), to be exact. If that language goes away, well, so do we. In all the hue and cry that is certain to come up during the “comprehensive overhaul” of the tax code, there will be only one organization – the American Fraternal Alliance – whose sole focus is on strengthening Section 501(c)(8).
A significant portion of every member society’s dues goes to fund the Alliance’s advocacy initiatives, and the bulk of those advocacy efforts are focused on tax issues – state and federal. The Alliance staff and our retained advocacy firms sift through mountains of information each week in order to separate the wheat from the chaff and determine whether threats to our tax exemption are real or imaginary. We keep our nose in the air and our ear to the ground by monitoring the actions of key legislative committees and political caucuses. We do our best to keep you informed of what’s going on behind the scenes in an effort to prepare you to rapidly respond to any measure that would negatively impact your society and your members. And, most importantly, we are constantly working with members to communicate the value and validity of the fraternal business model to those public policymakers, who will be considering changes to the tax code that could determine whether that model will be allowed to exist.
There are many good reasons to belong to the Alliance: networking opportunities with your peers and vendors that specialize in serving our market niche; education and information programs that address the unique issues facing fraternals; and access to exclusive products and services, such as professional liability insurance for your board members and your sales force, to name just a few. But it’s advocacy that may be the most valuable benefit each society receives. No member society – no matter how large – could be as effective an advocate for itself or the fraternal business model on its own as it can through the Alliance. And the vast majority of societies – even the larger ones – could not hope to fund such an advocacy operation on their own.
Advocacy is also the benefit that is the most difficult to quantify. How much is stopping a bill to repeal the fraternal tax exemption in Hawaii worth? How valuable are meetings between Alliance leaders’ and key public policymakers that keep discussion of repeal of Section 501(c)(8) off the table?
The average annual dues for a member of the Alliance are about $19,300. The median dues are $4,250. That means that half of the Alliance’s member societies pay more than $4,250 per year and half pay less. Let’s say, for sake of argument, that half of each member society’s dues is allocated to advocacy initiatives dedicated to ensuring that rules and regulations that established the fraternal business model remain intact. Whether you use the average dues or the median dues, the costs to an individual society to fund these absolutely critical projects is…modest. Frankly, from where I sit, it seems to me that based on the Alliance’s success in defeating state legislation to repeal tax exemptions and keeping the fraternal tax exemption out of the discussions over tax reform at the federal level, member societies are getting one heck of a return on their investment. I hope you feel the same way.
Sadly, there are still a few fraternals (see list below) that have chosen not to renew their membership in the Alliance and a few who chose not to join the Alliance. Some cite the cost of membership as the reason for not belonging; others point to philosophical differences on solvency issues between their societies and the Alliance Board. Yet despite these objections, such societies still receive the benefits of the Alliance’s advocacy efforts – even though it costs member societies just a little more to carry the water for these organizations. If you know the leadership of these societies, I hope you’ll reach out to them and let them know that all are welcome to join – and that the more active and engaged members we have, the more effective an organization we can be.
The Alliance exists to strengthen and support its members and the fraternal system. One of the best ways we can do that is to ensure that the rules governing the fraternal business model remain strong and viable, creating an environment that allows existing fraternals the opportunity to succeed and new societies to be created. And that, my friends, is what your dues dollars pay for.
Fraternal benefit societies which do not belong to the American Fraternal Alliance:
Artisan’s Order of Mutual Protection
Czech Catholic Union
Firemen’s Mutual Aid & Benefit Association
First Windish Fraternal Benefit Society of America
Grand Lodge of Ohio Order Sons of Italy
Grand Lodge of Pennsylvania Order Sons of Italy
Independent Order of Vikings
ISDA Fraternal Association
Lithuanian Alliance of America
Moslah Benefit Fund
Mutual Beneficial Association, Inc.
North American Swiss Alliance
Polish Beneficial Association
William Penn Association
Workmen’s Benefit Fund of the USA
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