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    Updated academic study verifies value of fraternal contributions to U.S. economy

    One of the Alliance’s most important missions – perhaps its most important – is to promote, protect, and preserve the tax exempt status of fraternals in the U.S.  The fraternal tax exemption has been on the books for more than 100 years, but the Alliance never lets its guard down when it comes to advocating on behalf of member societies on the issue.  Tax reform is one item that never strays too far from the top of the policymakers’ agendas, at the state or federal levels.  That’s why we don’t just vigilantly monitor the debate over tax reform on Capitol Hill and state capitals, we are actively engaged in communicating with lawmakers so they fully understand who we are and what we do BEFORE amendments to, or repeal of, the fraternal exemption get mentioned in the conversation.  And the Alliance just received an important new tool to help us better deliver this message. Habitat512 (Medium) In 2010, Dr. Phil Swagel of Georgetown University’s McDonough School of Business, authored a study that measured the benefits to society from the charitable and voluntary activities of fraternal benefit societies using a rigorous economic framework.  Dr. Swagel’s original study included statistical data from Thrivent Financial and the Knights of Columbus, the two societies that commissioned the independent research project.  The Alliance and its member societies have been effectively utilizing the results of the study to demonstrate both the direct and indirect economic impact of fraternals for the past four years.

    Dr. Swagel, now a professor at the University of Maryland School of Public Policy, has recently updated this study with data from two other Alliance members – Modern Woodmen of America and Woodmen of the World/Omaha – and the findings are even more impressive.  Here are just a couple of highlights from the report that demonstrate the importance of fraternals to both individuals and communities:

    “From 2007 to 2011, even during a severe recession, fraternals produced more than $3.8 billion in benefits on average to the U.S. economy each year, for a total of nearly $19 billion over the five-year period.  In direct contributions alone, fraternals together produced $2.4 billion in charitable and community assistance from 2007 to 2011, an average of $478.3 million per year.  Members of fraternal chapters also volunteers [sic] nearly 400 million hours of their time during the five-year period, with a direct average value of $1.6 billion each year.”

    But fraternals’ impact goes far beyond direct financial support and volunteerism.  Dr. Swagel also studied the “social capital” – the bonds between individuals that deepen reciprocity and trustworthiness within a community – that results from fraternal activities.  Here’s what he found:

    “During the five-year study, fraternal benefit societies generated social capital values at an average of $1.7 billion annually, or $6.8 billion total.  These enormous contributions vastly outweigh the estimated forgone $50 million annual cost of the federal tax exemption that makes the fraternal model possible, producing a 76-1 return on the public investment.”

    And one last thing: These benefits don’t even take into account the positive impact that fraternal insurance protection has on the individuals and families that purchase it! Separate studies have shown that financial security – not the accumulation of great wealth but a sense of confidence that your family’s financial future is protected – fosters generosity.  People – primarily the middle income individuals that make up the bulk of fraternal members – are simply more generous with both their time and money when they feel the sense of security that fraternal insurance and retirement products can provide.  It’s a powerful combination that needs to be communicated to public policymakers at every level. Texas meeting And that’s just what the Alliance plans to do.  We’ll distribute the updated Swagel Study far and wide – to member societies, to public policymakers, to the news media – in early September.  Over the course of the fourth quarter, the Alliance, working in tandem with the members of our Advocacy Engagement Task Force, will be making sure that every member of the U.S. House Ways and Means Committee and the Senate Finance Committee – the two primary congressional tax writing committees – receives a copy of this study, either through a personal visit with a fraternal executive from his or her district or through a personal letter from a constituent.

    All other member societies are encouraged to participate in this congressional outreach effort through our “Adopt-A-Member-Of-Congress” program.  Just let me know that you’d like to contact your Representative and/or Senators by emailing me at jannotti@fraternalalliance.org  and we’ll provide you with all the support you need to get this done.

    We’ll cap this latest grassroots initiative from April 19-21, 2015, with a “Fraternal Day on Capitol Hill” event that will be held in conjunction with the Alliance’s Presidents and Fraternal Operations Sections Mid-Year Meeting in Washington, DC.  This is another important event in which every Alliance member society can and should participate.  Mark your calendar today and look for more details on the Mid-Year Meeting coming in early 2015.

    Do you have suggestions on ways we can maximize the impact of the Swagel Study or better communicate our message to state and federal lawmakers?  Shoot me an email or post your comments here…

    2 Responses

    1. Those are amazing numbers! Way to go fraternal clients! Keep up the great work.

    2. Joe:
      Its nice to confirm what all of us in the Fraternal Benefit area have known for years. Fraternals do provide valuable services in the financial area. What can’t be measured is the vast benefit of the social interaction they have provided for over 100 years. Let’s hope that Fraternals can survive for another 100 years for the good of humanity.

      Ed De Persis

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