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Mary Kate Grant Subject Files
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Originally Processed With FOIA(s):
FOIA Number:
S
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin:
Speechwriting, White House Office of
Series:
Grant, Mary Kate, Files
Subseries:
Subject File, 1988-1991
OA/ID Number:
13882
Folder ID Number:
13882-010
Folder Title:
National Fraternal Congress, 12/88
Stack:
Row:
Section:
Shelf:
Position:
G
19
2
7
7
December 13, 1988
Walter Vinyard of the National Fraternal Congress (298-8660)
called the Public Affairs Office on 12/13/88. The NFC represents
100 fraternal organizations which provide insurance and lodges
for their members -- such as the Knights of Columbus and the
Lutheran Brothers. The group represents a large segment of the
volunteer movement and is strongly pro-Bush.
Fraternal organizations enjoy unique statutory exemption status
in federal tax law, and have since 1909. They are exempted at a
higher order than, for example, churches. In 1985, Treasury
proposed taxing fraternal societies (and their insurance for
members), but the Reagan White House removed the proposal from
the budget negotiations at the time.
Vinyard is concerned because he received a call from Treasury two
weeks ago, asking for the income figures on his member groups.
As this was unprecedented, he asked why and was told it was "for
the budget." Vinyard thinks that the Administration is
considering changing revenue assessments for fraternal
organizations and believes that the budget process will move very
quickly, as budget negotiations/proposals from the new
Administration are expected by the Inaugural.
He is asking to discuss this with Treasury and OMB before the
budget process begins, within the next month or so.
RESIDENCE
(703) 683-6838
WALTER DARNALL VINYARD, JR.
888 SEVENTEENTH ST., N.W.
ZUCKERT, SCOUTT & RASENBERGER
WASHINGTON, D.C. 20006-3959
ATTORNEYS AT LAW
TEL. (202) 298-8660
LAW OFFICES
ZUCKERT, SCOUTT & RASENBERGER
BRAWNER BUILDING
COATES LEAR (1915-1963)
888 SEVENTEENTH STREET, N. W.
EUGENE M. ZUCKERT
JERROLD SCOUTT. JR.
OF COUNSEL
RAYMOND J. RASENBERGER
WASHINGTON, D. C. 20006-3959
LINWOOD HOLTON
MARVIN S. LIEBERMAN
J. MICHAEL KEELING
FRANK J. COSTELLO
TELEPHONE: (202) 298-8660
EDGAR T. BELLINGER
RALPH L. KISSICK
TELECOPIERS: (202) 342-0683
JAMES L. DEVALL
JOHN T. STEWART. JR.'
(202) 342-1316
WALTER DARNALL VINYARD. JR.
WILLIAM M. CALLAWAY. JR.
TELEX: 89648
RACHEL 6. TRINDER
CHARLES J. SIMPSON. JR.
MONIQUE E. YINGLING
RICHARD A. ALLEN
ELENA W. KING
MALCOLM L. BENGE
JAMES A. HARRIS
EVAN M. MIGDAIL
ANDREW R. PLUMP
ROBERT M. HALLMARK
JAYME RIZZOLO EPSTEIN
JULIE A. TIGGES'
RICHARD P. SCHWEITZER
December 8, 1988
"NOT ADMITTED IN D. C.
Ms. Edith Brashares
Office of Tax Analysis
U.S. Department of the Treasury
15th Street at Pennsylvania Avenue, N.W.
Washington, D.C.
Dear Edith:
Enclosed are the individually completed fraternal
beneficiary association questionnaires dated October 21, 1988.
If any of the answers are unclear or any other information is
needed, please don't hesitate to let us know. All of the
societies under study want to make certain that you receive
satisfactory information in any area of interest. We remain
ready to assist you at any time.
We also include copies of the five previous submissions to
your office concerning: (1) History of the Unique and Specific
Federal Tax Exemption for Fraternal Beneficiary Societies, (2)
Unrelated Business Income Tax Returns, (3) Membership Standards,
(4) samples of literature, and (5) fraternal activities over a 30
year period. I know that you intend to cover each of these areas
in the study. We look forward to a fair and balanced report.
Our invitation stands for Treasury staff to visit one lodge
meeting of each society under study. Fraternalism can only be
understood by experiencing its vitality directly. America's
fraternal. benefit societies are much more than a compilation of
statistics. We believe they are a large part of the "thousand
points of light" which makes the volunteer spirit alive in the
United States. We hope you will come to see for yourself.
ZUCKERT, SCOUTT & RASENBERGER
Ms. Edith Brashares
Page - 2 -
December 8, 1988
After you have had an opportunity to make a preliminary
review of the enclosures, we would very much appreciate the
opportunity to meet with you and Tom and any other appropriate
OTA staff members to discuss the fundamental public policy
questions at issue. We hope this could be done by December 16.
Best regards.
Sincerely Water yours,
Walter D. Vinyard, Jr.
WDV CSS
LAW OFFICES
ZUCKERT, SCOUTT & RASENBERGER
BRAWNER BUILDING
COATES LEAR (1915-1963)
888 SEVENTEENTH STREET, N. W.
EUGENE M. ZUCKERT
OF COUNSEL
JERROLD SCOUTT. JR.
RAYMOND J. RASENBERGER
WASHINGTON, D. C. 20006-3959
LINWOOD HOLTON
J. MICHAEL KEELING
MARVIN S. LIEBERMAN
FRANK J. COSTELLO
TELEPHONE: (202) 298-8660
EDGAR T. BELLINGER
RALPH L. KISSICK
TELECOPIERS: (202) 342-0683
JAMES L. DEVALL
(202) 342-1316
JOHN T. STEWART. JR.
WALTER DARNALL VINYARD. JR.
WILLIAM H. CALLAWAY. JR.
TELEX: 89648
RACHEL B. TRINDER
CHARLES J. SIMPSON. JR.
MONIQUE E. YINGLING
RICHARD A. ALLEN
ELENA W. KING
MALCOLM L. BENGE
JAMES A. HARRIS
EVAN M. MIGDAIL
ANDREW R. PLUMP
ROBERT M. HALLMARK
JAYME RIZZOLO EPSTEIN
JULIE A. TIGGES
RICHARD P. SCHWEITZER
"NOT ADMITTED IN D. C.
September 20, 1988
Ms. Edith Brashares
Office of Tax Analysis
U.S. Department of the
Treasury
15th Street at Pennsylvania Avenue
Washington, D.C. 20220
Dear Edith:
In response to the request from your office on July 14, we
are pleased to submit the enclosed explanations of fraternal
activities over a 30 year period for each of the seven fraternal
benefit societies under study.
In every instance fraternal activities have increased in
quantity and quality. Currently each society's fraternal
programs are more vigorous than at any other time in their
history. In addition to protecting members and their families,
the seven societies have multiplied efforts in volunteer, social,
religious, patriotic, educational, charitable and benevolent
areas. The enclosures provide an overview of the expanding
contribution of these seven fraternals to American society. It
is by no means an exhaustive catalogue. Much more background
information is available if you wish to review it.
Fraternal benefit societies are unique. They are not
insurance companies, membership clubs, educational organizations,
or public charities. They are member governed, non-profit,
mutual aid organizations which insure members and their families
against death, disease and disability and which maintain an
active lodge system for fraternal association and outreach. We
hope the enclosures demonstrate that American fraternalism is
alive and well.
ZUCKERT, SCOUTT & RASENBERGER
- 2 -
In isolation the effect of a single fraternal lodge
transporting retarded people or sheltering hurricane victims may
not have much impact in comparison to the federal budget, but the
cumulative effect of millions of such benevolent acts is
enormous. Without tax exemption this would not be possible.
Fraternal volunteer programs extend to the public at large
in communities where lodges are located. Local fraternalists
support community benevolence and charity. Lodges themselves
initiate and participate in numerous acts of service. Lodges
also implement programs initiated and funded by their own
national fraternal society. Viewed in the aggregate, the overall
community impact of fraternal volunteers cannot be
underestimated.
In the lodge system authority and responsibility flow from
the bottom upwards. Each lodge is self-governing. National
fraternal organizations provide financial, personnel and program
assistance to local lodges. The lodge system is expensive to
maintain, support and nurture. National societies often
initiate, develop and fund fraternal programs. Seed money and
grants from national organizations generate additional
contributions at the local level when volunteers implement
fraternal programs. One tax-exempt dollar from the national
society can produce multiple returns by local lodges.
To assist you and your colleagues in understanding the lodge
system, we extend a cordial invitation for Treasury Department
staff at our expense to visit one lodge meeting of each of the
seven societies under study. We very much hope that you will be
able to do SO.
By focusing upon only large fraternals, the study mandated
by Congress seems to imply a negative connotation to growth. We
hope the enclosures will help to demonstrate that large
fraternals remain faithful to all of their historic exempt
purposes, fraternal as well as beneficial.
Professor Peter F. Drucker commented recently that "many
non-profits have become vastly more productive during the past
ten years. He believes this is because non-profits have
discovered management:
Twenty years ago 'management' was bad word in
non-profit institutions; it meant 'big business.
Far too many of these institutions then believed
that good intentions and a noble cause are all that
is needed to produce results -- and quite a few, of
zuckert, SCOUTT & RASENBERGER
- 3 -
course, still do. But more and more are learning
that good intentions by themselves only spawn
bureaucracy.
Twenty years ago non-profit institutions
tended to believe that they did not have to
'manage' because they did not have a 'bottom line.'
More and more of them have since learned that they
have to manage especially well precisely because
they lack the discipline of the 'bottom
line.
There are no statistics on the total number of
people who serve as volunteers in non-profit
organizations. But they are almost certain to
constitute our largest single 'employment.
1
...
Government has become too big, too
complex, too remote for each citizen actively to
participate in it. Yet we no longer believe, as
did the 'liberals' and 'progressives' these past
hundred years, that community tasks can -- nay,
should -- be, left to government. As a volunteer
the individual can again find active, effective
citizenship, can again make a difference, can again
exercise control. This is a uniquely American
achievement; it may well be America's most
important contribution today. *
The seven fraternal benefit societies discussed in the
enclosures are an important part of what Professor Drucker states
is "America's most important contribution." We hope that you
will visit their lodges in various communities throughout the
nation in order to understand them more fully.
I am available at any time to provide you and your
colleagues with any additional information or to try to answer
any questions as they arise.
water Sincerely yours,
Walter D. Vinyard, Jr.
* Peter F. Drucker, "The Non-Profits' Quiet Revolution,' The
Wall Street Journal, p. 30 (September 8, 1988).
AAL
During the period 1955-1985, fraternal expenditures by AAL
(Aid Association for Lutherans) increased 9,947% as follows:
1955
$
361,282
1965
2,216,644
1975
7,878,983
1985
36,296,922
Simultaneously, assets grew at a rate of 1,776%:
1955
$ 209,374,791
1965
544,833,224
1975
1,318,595,249
1985
3,927,583,727
AAL's purpose is to bring together Lutheran people to pursue
quality living through financial security, volunteer action, and
help for others. (Exhibit 1.)
A sampling of AAL fraternal programs since 1960 discloses
AAL's fraternal commitment:
1960
:
Scholarships totaling $93,000 were awarded to
young people studying at seminaries to become
pastors, teachers, and lay leaders of Lutheran
Synodical Conference churches.
-- More than $360,000 was distributed by AAL to
local branches to aid benevolent works,
including support to local church projects,
parochial schools, Lutheran colleges and
seminaries.
--
At least $47,500 was granted to Synodical
Conference charitable institutions, and to
projects promoting Lutheranism.
- 2 -
1975
--
More than 7,000 pints of blood were donated
through the efforts of 264 AAL blood donor
clubs.
-- Throughout AAL, Project Care benevolences were
being undertaken to meet specific human needs
such as literacy training in California,
emergency short-term care in Delaware, a
senior citizen center in Illinois, day care
centers in Wyoming, and ear and eye screening
programs for pre-schoolers in Oregon.
-- AAL scholarships were awarded through AAL's
All-College Scholarship Program under which
150 scholarships of up to $1,750 annually
(1971 figures) are awarded, renewable for up
to three years.
1985
-- 88 orphan fraternal benefit grants were made,
consisting of amounts ranging from $66 to $200
a month to children of deceased AAL members.
-- AAL supported higher education with grants
totaling $5.1 million. AAL competitive
scholarships were awarded to 550 members.
13,250 others were helped through other
scholarships and grants-in-aid.
-- AAL provided a grant to help produce a two
hour public television program about the life
and work of Johann Sebastian Bach, the most
famous Lutheran composer in history.
-- Through four benevolence programs (Helping
Hands, Community Action, Disaster Response and
CO-OP), AAL provided almost $7.7 million
dollars during 1985 to help branches conduct
local work or service projects and to raise
over $6.1 million dollars to benefit needy
people and organizations.
-- AAL contributed almost $1 million to the
restoration of the Statute of Liberty.
- 3 -
-- 283 Lutheran congregations received grants
totaling $157,000 to help observe milestone
anniversaries.
In 1987, AAL inaugurated a drug abuse prevention program,
"Get Involved Before Your Kids Do." This million dollar program
is designed to educate parents of elementary and junior high
school students about substance abuse and provide them with the
skills and confidence to communicate effectively within the
family about drugs and alcohol. A $300 community outreach grant
is available to each branch conducting this program to aid in the
war on drugs. (Exhibit 2.)
BRANCH SYSTEM
AAL members elect AAL's board of directors annually. AAL
fraternal and benevolent activities are conducted through AAL's
6,833 branches.
In 1985 AAL members devoted over 1.8 million volunteer hours
to charitable projects. In 1986 more than 615,000 people were
helped through AAL branch programs. In 1987 15,000 projects
helped others in need. AAL contributed $10 million to these
benevolence activities. Another $7.5 million was raised by AAL
volunteers. (Exhibit 3.)
- 4 -
AAL supports branch activities with two types of funding,
branch funds and benevolence dollars. (Exhibit 4.) As
Lutherans, AAL members direct a substantial part of their
benevolent activities to Lutheran churches and institutions. In
1985, AAL gave $5.8 million in grants to Lutheran high schools,
colleges, seminaries, camps, and church bodies. Examples follow
of AAL branch grants and the programs they supported in 1985:
AAL Branch Funds. AAL provides branch funds semiannually to
assist branches with expenses such as supplies, telephone
expenses, printing, rent, and postage. Although not intended for
benevolence, branch funds can be used for charitable purposes in
emergencies. The amount each branch receives is based upon the
number of members in each branch and the branch rating. Branches
which undertake more fraternal and benevolent activities will
receive increased branch funds in the following year.
Community Action Benevolence. AAL encourages branch
outreach in local communities with grants of up to $2,500 to
purchase materials to improve community-owned property. Branch
volunteers plan and control projects and supply physical labor.
Examples include landscaping community-owned parks and
constructing a community baseball diamond.
- 5 -
Cooperative Benevolence. AAL makes grants of up to $5,000
($10,000 if two or more branches are involved) to supplement
funds raised at the branch level to provide assistance to an
individual or a family in need as a result of an accident,
illness, or disaster. Examples include the cost of providing
temporary living expenses for a family which lost its breadwinner
through illness, and the purchase of a wheelchair for a disabled
person.
Cooperative benevolence grants also are made to supplement
funds raised at the branch level to provide tangible items for an
agency, an institution, or a community. These grants, in amounts
of up to $2,500 (or $5,000 if two or more branches are involved)
are made to support such projects as the purchase of a television
set for a local home for the aged, or equipment for a local
volunteer fire department. The branches themselves identify
projects for cooperative benevolence grants.
Disaster Response Benevolence. AAL assists branches aiding
disaster victims with grants of up to $2,500. These funds must
be used for the rent or purchase of equipment, materials, or
supplies needed by disaster victims. Disaster response funds
- 6 -
have been used by branch volunteers to harvest crops for a
disabled farmer, to set up a food station, and to clean up
communities after flood, fires and explosions.
Helping Hands. Grants of up to $250 are made to purchase
materials or supplies to aid a family in need, or a nonprofit
agency, institution, congregation or community. Helping Hands
grants have been used by branch volunteers to build playground
equipment, install smoke alarms, or to arrange birthday parties
for residents of senior citizen homes.
EDUCATION
AAL has a continuing commitment to the education of
Lutherans and to Lutheran educational institutions. In 1987,
more than 5,000 AAL members. received $2.2 million in
scholarships. A breakdown of the most important AAL education
programs follows:
AAL College Scholarships. At least 400 are awarded each
year to select high school seniors. Two hundred of these are
renewable, another 200 are non-renewable.
- 7 -
Competitive Nursing Scholarships. Available to AAL members
who enroll in a registered nursing program.
Lutheran Campus Scholarships. Available to AAL members
enrolled at 51 Lutheran colleges on the basis of need and
ability.
Lutheran American Ministry Scholarships. Available to
Lutheran American ministry students, either AAL members or
nonmembers enrolled at Lutheran colleges.
Vocational/Technical School Scholarships. Available to AAL
members who are pursuing associate degrees or vocational diplomas
in vocational/technical programs.
Distinguished Presidential Fellowships. Awarded in the
amount of $12,500 each to professors at Lutheran seminaries.
Missionary Scholarships. Available to missionaries and
their spouses to enrich their training and professional growth,
especially in sabbatical years.
Lutheran Hospital Nursing Scholarships. Available to AAL
members who are pursuing nurse's training at Lutheran hospitals.
- 8 -
Lutheran Institution Support Program. AAL supports Lutheran
seminaries and high schools with support grants and scholarships.
Employee Gift Matching. AAL matches up to $2,500 of
voluntary contributions by employees to Lutheran institutions.
In 1985, 235 institutions received assistance; 474 employees
participated in the program.
OTHER DIRECT MEMBER BENEFITS
AAL provides members with the following additional direct
member benefits:
Orphan Fraternal Benefit Program. AAL provides amounts
ranging from $60 to $200 monthly, per family, to children of
deceased AAL members. An edycation grant of up to $1,750 per
year also is available for orphans attending a post-secondary
educational institution up to the age of 23. In 1985, 88 orphans
benefitted from this program.
Family Fraternal Benefit Program. A one-time benefit of
$1,500 is provided to eligible AAL families whose live-born child
dies within the first 60 days of his life. A benefit of $750 is
paid to eligible AAL families who bear a stillborn child at least
- 9 -
20 weeks after gestation. This program also provides $2,500 of
life insurance coverage for a newborn child less than 60 days old
of an AAL family, at standard rates, regardless of the child's
health. AAL provides a $2,500 certificate of insurance to AAL
children of more than 60 days, but less than 16 years old, when
the child is actuarially uninsurable.
HEALTH ACTIVITIES
AAL encourages branches to conduct activities which help
members and others in their community in daily living and/or
personal relationships. Branches may select topics from AAL's
film library. AAL provides printed materials explaining programs
which AAL develops.
ENCORE. Married couples meet with an AAL trained couple to
discuss ways to nurture and strengthen their marriages.
Estate Planning. Members learn about estate planning and
are encouraged to prepare plans that meet their personal
objectives.
- 10 -
Health Fairs. Health fairs are designed to provide AAL
members and the community at large with information about health
resources. Health fairs include several activities which help
people assess their health and to plan for better health.
Improving Your Personal Wellness. Participants use AAL's
"Well Now!" kit to assess their health habits and identify a
specific behavior they want to improve.
Link-Age. AAL provides resources for a workshop to bring
together adults who are caring for their parents and other older
family members.
Managing Stress. AAL provides program materials to help AAL
members and the community learn about stress and ways to cope
with stress.
Smart Pre-Retirement Planning. This program is open to AAL
members and community members who want to plan for retirement by
focusing on retirement attitudes, financial concerns, leisure
activities, health, housing, and legal needs.
Talking Money. This AAL program helps parents and other
adults educate children on how to handle money.
- 11 -
Grief Helper Kit. AAL provides members with materials to
help strengthen and develop the skills of individuals who want to
provide help and information to grieving persons.
RECOGNITION AND SOCIAL ACTIVITIES
Special celebrations occur during which branches honor
significant milestones or accomplishments. Examples are:
- Honoring an important contribution to the
community.
- Birthday parties for elderly branch members.
- Gifts for baptisms and graduations.
- Mother/Daughter, Father/Son banquets.
- Sweetheart dinners for couples married 25 years
or more.
- Father's Day and Mother's Day dinners.
- Coffee hours to welcome new church members.
INDEPENDENT ORDER OF FORESTERS
During the period 1955-1985, fraternal expenditures by the
Independent Order of Foresters ("IOF" or "Foresters") increased
4,605% as follows:
1955
$ 171,262
1965
$ 830,413
1975
$3,451,888
1985
$8,051,578
Simultaneously assets grew at a rate of 2,523%:
1955
$ 60,921,400
1965
$ 195,185,900
1975
$ 545,199,317
1985
$1,606,602,452
The Foresters' creed states:
WE BELIEVE -- with malice toward none, with
arms extended in friendship and concord toward all
men of goodwill and good standing, that we members
of Forestry will travel through life safe in the
protective arms of our great Fraternity; happy in
the knowledge that we shall not be alone when in
distress and glad, should the occasion arise, to
extend a helping hand to our fellow man.
WE BELIEVE -- that united we may hold back
adversity which, alone, would overwhelm us, our
children and our homes.
WE BELIEVE in God, in the greatness of our
Country and in the spirit and the practice of
Democracy.
- 2 -
The Foresters are seriously committed to socially
responsible, charitable efforts in every community in which they
exist. Local courts help such organizations as Big Brothers,
Muscular Dystrophy, Cancer and the Heart Association. There are
numerous programs for the donation of medical equipment and fund
drives for hospitals, research and prevention of child abuse.
Prevention of child abuse has increasingly become a major
focus. For over a decade, educational films and booklets have
been produced and distributed through the Order's Prevention of
Child Abuse Fund, which also provides financial assistance to
organizations serving the needs of abused children and troubled
families. Every penny raised for the Fund is used to fight child
abuse. The IOF absorbs all administrative costs, while the
President and Board Members of the Fund serve without
remuneration. Since 1977, the Fund has awarded 256 grants to 164
recipients in 43 states in the U.S. representing a financial
total of $595,161.
In 1988, the Order proclaimed an annual IOF Child Abuse
Awareness Week in conjunction with National Child Abuse Awareness
Month. IOF Courts all over the nation participated in special
events and programs to stimulate awareness. In California the
IOF Network produced a five-part cable-television series that
- 3 -
aired to audiences in San Diego County. The program encompassed
the Order's child abuse prevention films with panels of local
professionals in an update discussion of each film's topic.
The Foresters sponsored a special educational insert on
child abuse prevention in the November 1988 issue of Family
Circle magazine. Family Circle has a circulation of almost
185,000 and the IOF will also continue to offer copies of this
helpful booklet to its members, employees, the general public and
community service organizations, upon request.
Substantial donations of money and hundreds of thousands of
volunteer hours have been given by the Foresters towards the
Child Abuse Prevention Program as well as many other charitable
causes for public benefit. In the U.S. alone during 1987, IOF
Courts reported over 131,939 man hours in services to their
communities as well as donations of 3,929 pints of blood and
total monetary donations of over $767,267. The Foresters conduct
holiday coffee rest stop safety programs all across America.
Every Court maintains a food pantry program for the distribution
of food to needy families.
- 4 -
LOCAL LODGE SYSTEM
It takes only 500 beneficiary members to institute a Court.
with the financial backing and fraternal direction of the IOF
Supreme Court, local Court members dedicate time and financial
assistance to community service. In addition to the major
fraternal and charitable activities that are recommended by the
Order, each Court chooses its own social programs and community
projects.
STRUCTURE OF THE LOCAL COURTS
The Foresters' Constitution and Laws (Exhibit 1), detail the
structure of a typical Court which follows a basic pattern.
Individual members elect a Chief Ranger annually at the regular
meeting. He is assisted by a slate of officers. The Chief
Ranger appoints chairmen for various committees in the Court to
involve more members and share the work load.
A Vice Chief Ranger is also chosen to assist the Chief
Ranger. He will accept responsibility of the Court for the
following year. An Orator conducts the prayers and takes part in
the ritual work of the Order. The Court's Treasurer is
responsible for the finances of the Court. The Court's Secretary
takes the minutes of the meetings and is in charge of all
- 5 -
correspondence. Senior and Junior Woodwards look after the
regalia of the Court. The Trustees are in charge of the property
of the Court.
The Public Relations Officer prepares news releases and
makes a variety of other efforts to publicize social and
charitable events and projects, to encourage increased membership
and community involvement in the Court's charitable work.
A typical Forester Court has a number of special committees
specifically designed to fulfill the organization's fraternal and
charitable goals. A Sick Committee looks after sick members, and
is in charge of organizing visits, as well as sending gifts and
cards. The Benevolent Committee investigates all requests for
financial assistance and gives money to those in need. The
Activities Committee is in charge of all entertainment, social,
and fraternal activities.
A Youth Committee promotes junior work and convenes
committees to arrange parties for young members and their
families. A Project Committee studies the need for community
projects and, upon approval of the Court, makes all the necessary
arrangement for presentation of checks and equipment.
All involvement for Court officers and all committee work is
on a volunteer basis.
- 6 -
FRATERNAL ACTS
The IOF sustains a Matching Fund Program in which the
Order's Supreme Court allocates money to each High Court in order
to supplement the funds raised to benefit selected worthy
charities supported by Forester Courts.
In addition, benevolent funds from the Order can be
requested by Courts wishing to provide and supplement emergency
assistance to select members. These funds provide essential help
to individual Foresters and their families in the unfortunate
case of natural disasters and instances of personal loss and
tragedies.
FRATERNAL BENEFITS
Fraternal Benefits offered IOF membership have responded,
over the years, to the growing changes and needs of society.
These benefits include educational scholarships; cancer, TB and
MS grants; financial assistance for orphaned children of members;
a common carrier accidental death benefit; and living
accommodations and maintenance for qualified indigent elderly
members and their spouses. (Exhibit 2.)
- 7 -
There are two Forester Havens in the U.S. which provide
quarters for qualified senior members and their spouses who no
longer have the resources to maintain themselves. Havenites
enjoy carefree living
a private residence, meals, medical
care, clothing, recreational activities, maid service, a friendly
atmosphere, and a feeling of security. The Foresters provide
intermediate and skilled nursing care for every resident. New
units are constructed in advance of projected needs.
The Orphan Benefit program provides monthly grants for the
care and education of junior members and children of members who
are orphaned. For children under five, the programs pays $150 a
month. A child between 5-13 receives $180 a month and children
14-18 receive $210 per month. Under this program children may
also receive up to $12,500 for their college education.
Under the Scholarship Program, 125 renewable scholarships
are awarded annually. A recipient may receive up to $1,000 per
year for a maximum of four years, or until the student earns a
bachelor's degree.
Guaranteed Student Loans are available to IOF members, their
spouses and children. Depending on the amount needed to meet
education costs, up to $2,500 per academic year for undergraduate
work and $5,000 for graduate work may be received.
- 8 -
Surviving dependent children of a deceased member in good
standing may receive college scholarship grants of $1,000 a year
for a maximum of four years.
The Common Carrier Accidental Death Benefit provides a grant
up to $100,000 for a member, $50,000 for a spouse and $25,000 for
a dependent child in the event of accidental death.
Cash Grants to members and dependents are available as
follows:
1. Tuberculosis up to $5,000.
2.
Multiple Sclerosis up to $5,000
3. Cancer up to $1,500.
OVERVIEW OF LODGE ACTIVITIES
The attached Exhibits and materials previously submitted
contain extensive examples of Foresters fraternal and community
activities. Outlined below are samples of these activities.
1957:
O
The Foresters' Polio Benefit program provides money and
assistance to help polio victims learn to walk and
otherwise cope with the disease.
o
The Foresters provide a Tuberculosis Benefit granting
funds to those afflicted with the disease. A
sanatorium located in Saramac Lake, New York is
operated to provide care for members.
- 9 -
IOF Cancer Benefit provides care and treatment for
cancer victims.
IOF Orphan's Benefit provides aid to 2,700 children.
IOF constructs a home in Southern California to provide
care for elderly Foresters.
1977:
The Foresters continue major programs for cancer,
cystic fibrosis, orphans and homes for the elderly.
The Florence Hallum Fund for the Prevention of Child
Abuse is established.
IOF raises money to build a park for the blind and
handicapped in Washington state.
IOF supports autistic welfare efforts and furnishes a
child development center for handicapped children.
IOF conducts a charity drive for the Sutter General
Hospital for dialysis treatment in California.
IOF holds a fund raiser for the Lung Association.
IOF opens a Skilled Nursing Facility at the California
Haven, the Forester home for the elderly. The facility
contains 49 beds, 13 designated for the care of non-
ambulatory patients. The facility has state of the art
equipment for the care of patients.
O
IOF begins construction of a Skilled Nursing Facility
for the Forester Florida Haven.
1987:
IOF opens a fourth Forester Haven to provide living
quarters for elderly Foresters.
IOF members raise $6,000 to help a heart transplant
patient in Massachusetts.
The Forester Haven in California is upgraded.
IOF Merrie Maids celebrate birthdays at the
California Haven with special food and gifts.
IOF produces a film starring George Kennedy to
recruit men to join the Big Brothers program.
Big Brothers/Big Sisters activities are often
tied to Child Abuse Prevention Programs and
- 10 -
local events. Foresters invite little
brothers and sisters to share IOF activities
such as ball games, picnics, social events and
field trips.
IOF's Bowl for Kids Sake raises over $60,000
in Denver alone for Big Brothers/Big Sisters.
To combat the problem of missing children,
IOF's Court Royal in California set up a booth
in a shopping center to offer parents free
fingerprinting or footprinting of their
children. Identifying marks were noted.
Parents were given a lock of hair and a
photograph for safekeeping.
On December 7, 1984, the High Court of
Southern California placed a plaque on the USS
Arizona Memorial in Peal Harbor. It reads:
"The Independent Order of Foresters remember
in Liberty, Benevolence and Concord, the price
paid for us to live free."
IOF's Court Lehigh prepared Christmas dinner
for 150 residents of a senior citizens home in
Pennsylvania.
Classes in cardio-pulmonary resuscitation were
arranged for Foresters by Foresters. CPR
equipment donated by IOF has trained thousands
of instructors, who in turn are training
others to save lives.
In California, an important jurisdiction for
IOF, an awards ceremony was held to honor
citizens for community activities.
Representatives of local governments, fire and
police departments and other civic leaders
attended to show appreciation.
IOF operates 30 Forester Coffee Stops to help
motorists over holiday weekends.
IOF's San Francisco-Golden Gate Court bought
four vans to transport handicapped persons to
and from the San Francisco Recreational
Center.
IOF aids the Lorma Linda University School of
Medicine with a fund-raising drive throughout
Southern California and Hawaii.
- 11 f.
IOF sponsored a Children's Pet Parade in Ohio.
In Massachusetts IOF members constructed a
104-foot long ramp at the home of a 10 year
semicomatose child so she could be transported
more easily for medical treatments.
IOF set up relief centers and made grants to
rebuild property devastated by flooding in
Northern California. Foresters staffed each
center inspecting damage, gathering photos and
filing reports. Similar efforts helped
victims of tornados.
In Erie County, New York, IOF provides
counselling through the self-help program,
Parents Anonymous, which involves parents who
feel they may be abusive. A 24-hour hot line
is based in the home of an IOF member.
The Foresters raised funds nationwide for the
Doreen Trace Brain Center in Massachusetts.
IOF produced the following films and video
tapes to aid in its campaign against child
abuse:
O
"Fragile, Handle With Care" produced by
KTAR-TV in cooperation with The Independent
Order of Foresters, is narrated by Mr. Bill
Cosby. The film shows that mental and
physical abuse of children is an old and
increasing problem. Through reenactment of
case histories, the film explores the
questions of why, prevention, effects on
the child, and legal considerations.
"Victims" was produced by Mr. Church
Wintner for the I.O.F. This award-winning
film is an unrehearsed documentary narrated
by Ms. Christina Crawford and examines the
lasting effects of abuse on children This
appears to be a direct relationship between
some abused children becoming violent
criminals later in life. Personal
interviews with children, parents, doctors,
and convicts give an in-depth look at the
problem.
"The Next Volunteer" was produced by Mr.
Leetate Smith, President of the I.O.F., and
written and directed by Mr. Herb Golden.
- 12 -
This film, narrated by Mr. Ed McMahon,
illustrates the value of the activity of
the volunteer. Actual conversations with
volunteers and group therapy sessions give
insight into the feelings of abusing
parents who are working through their
problems.
O
"One Out of Six" was produced by the New
Image Teen Theater group of San Diego in
conjunction with the I.O.F. and examines
the child abuse issue of incest. This
film, which is based on accounts of actual
victims, stars and award-winning teen actor
group. Designed to educate young people on
the subject, the film attempts to demystify
the issue of incest and opens avenues for
further discussion on the subject.
"There is Hope" focuses on incest treatment
and what happens to families after incest
is reported. It is designed for use with
families in treatment as well as for
general audience, to increase awareness and
to encourage people who have suffered
sexual abuse or perpetrated abuse that with
treatment.
The Foresters also make available the
following booklets on child abuse:
"What Everyone Should Know About Child Abuse"
- English and Spanish
"What Everyone Should Know About Sexual Abuse
of Children" - English and Spanish
"On Parenting" - English and Spanish
"What Everyone Should Know About Disciplining
Your Child" - English only
"About Incest" - English only
"You're In Charge" - English only (coloring
book aimed at 3 to 8 year olds -- used by
school and day-care staffs)
"About Alcohol, Child Abuse and Child Neglect"
- English only
"About Adults Abused As Children" - English only
KNIGHTS OF COLUMBUS
During the period 1965-1985, fraternal expenditures by the
Supreme Council of the Knights of Columbus (the "K of C" or
"Knights") increased 642% as follows:
1965
$ 3,588,623
1975
$ 3,886,411
1985
$ 8,204,527
From 1955-1985, assets grew at a rate of 1;465%
1955
$ 109,581,567
1965
$ 281,228,300
1975
$ 594,880,436
1985
$1,714,947,151
In addition, the Knights annual survey of fraternal activity
as of December 31, 1984 shows that K of C councils and Fourth
Degree Assemblies disbursed $49 million for charitable and
benevolent activities as follows:
Youth activities
$ 3,400,934
Church/community
$ 7,374,452
Donations to the needy, sick,
disabled and handicapped
$13,370,797
Aid to disaster victims
$ 570,603
Donations to welfare organizations,
community projects, scouting, cancer,
heart and other funds
$ 6,007,261
Donations for scholarships, schools
libraries, other educational
purposes
$ 5,811,063
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Estimated value of food, clothing,
etc. contributed by members
$ 3,638,353
Miscellaneous
$ 1,013,288
$49,484,566
Moreover, the Knights performed the following additional
acts of fraternity during 1984:
1,944,920 visits to the sick and bereaved
189,817 blood donors
14,442,413 hours of community service to youth,
hospitals, orphanages, church
1,553,224 hours of service to sick or disabled
members or families
The Knights are an order of Catholic men and their families,
dedicated to promoting the ideas of charity, unity, fraternity
and patriotism. Supporting the Roman Catholic Church to make
certain it remains vigorous and undiminished is one of the
primary missions of the Knights. To counter the ongoing decline
in the number of candidates for the priesthood and religious
life, for example, the Knights provide moral and financial
support to individual seminarians and postulants.
The Knights serve as a principal sponsor of the
International Special Olympics Summer Games, providing financial
support, manpower and on-site support. The Games' Founder,
- 3 -
Eunice Kennedy Shriver said, "I don't think there is any
organization in the country that has given as much in personal
help and in financial support since we started 19 years ago."
From 1955 to 1985 the fraternal and charitable activities of
the Knights have increased both in size and in scope. Among
other things, the Knights:
Created the $10 million "Knights of Columbus
Vicarius Christi" fund, earnings from which are
conveyed annually to the Holy Father for His
personal charitable purposes. In five years this
fund has generated more than $6 million for the
Pope's good works
Bring the Pope to the world at least three times a
year by providing the uplink cost to the global
satellite Intelsat for the televising of papal
ceremonies, especially at Christmas and during Holy
Week -- and the downlink in poor mission
countries
Presented a mobile television production unit to
the Vatican Television Center for the taping,
recording, and transmission of Vatican
ceremonies.
Established the million-dollar Count Enrico
Galeazzi Fund for the Pontifical North American
College for the benefit of the College, U.S. and
Canadian Bishops and its priest-students, the
Father McGivney Fund for the Collegio Pontificio
Filipino and the Our Lady of Guadalupe Fund for the
Pontifical Mexican College
...
Underwrote completely the renovation of the entire
facade of St. Peter's Basilica in Rome, the most
famous church in the world, and the statutes of
Sts. Peter and Paul in St. Peter's Square
Made a $2 million grant for the construction of the
chapel in the new headquarters of the National
Conference of Catholic Bishops dedicated to Mary,
Mother of the Church, and identified as the
"Knights' Chapel" in honor of Bishop Greco; and are
- 4 -
raising $1 million for the Bishop de Laval Fund to
help support the work of the Canadian Conference of
Catholic Bishops
Contributed $250,000 to the National Conference of
Catholic Bishops for the Pope's 1987 pastoral
journey to the United States, and $100,000 to the
program on Catholic education conducted by the
National Catholic Educational Association during
his visit
Erected the Knights Tower and carillon of bells at
the National Shrine of the Immaculate Conception
and the preservation of the Shrine in perpetuity,
and raised a $500,000 memorial fund in honor of
Past Supreme Knight Luke E. Hart to promote Marian
devotion at the Shrine
Provide the entire budget of the National Family
Planning offices of the U.S. and Canadian Bishops,
assist the NFP office of the Mexican Bishops and
donate $150,000 annually, respectively, to the U.S.
and Canadian Pro-Life Activities committees
Underwrote the construction of the Chapel of Sts.
Benedict, Cyril and Methodius, co-patrons of
Europe, and the expansion of the Chapel of Our Lady
of Czestochowa, both in the grottoes of St. Peter's
Basilica, Rome
Created the Father Michael J. McGivney Memorial
Fund for New Initiatives in Catholic Education in
the amount of one million dollars to assure a
broadbased improvement in achieving the goals of
religious education in the United States and
Canada
Sponsor the Pope John XXIII Center's seminars for
the Bishops in the U.S., Canada, Mexico, Puerto
Rico and the Caribbean on the vital topics of
life-death issues
Underwrite, through an annual assessment, the
Order's Catholic Advertising Program which provides
free information on the Catholic faith to
interested inquirers -- 135,000 inquirers and
10,000 enrollees in correspondence courses
annually
Have distributed almost two million special Knights
of Columbus rosaries at the rate of some 10,000 per
month, especially to new members
- 5 -
Support a multi-million dollar Student Loan Program
for members and their children pursuing higher
education, with all seminarians eligible.
...
Provide support for such varied apostolates as the
National Clergy Conference on Alcoholism;
Morality-in-Media; the National Catholic Office for
Persons with Disabilities; the National Catholic
Office for the Deaf; the National Foundation for
Mexican-American Vocations; the National Apostolate
with Mentally Retarded Persons.
Provide $243 million dollars in Church-related
mortgages to Catholic dioceses and institutions at
low interest rates
Renovated St. Mary's Church in New Haven, the
birthplace of the Order and entombed the remains of
the founder, Rev. Michael J. McGivney, therein on
March 29, 1982. Completed the 110-year old
construction plan of the Church by erecting a 179-
foot steeple, including a carillon of three bronze
bells, atop St. Mary's
Support the spiritual welfare of armed services
personnel and their families around the globe
through a $900,000 fund for the Archdiocese for
Military Services.
Sponsor daily Mass for deceased Brother Knights at
St. Mary's Church in New Haven and enable widows of
Knights to receive COLUMBIA magazine each
month
Council Structure
As of June 30, 1985, K of C membership stood at 1,417,020,
an all time high. Members are organized into 8,185 Councils.
The Knights are governed by the Supreme Council, which
consists of the supreme officers, the supreme directors (a 21
member body elected for three year terms by the Supreme Council
- 6 -
at its annual meeting), the past supreme knights, the state
deputies, and delegates duly chosen by 61 separate jurisdictions.
Executive authority is vested in the supreme officers, who are
elected annually by the supreme directors.
Charters establishing a subordinate council are granted upon
completion of a roster of thirty members or applicants for
membership. The presiding officer of the subordinate council is
called the grand knight. There are in addition seventeen council
officers, twelve of whom are elected to their positions annually
by council members, and five of whom are appointed by the grand
knight. The officers appoint and supervise committees which are
charged with council projects. New members are encouraged to
become active in the council by joining one or more committees.
A new member is admitted by the Admission Degree. In time,
he advances to the Formation Degree, and thereafter may become
entitled to wear the emblem of the K of C by entering the
Knighthood Degree. The highest order of membership is the
Patriotic (or Fourth) Degree. The purpose of the Fourth Degree
is to foster the spirit of patriotism. Fourth Degree members
serve as honor guards at civic and religious functions.
A more detailed description entitled "These Men They Call
Knights," is attached as an Exhibit.
- 7 -
Overview of Fraternal and Benevolent Activities
Between 1955 and 1985, the Knights sponsored numerous
programs throughout the world for the benefit of the Church,
K of C members, and the community. Outlined below are samples of
these activities.
1955:
A national campaign to place the words "under God" to the
Pledge of Allegiance.
The Knights of Columbus Foundation - Funds were raised to
support a program for the restoration of historic
documents at the Vatican library.
Anti-Pornography Campaign - A program to oppose
pornographic literature and its effect on children and
their communities.
Italian Welfare Program - The establishment and
maintenance of centers in Italy to provide recreation and
Catholic education to Italian youth.
The K of C correspondence school, offering, at cost,
instruction in english, business, foreign languages, civil
engineering, and various technical fields.
1965
K of C campaign against pornography, whose activity
included the Knights presenting its views in amicus briefs
before the Supreme Court. The anti-pornography campaign,
which began in the 1950's, continues to this day.
Catholic Advertising Program - A campaign begun in 1948 to
publicize the tenets of the Catholic Church throughout the
world.
The K of C deeded land in Rome to the Church on which a
Papal audience hall would be erected.
- 8 -
Scholarship Funds - The K of C awarded scholarships under
the Pro Deo and Pro Patria, the Educational Trust Fund,
and the Catholic University scholarship and Fellowship
programs.
President Lyndon B. Johnson commended the Order to its
"exemplary charitable works, educational endeavors and
worthy civic projects."
1975
The K of C began a new project involving the funding of
satellite transmissions of major Vatican ceremonies
throughout the world, a project which continues to this
day.
Beginning in 1971, the "Surge
With Service" program
encourages local councils to undertake projects of
assistance to Church, communities, and to youth. In 1974,
almost $11 Million and five million man hours were donated
to charitable and benevolent causes. Included were $2.46
Million in donations to needy, sick, disabled and
handicapped people; aid to victims of disasters in the
amount of $212,000; donations to homes for the aged,
hospitals, and youth institutions in the amount of $1.71
Million; donations to civic and welfare projects in the
amount of $2.1 Million; and $1.4 Million devoted to youth
and juvenile works.
The K of C Educational Trust Fund provides a college
education to children of members who were killed or
permanently and totally disabled in World War II, the
Korean War, in Vietnam, or in service with a U.N.
peacekeeping force. During the 1970's this program was
extended to children of members of the Order who are
killed or permanently and totally disabled as a result of
criminal violence while functioning as law enforcement
officers or as full-time fire fighters. These K of C
scholarships include tuition, board and room, books, lab
fees, and other incidental expenses at the Catholic
college of the student's choice.
1974 figures reflect that K of C members made 434,634
visits to the sick and bereaved, contributed 103,339
donations of blood, devoted 5,111,053 hours of community
service to youth, hospitals, orphanages and churches, and
462,903 hours in service to the sick or disabled and their
families.
The K of C established a fund for a program to reverse the
Supreme Court's abortion decision, and to undertake other
right to life activities.
- 9 -
Local councils sponsored sporting, social, patriotic, and
various cultural events.
1985
The K of C created a committee in 1983 for the
"preservation of the historic sites of the Order," such as
St. Mary's Church in New Haven, and the Cardinal Gibbons
Memorial in Washington, D.C.
The "Surge
With Service" program involved over 15
million man hours of community service, 1,944,920 visits
to the sick and bereaved, 1,553,224 hours of service to
sick and disabled members and their families, and blood
donations by 189,817 members, and over $55 Million in
charitable contributions, approximately $39.37 per member.
K of C funds were used to purchase a new radio transmitter
for Radio Veritas in the Phillipines, a radio station
devoted to bringing religious broadcasting to the Far
East.
Numerous community programs were undertaken, such as the
collection of approximately 4,000 used toys by Knights
Council 6244 in Savannah, Missouri for the "Toys for Tots"
Christmas program. At the council home, 425 man-hours
were devoted to cleaning and repairing the toys.
K of C Council 4913 in Valdosta, Georgia brought the
riches of the holiday season to eighteen indigent families
in an "Adopt a Family" program.
K of C councils provided relief for the famine stricken
peoples of Africa. For example, Council 4323 in Blooming
Prairie, Minnesota donated $8,000 to ship approximately
79,200 pounds of donated corn to Africa.
Traditional scholarships, religious, and educational
programs described above continued to form a part of the
K of C's fraternal and benevolent works in 1985.
LUTHERAN BROTHERHOOD
During the period 1955-1985, fraternal expenditures by
Lutheran Brotherhood ("LB") increased 9,538% as follows:
1.955
$
238,181
1965
$
843,918
1975
$
4,569,587
1985
$ 22,956,493
Simultaneously, assets grew by 2,911%:
1955
$ 108,128,506
1965
$ 338,614,111
1975
$ 971,195,880
1985
$3,256,106,327
Since its inception in 1917, the official purpose and object
of Lutheran Brotherhood, expressed in Article I of its Articles
of Incorporation (as amended by the General Convention on May 5,
1979), has been to serve its membership by:
Aiding the Lutheran church bodies, their
institutions and congregations,
Fostering patriotism, loyalty, justice, charity,
and benevolence,
Providing education and encouragement of the arts,
Encouraging industry, saving, thrift, and
development on the part of its members,
Giving aid in the case of poverty, sickness,
accident, or other misfortunes,
Owning or operating homes, hospitals, and
sanatoria,
- 2 -
Furnishing protection and issuing benefit
contracts, and making payments of benefits,
thereon, in case of death or disability by
sickness, accident or old age, and otherwise,
Promoting the general welfare of its members.
The following comparison of Lutheran Brotherhood fraternal
programs over the 30 year period 1957 - 1987 demonstrates that
LB's fraternal commitment has never been stronger:
1957
$350,000 was allocated for fraternal activities. These
funds were used for a variety of programs including
scholarships, Lutheran scouting, and branch projects.
Through branches, LB distributed $66,000 to youth
activities, educational and welfare programs, choirs,
religious conferences, mission support, building and
repair projects and the purchase of church equipment.
LB investments in more than 650 Lutheran church
properties reached $187 million in 1957.
LB distributed $43,600 to 150 scholarship recipients.
1987
LB provided $31 million for fraternal activities.
$3 million went to 11,832 Lutheran congregations.
$1.4 million was distributed to 381 Lutheran schools
through matching gifts programs (LIFT, IMPACT, Primary
Partners). These funds matched 17,970 member gifts.
An additional $1.3 million was given to the institutions
participating in the matching gifts programs.
$3.9 million was distributed to 5,336 fund-raising
projects developed and implemented by LB branches.
- 3 -
$2 million went to 77 Lutheran congregations through the
Church Extension program.
$1.3 million was distributed to 1,096 students
through LB's scholarship programs last year.
FRATERNAL STRUCTURE
LB members govern Lutheran Brotherhood through delegates
elected to a national General Convention. The month to month
activities of the Brotherhood are conducted through 719 branches
throughout the United States.
LB branches bring together three fundamental purposes of the
society:
the unity and joy of service and sharing;
the growing community of Christ's people who
are committed to aiding the Lutheran church, the
home and the nation through fraternal service
activities; and
service to the community and the nation.
Branches address local needs by making their own decisions
about appropriate charitable and fraternal projects, which in
part are backed by LB's financial resources. (Exhibit 1.)
Examples of LB programs which provide funds for branch use are:
- 4 -
LB Branch Operating Funds. LB assists the branch with funds
for postage and mailing expenses, educational seminars, room
rental, food and publicity. The branch decides how the money can
best be used. Part of the funds could be spent on the branch's
own fraternal activities. Part might be contributed charitably
to help resolve the needs of others. Each branch develops its
own procedures and guidelines for allocating LB operating funds.
LB Branch Challenge Fund. LB encourages and assists
branches to undertake service projects otherwise beyond their
financial means. Branches may apply to conduct fund-raising
efforts matched dollar for dollar by LB. Examples of such
projects are: repairing buildings at a Lutheran camp, purchasing
furniture for a children's home, buying new equipment for a
Lutheran high school, and providing labor and resources to
augment environmental and historical preservation projects in
local communities.
LB Disaster Relief. This program encourages branches to
undertake disaster-related service projects by matching branch
fund raising efforts on a two dollar for one dollar basis.
Qualifying projects are those aiding persons within the U.S.
suffering from a one-time natural or medical disaster resulting
- 5 -
in extensive damage, loss, or destruction. Examples include: a
family whose home has been destroyed by fire, victims of a
tornado, an individual unable to pay extensive medical bills.
Friends in Deed. LB will reimburse a branch for materials
and supplies purchased for up to six approved service projects
each year. Examples of such projects include: building picnic
tables for a camp or park, repairing an elderly person's home,
painting school rooms, and building landscape enhancements to
parks and recreational areas.
Care and Share. LB reimburses branches which distribute
items to needy and forgotten recipients in their communities.
Examples of care and share projects include:
Purchasing clothes, distributing them to a needy
family, and visiting with the family.
Purchasing toys, taking them to an orphanage, and
helping the children unwrap them.
Purchasing personal hygiene items, taking them to
a shelter, and visiting with the people who live
there.
Purchasing food, packaging it, and distributing
it to needy families.
- 6 -
AID TO THE LUTHERAN CHURCH
The following LB programs are designed to assist the growth
and sustenance of the Lutheran church and its related
institutions:
Congregational Matching Funds. LB enables Lutheran
congregations to conduct designated appeals or other efforts to
raise funds for projects. The funds raised will be matched by LB
dollar-for-dollar up to a stipulated amount. The amount varies
according to the number of baptized members in each congregation.
Christian Education. LB provides numerous Christian
education materials to enhance Sunday school, confirmation,
Christian day school and Bible classes. Topics include:
"Martin Luther's Seal, "Reformation Window,"
"Palestine in Third Dimension," "The Christmas
Story, "Nativity" "Easter," "Pentecost," and
"Noah's Ark,"
Loans. LB loans money to Lutheran congregations for new
construction, building remodeling and refinancing.
- 7 -
Missions. LB assists national Lutheran church bodies in
establishing and sustaining new mission congregations in America.
By providing program and interest subsidies for newly formed
congregations, LB helps strengthen the growth of the Lutheran
church.
Baptisms. LB provides newly baptized Lutheran infants with
a baptismal medallion to commemorate this holy sacrament.
EDUCATION
LB provides the following extensive programs to further the
education of Lutherans and to strengthen Lutheran educational
institutions:
LB Four Year and Two Year College/Vo-Tech Scholarships.
Available to LB members entering their first year at junior or
senior colleges as well as vocational or technical schools.
LB Member In-College Scholarships. Available to LB members
who are currently undergraduates at a four-year college.
LB Lutheran Senior College Scholarships. Available to
Lutherans entering their first year at a Lutheran senior college.
- 8 -
LB Lutheran Junior College Scholarships. Available to
Lutherans entering their first year at a Lutheran junior college
or Bible school.
LB Lutheran Junior College Graduate Award. Available to
Lutherans who have been accepted to continue their education at a
Lutheran senior college.
LB Seminary Award. Available to Lutheran students preparing
for a full-time church vocation and attending a Lutheran
seminary.
LB Seminary Sabbatical Fellowships. Available to Lutheran
seminary faculty members and administrators.
MD/PhD Scholarships. Available to Lutheran medical students
pursuing a joint medical degree and research oriented degree.
Guaranteed Student Loans. LB offers guaranteed student
loans to members and their dependents.
IMPACT. LB encourages members to provide financial support
to Lutheran colleges and theological seminaries. LB will match
through IMPACT members' gifts of $25-$100 to Lutheran
- 9 -
institutions of higher education. In 1987, LB contributed $1.1
million to Lutheran institutions through IMPACT to match gifts
from 14,434 LB members.
LIFT. LIFT is a similar matching-gift program for Lutheran
senior high schools. In 1987, Lutheran high schools received
$182,000 through the LIFT program.
Primary Partners. Through Primary Partners, LB will match
members' gift of $25-$100 per year to participating Lutheran
pre-schools and elementary schools. In 1987, $145,000 was given
to Lutheran elementary schools, matching gifts from 1,519 LB
members.
LB Foundation Grant Program. The LB Foundation provides
funds to allow recipients to attempt innovative projects beyond
their normal operational resources. LB identifies a select
number of areas for which it will entertain grant proposals and
reviews them on an ongoing basis.
MENNONITE MUTUAL AID ASSOCIATION
During the period 1975-1985, 1/ fraternal expenditures by
the Mennonite Mutual Aid Association ("MMAA") increased 705% as
follows:
1975 $ 185,290
1985 $1,491,564
Simultaneously, assets grew at a rate of 403%:
1975 $ 9,851,461
1985 $49,570,225
MMAA's Mission Statement explains the society's purposes.
Mennonite Mutual Aid is committed to the
biblical teachings of stewardship and mutual aid.
Our ministry in the church is to contribute to
Christian renewal and growth.
Mennonite and related denominations and
conferences give us direction and guidance. We
serve persons, congregations and other groups
within these church bodies.
We seek to inspire and assist caring and
sharing in congregations. We help people provide
for themselves and their families. To meet the
needs of these groups and persons, we offer
education, programs, and services. (See
Exhibit 1.)
MMAA branches support relief activities sponsored by
Mennonite Church agencies. Examples include assisting victims of
natural disaster through the Mennonite Disaster Service and
1/ Information prior to 1975 does not exist.
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volunteering time and contributing funds to the Mennonite Central
Committee for poor and disadvantaged persons throughout the
world.
MMAA conducts educational and religious training programs on
the Mennonite church's history, faith, and discipleship
practices. Examples include a study of the Mennonite experience
during World War II and an internship program to reach unchurched
youth.
FRATERNAL STRUCTURE
MMAA members govern the Association by electing the board of
directors biannually. MMAA's national office organizes branches
to parallel local congregations. The current membership of
61,507 is organized into 562 MMAA branches. The average branch
has 109 members.
MMAA branches must elect a local secretary, whose duties
include keeping a record of branch activities and all branch
correspondence. Other branch officers are elected by the members
as deemed necessary to carry out the activities of the branch.
MMAA branches meet at least monthly. Branch meetings are the
forum at which mutual aid programs are planned. In 1985, MMAA
expended almost $4.5 Million for charitable activities.
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DIRECT MEMBER ASSISTANCE
MMAA provides financial assistance, based on need as
determined by the local Mennonite congregation, to help MMAA
members cope with special needs. (See Exhibits 2 and 3.)
Examples are:
Adoption Expenses. MMAA members may receive assistance with
adoption related expenses, up to the lesser of 80% of such
expenses or $1,500. Covered expenses include attorney fees,
court costs, adoption agency fees, and hospital and doctor
charges.
Burial Expenses. In cases of financial hardship, a grant of
up to $2,000 is made for the costs of a casket, burial plot,
tombstone, flowers, and other related funeral charges.
Catastrophic Aid. MMAA members who suffer financial
hardship because of unpaid medical expenses are entitled to
receive catastrophic aid grants. There is no maximum limit on
the amount of this benefit.
Flexible Premium Aid. Members of low income congregations
are assisted with medical premiums.
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FOCUS. MMAA will match funds raised by MMAA congregations,
up to $1,000 per congregation, for the purpose of assisting
members with unmet emergency financial needs of a nonmedical
nature. For example, MMAA made. a FOCUS grant in December of 1983
to assist a handicapped teenage boy with the installation of an
environmental control center in his home.
Congregational Grants. MMAA provides seed money to start
projects and funds for mutual aid in Mennonite congregations and
communities.
SHALOM. The SHALOM (Sharing Health and Leadership on
Mutuality) program provides grants to students at Mennonite
seminaries to help pay MMAA medical plan costs. SHALOM also
supports seminary projects and programs which embody mutual aid
and stewardship.
Denominational and Inter-Mennonite Grants. These programs
provide start-up funds for projects involving mutual aid sharing
by Mennonite and Mennonite-related organizations. Examples
include a pilot project for nursing help for members within a
congregation, and various film/video projects promoting mutual
assistance.
- 5 -
Church Workers Life Premium Aid. This program assists
church workers living overseas in high-risk areas in paying
insurance premiums.
Special Dependent Adults. For as long as needed MMAA will
pay 100% of health insurance premiums for members who are
mentally or physically unable to earn a living.
Wellness. MMAA's commitment to the well being of its
members through Christian theology is embodied in the Wellness
program, a series of courses providing instruction and
consultation for spiritual, mental, and physical well being with
Jesus Christ's life as a model for wellness. (See Exhibit 4.)
The following comparison provides examples of MMAA fraternal
activities during 1975 and 1985:
1975
During the year 1,975 Catastrophic Aid payments of
$63,992 were made to help 175 individuals in 28
states pay medical bills.
Grants were made to such projects as the Oklahoma
Indian Offender Program, the Peace Research Program,
the Senior Citizens Committee in Kansas, and the
Beatrice Day Care Center.
Funding was made possible for inter-Mennonite
projects such as a study on aging, and a mental
retardation program.
- 6 -
1985:
Branches assisted victims of natural disaster
through the Mennonite Disaster Service.
Branch members contributed funds and volunteer man-
hours to the Mennonite Central Committee to assist
poor and disadvantaged persons in North America and
other parts of the world.
Educational and religious training programs helped
to perpetuate the history, faith, and practices of
the Mennonite Church.
During 1985, 12 Mennonite congregations and
institutions received over $2.5 million in first
mortgage loans to build or renovate structures.
MMAA helped illegal immigrants in Los Angeles obtain
legal status.
MODERN WOODMEN OF AMERICA
From 1955 to 1985, fraternal expenditures by Modern Woodmen
of America increased by 1,254.75% as follows:
1955
$ 469,191
1965
$ 489,135
1975
$1,291,359
1985
$6,356,389
During the same period assets grew by 336.52% as follows:
1955
$194,928,845
1965
$258,848,489
1975
$359,828,629
1985
$850,908,122
The Modern Woodmen's fraternal programs and community
activities are designed to:
Bring together persons of exemplary habits and good
moral character into a Fraternal Benefit Society and
thereby provide for the social, intellectual, moral,
and physical improvement of its members.
Promote fraternal relationships and foster acts of
fraternity, charity, and benevolence by and among
members.
Encourage and strengthen the concept of the
conventional and traditional family unit.
Assist members to live in harmony with their
environment.
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Modern Woodmen has increased fraternal programs steadily to
fulfill its objectives and to respond to member and community
needs. Attached as Exhibits 1-4 are copies of Modern Woodmen
magazine for 1955, 1965, 1975, and 1985. These Exhibits as well
as others enclosed provide a sample of Modern Woodmen's fraternal
and charitable activities since 1955. Today Modern Woodmen
offers an expanded list of fraternal support for members
including Family Helpline, Orphan Benefits, College and
Vocational Scholarships, Newborn Benefits, Medic Alert, and
Fraternal Aid.
The Camp System
Modern Woodmen conduct fraternal and community programs
through "camps". In 1985 there were 1,093 camps dedicating
320,848 hours of volunteer time in acts of fraternal and
benevolent service. (Exhibit No. 5.) Each camp has its own
local governing body. (Exhibit 6, pages 1-5.) A Consul presides
over all camp meetings and calls special meetings. Consul duties
include appointing committees, judging elections, appointing
officers and promoting camp activities. The Adviser fills in for
the Consul and assumes the office of Consul if it becomes vacant.
The camp Secretary presents plans for fraternal and community
programs and is responsible for activity and membership records.
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The Banker acts as the camp's financial officer and pays all
authorized bills, assists the Secretary with financial reports,
and maintains the camp's general funds. The Escort, Watchman and
Sentry serve the camp as directed by the Consul. In some camps,
these three officers comprise the Board of Trustees. The officers
discuss social, community and community programs at regular
monthly meetings.
Social and Community Activities
with Modern Woodmen's financial and managerial assistance,
each camp develops a variety of social and community service
activities. (See Exhibit 6, pages 9-18.) Modern Woodmen
encourages every camp to sponsor a Family Life Activity Program
each year, including dinners and picnics as well as speakers.
Clergymen, family counselors, family court judges, psychiatrists,
social workers, or teachers are invited to talk on family life.
Typical Family Life topics are: "Parent-Child Communications,"
"Discipline with Love," "The Family that Plays Together Stays
Together," and "A Child's Early Years."
Another example is Modern Woodmen's home safety program.
These programs demonstrate to camp members how to minimize fire
hazards, install smoke detectors, and develop a fire escape plan.
(Exhibit 6, page 13.)
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Modern Woodmen encourages local camps to conduct social
programs at nursing homes or shelter care homes, visit children
in local hospitals, plant trees and shrubs in city parks or
around community buildings, clean up community parks, give
holiday food baskets to needy families, and do home maintenance
and repairs for the elderly. (Exhibit 6, page 18.)
A Community Service Recognition Program gives each camp the
opportunity to honor an individual for outstanding community
service. Examples include a special education teacher who
conducts day camps for handicapped children; a doctor who works
with cancer patients; a school guidance counselor; a minister
celebrating the 55th anniversary of his ordination; and a doctor
who organized a community health program. (Exhibit 6, page 16.)
Matching Funds
Modern Woodmen provides matching funds so that each camp may
conduct a successful community project each year. Through this
program a camp can raise money in its own area for specific local
needs with the financial support of Modern Woodmen. (Exhibit 6,
page 17.)
In 1987, Modern Woodmen Matching Fund Projects contributed
1.7 million dollars to benefit local communities. The following
are typical examples:
is
- 5 -
Providing equipment for a Minnsota high
school; installing heating and air-conditioning in
a Tennessee community center; helping to fund a
volunteer fire department in Kentucky; equipping a
senior citizens' retirement home in South Dakota;
equipping a room for children's play therapy and
counseling in an Illinois shelter for abused women
and children; renovating a public swimming pool in
Nebraska; financial assistance to a Kansas family
with a two year old child afflicted with cancer;
upgrading a Vermont library.
Junior Service Clubs and Teen Clubs
Modern Woodmen gives special emphasis to youth. Hundreds of
Junior Service Clubs and Teen Clubs provide children and their
families with monthly social, civic, educational and fraternal
activities intended to combat juvenile delinquency, teach safety,
promote patriotism, encourage environmental concern and stimulate
interest in education. The Junior Service Clubs and Teen Clubs
sponsor civic speaking contests, bicycle safety programs, youth
community parties, and ecology programs. (See Exhibits 7 and 8.)
An overview of youth activities for 1955 and 1965 are attached as
Exhibits 9 and 10.
- 6 -
Modern Woodmen's youth programs encourage children to serve
their community. Awards are presented for the number of hours
dedicated to community service. Examples include providing
wheelchairs and crutches to those in need, and participation in
Modern Woodmen's "Adopt a Grandparent" program.
Family Helpline
Modern Woodmen provides members and their families with a
full time professional counseling program to assist with marital,
legal, health, family, alcohol and drug problems. (See Exhibit
11.) Operation of Family Helpline costs Modern Woodmen
approximately $35,000 per month.
Scholarships
Modern Woodmen awards 48 fraternal scholarships each year.
Thirty six are for college education and the remaining 12 are for
vocational/technical training. The scholarships are renewable
and applications are judged by an independent scholarship
selection committee. As of December 31, 1985 Modern Woodmen had
awarded $1,257,800 in scholarships. (Exhibit 12, page 39.) By
December 31, 1987, Modern Woodmen had awarded $1,597,595 in
scholarships.
- 7 -
Orphan Benefits
Through this benefit a child's guardian receives monthly
payments from Modern Woodmen to assist in the care, maintenance
and education of junior members and minor children of members who
are orphans. Orphans are also eligible for a $12,000 college
scholarship. Through 1985, Modern Woodmen had paid $876,135 in
Orphan Benefits. (Exhibit 12, page 38.) By December 31, 1987
payments had increased to $1,021,325. (Exhibit 13, page 37.)
Fraternal Aid Fund
Modern Woodmen maintains a Fraternal Aid Fund to assist
members who are temporarily in need of financial assistance as a
result of flood, earthquake, tornado, hardship or disability.
(Exhibit 6, page 24.)
New Born Benefits
New Born Benefits are paid to parents of a child that lives
five full days but less than 60 days. The New Born Benefit also
provides new born children with insurance regardless of health.
(Exhibit 6, page 25.)
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Medical Information Service
A Medical Information Service provides members with health
information publications on smoking, cancer, drugs, alcohol, and
other health matters. In 1985 there were 6,318 requests for
Modern Woodmen's medical publications. (Exhibit 12, page 39.)
In 1987 9,366 requests were received. (Exhibit 13, page 39.)
Medic Alert
Modern Woodmen members may register, at no cost, in a Medic
Alert system which provides information on medical conditions
that must be known to physicians or others administering
emergency medical treatment. A participating member receives an
identification bracelet with a registration number and the
member's medical problem engraved on it. Emergency medical
technicians may obtain information on the patient's health
condition by calling the emergency number on the bracelet.
(Exhibit 6, page 23.)
WOODMEN OF THE WORLD
During the period 1955-1985, fraternal expenditures by
Woodmen of the World ("Woodmen" or "WOW") increased 629.60% as
follows:
1955
$ 860,200
1965
$1,620,340
1975
$2,453,923
1985
$6,276,013
Simultaneously, assets grew at a rate of 554.08%:
1955
$ 201,879,992
1965
$ 334,496,306
1975
$ 491,241,547
1985
$1,320,465,232
OBJECTIVES
The Society's objectives are stated in the preamble to its
Constitution:
Woodcraft is to ennoble its membership;
to minister to the afflicted; to relieve
distress; to seek employment for those without
it; to cast a sheltering arm about the
defenseless living; to give honorable burial
to our sacred dead; to so impress the grand
doctrine of the brotherhood of man upon our
membership as to make it an important factor
in our daily lives; to encourage broad,
charitable views; to make us more intelligent
citizens, truer friends, gentler sons and
- 2 -
daughters, more thoughtful brothers and
sisters, more considerate husbands and wives
and more reasonable parents.
It is not an asylum for the indolent or
those without self-esteem. It is for mutual
benefit when misfortune assails us. It is for
substantial aid to our loved ones when we are
gone. It is for the entertainment of our
families and friends in social sessions, thus
more firmly to weld the fraternal bonds which
so pleasantly unite us, and finally it is to
build a progressive and permanent institution,
which shall prove a valiant knight in the
defense of home and country through the coming
ages.
LODGE SYSTEM
The Woodmen accomplish their fraternal, charitable, and
patriotic goals through a network of 3,318 local lodges. The
lodges meet monthly and have an average of 239 members. New
lodges are formed when 20 persons are available for membership.
Twelve members of WOW then petition the National Secretary for a
new charter. Each month WOW members receive the Woodmen Life
Magazine (Exhibit 2).
The officers of the lodge include President, Past President,
Vice President, Secretary, Treasury, Trustees, Escort, Watchman,
Sentry and Musician. All officers are elected except for the
Lodge Secretary who is appointed by the President of the Society.
1/
Exhibit 1, P. iv.
- 3 -
The subordinate bodies of the Society consist of
Jurisdictions, Camps, Courts, Groves, and Youth Lodges. Camps or
Groves are composed of members who have attained the age of
sixteen. Courts are composed of female members who have attained
the age of sixteen years. Youth Lodges are composed of members
of the Society who have not attained the age of sixteen. State
managers supervise local lodge activities.
GOVERNANCE
Local lodges are ultimately responsible for choosing WOW
leaders. The Supreme Governing body is the National Convention.
The National Convention has original and appellate jurisdiction
in all matters pertaining to the Society and its general welfare.
It has the power to enact laws for its own government, the
government and management of the Society in general, and all
subordinate bodies. Delegates to the National Convention are
elected by jurisdictional conventions.
Special powers of the National Convention include: election
of officers and directors of the Society, changes in the
Constitution and Laws, and general oversight of all the Society's
interests. The National Convention elects members of a Board of
Directors. Officers and Trustees are elected by delegates to the
National Convention. Each of the Officers and Trustees also
serves as a Director.
- 4 -
Jurisdictions are intermediate assemblies. Each
jurisdiction is one, or a combination of several, states. The
jurisdictional conventions meet biannually. Delegates are
elected from local lodges within each jurisdiction. The number
of delegates from each lodge is based upon membership.
WOODMEN CARE
The Society's fraternal tenets, exemplified in Woodcraft's
ritualistic ceremonies, teach brotherly love, mutual sympathy and
understanding, and good citizenship. In times of need and
misfortune, fellow Woodmen bring aid, comfort and encouragement
to each other. Local lodges also perform thousands of civic
services in their communities each year. Special fraternal and
social programs provide wholesome entertainment and inspiration
for Woodmen to their families and foster firm, lifelong
friendships.
There are two sides to WOW'S structure -- the Protective and
the Fraternal. Because WOW cares about its membership and its
responsibility in the local community it offers Woodmen Care
benefits to all members and local lodges. These package benefits
enable lodges to extend their own "care" to Woodmen families and
to other individuals and organizations in their communities
(Exhibit 3).
- 5 -
FRATERNAL SERVICE FUND
WOW'S Fraternal Service Fund is designated to be used
specifically in the promotion of fraternal, civic and patriotic
service.
WOW's Executive Vice President manages the Service Fund with
the assistance of national officers appointed by the President.
These individuals comprise the Fraternal Service Fund Committee.
Projects and activities supported by the Fund are approved by
another group of sovereigns called the National Fraternal
Committee. This committee is composed of 12 lay members from
throughout the nation who are appointed by the President for
two-year terms and are among the outstanding Woodmen in the
country.
Various fraternal projects made possible through WOW's
Fraternal Service Fund are sponsored and carried out by local
adult lodges under the direction of WOW state managers. WOW
projects promote good will in local communities. The following
are examples:
U.S. Flags. WOW presents U.S. and religious flags to worthy
organizations such as Scout Troops, 4-H clubs, and schools. WOW
is the largest private purchaser of U.S. flags.
- 6 -
American Patriot's Handbook. WOW provides Patriot's
Handbooks to school libraries, newly naturalized citizens, and
persons studying to become citizens.
Books. WOW provides books with bookplates to libraries in
memory of deceased members. The objectives of WOW are printed on
each bookplate.
Compasses. WOW presents compasses to Boy Scout leaders.
Honor, Conservation and Lifesaver Commendation Awards. WOW
presents honor, conservation and lifesaver commendation awards to
deserving persons.
Mr. Woodmen and Woman of Woodcraft Plaques. WOW presents
plaques in recognition of members most active and helpful to the
lodge.
Lodge President Citations. WOW presents a special citation
to lodge presidents in recognition of fraternal service.
Safe Driver Pins and Recognition Cards. WOW presents pins
and cards to school bus drivers who have driven one or more years
without an accident.
- 7 -
History Awards. WOW presents history awards to outstanding
high school and grade school students in American history. The
awards are placed on display in the student's school.
Permanent Record History Plaque. WOW presents plaques to
schools that participate in the WOW history trophy program to
record the names of trophy winners.
Grave Markers. WOW places grave markers on the graves of
members.
Funeral Banners. WOW provides a funeral banner to signify a
deceased person was a Woodman.
Fraternal Allowance. WOW provides a fraternal allowance to
new adult lodges to assist in implementing fraternal and
charitable programs.
Scrapbook Contests. Local WOW lodges sponsor scrapbook
activities. Contests are held at jurisdictional conventions and
a first place cup is awarded to winners.
Disaster Relief. Qualified members suffering hardship as a
result of hurricanes, storms or floods qualify for Woodmen
disaster relief: Payments for Woodmen families who were victims
of natural disasters totaled $136,194 in 1985.
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Wheel Chair Program. WOW provides wheel chairs, walkers,
canes and crutches to individuals in need.
Matching Funds, Civic and Needy Member Projects. WOW
provides matching funds to local lodges to assist in community
programs. The following projects are part of the WOW's matching
fund and civic activity programs:
Recreational activities for groups of senior citizens
and athletic teams.
Christmas projects of food baskets, small articles of
clothing, and Christmas parties for orphans or needy
children.
Assistance to needy members.
Equipment for rescue squads and volunteer fire
departments.
Equipment for parks and community centers.
State flags for public buildings.
School bus shelters.
Flagpoles at public buildings or on public grounds.
Equipment for medical institutions.
Equipment for handicapped persons.
Furnishings or equipment for orphanages and homes for
the elderly.
Furnishings and equipment for public libraries.
Equipment for schools such as maps, reference books,
laboratory equipment, and various other teaching aids.
Outdoor equipment for the community, such as bulletin
boards, trash receptacles, etc.
Equipment for historical museums.
- 9 -
Lodge Aid. WOW provides funds on a 50/50 matching basis to
improve lodge halls. The Society also provides loans to Woodmen
lodges at 6% interest to enable them to build lodge halls. In
1987, nine lodge halls received $253,000. Outstanding loans as
of December 31, 1987 totaled $2,682,570.
Youth Program. WOW's National Youth Program provides
guidance. and information for year-round youth activities
including a comprehensive summer camping program. WOW has
special youth lodges. Young members are known as Woodmen
Rangers. WOW publishes Timberlines Magazine especially for
Rangers. (Exhibit 4). The goals of the Youth Program are
character development, physical fitness, self determination, and
leadership experience. The WOW youth program provides
opportunities for young people to gain confidence in themselves,
strengthen integrity, develop independence, show thoughtfulness
towards others, and be good citizens. WOW presents awards to
youth members to encourage personal growth.
WOW sponsors free summer camps for active members of its
youth lodges. These camps allow members from many youth lodges to
meet, and to engage in outdoor and craft activities. In 1987,
11,926 youth members attended such camps.
- 10 -
The Society also loans funds to enable the lodges in the
various states, acting jointly, to acquire or construct
facilities for the summer youth camp program. In 1987, two such
loans were granted totaling $400,000 and at the end of 1987, the
unpaid balance on such loans was $2,028,921.
Uniform Rank and Drill Teams. Local lodges encourage
introduction of new members through use of ritualistic ceremonies
and a drill team company.
The Uniform Rank program includes a state competition for
qualified Uniform Rank teams. State competitions are held each
year when there are four or more qualified teams. A Uniform Rank
Company must have 12 members and a captain, plus two alternates
-- a total of fifteen. The Degree Team is the Company plus the
five principal lodge officers. Judges for all state competitions
are assigned by the state manager, and all competition is judged
in accordance with the Society's Official Ritual and Drill
Instructions for Lodges with Drill Teams. (Exhibit 5).
Orphan Benefit. The Woodmen Orphan Benefit Program provides
monthly grants for the care and education of the orphan children
of members. For children under five the program pays $100 a
month. A child between 6-15 receives $125 a month and children
16-18 receive $165 per month. Under this program children may
also receive up to $10,980 for their college education. In 1987
- 11 -
the program served 25 orphans. Since the inception of the
program in 1975, 71 orphans have been assisted at a cost of
$506,415 through 1987.
WOODMEN CARE HEALTH PROGRAM
Health assistance to members and dependents is one of the
major fraternal benefits offered by Woodmen. The Fraternal
Medical Program has shown steady growth over the years. Major
health care benefits are:
Tuberculosis Benefit. The maximum benefit available is
$3,000. Since the beginning of the tuberculosis program in 1923,
7,854 members have been treated and fraternal assistance has
amounted to $6,468,901.68.
Lung Cancer Benefit. The maximum benefit is $1,000. The
program started in 1959. Over 5,500 members have been assisted
and in 1987 WOW paid $429,524.59 for the program.
Brain Tumor Benefit. The maximum benefit is $1,000. Since
1973 Woodmen have assisted 861 brain tumor victims. In 1987 WOW
expended $73,028.17 for this program.
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Leukemia and Hodgkin's Disease Benefit. The maximum benefit
is $1,000. Since 1973 the program has assisted over 800 leukemia
and hodgkin's diseases victims. In 1987 WOW expended $58,900.46
for this program.
Malignant Lymphoma Benefit. The program started on
January 1, 1979. Over 350 lymphoma victims have been assisted.
In 1987 WOW expended $60,672.13 for this program.
Multiple Myeloma Benefit. 131 multiple myeloma patients
have been aided by Woodmen since 1979. In 1987 WOW expended
$22,999.92 for this program.
OVERVIEW OF WOW LODGE ACTIVITIES, 1955-1985
The attached Exhibits and materials submitted to Treasury
contain extensive examples of WOW'S fraternal activities.
Outlined below are samples of these activities over the 30 year
period in question. We have also attached as Exhibit 6 newspaper
clippings containing additional examples of WOW'S charitable,
community and fraternal activities in the years 1985-1988.
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1955
Exhibit 7.
2,392 flags presented to schools, community buildings,
churches, parks, playgrounds, Boy and Girl Scout
Troops, 4-H Clubs, F.A.A. branches, etc.
634 gold medals awarded for proficiency in American
history in high schools.
310 recognition certificates awarded to grade school,
students for proficiency in American history.
1,352 American Patriot's Handbooks given to newly
naturalized citizens, teachers, grade school history
students, etc.
584 Compasses given to Scoutmasters.
482 key ring knives presented to Den Mothers of Cub
Scout Packs.
29 wrist watches furnished for most cooperative boy in
state training schools.
82 Honor Plaques awarded to persons performing
outstanding civic service and acts of heroism.
51 Conservation Plaques presented to persons giving
high order of service in field of conservation.
7,659 Safe Driver Awards presented to worthy school bus
drivers.
2,843 nail clippers presented to men being inducted
into military service.
17 "Woodmen Trees" planted by local Camps.
3 historical markers dedicated:
General John J. Pershing, California
Stephen Russell Mallory, Florida
First Two Free Schools, Virginia
545 "Mr. Woodman of 1954" plaques presented.
29 grave markers erected at unmarked graves.
199 WOW monuments cleaned and straightened when needed.
5 hospital rooms furnished by a local lodge.
1 hospital given laboratory equipment.
8 wheel chairs furnished for community use.
4 hospital beds made available for community use.
2 laryngoscopes given to rescue squad.
1 air-pack donated for fire department.
2 boats and trailer furnished for rescue squads.
1 oxygen tent contributed for community use.
3 community swimming pools constructed.
42 community and recreation centers and city parks
given equipment.
a shetland pony and saddle given to a crippled boy.
Community church and a nursery provided with equipment.
16 Boy Scout and Girl Scout Troops given equipment,
such as tents, cooking facilities, rifle range,
cameras.
30 playgrounds given equipment.
1 school activity bus furnished.
12 high school bands given band equipment and uniforms.
- 14 -
25 athletic teams, Boys' Camps and Boys' Clubs
furnished athletic equipment.
19 unfortunate members were given financial assistance.
families. 20 Christmas programs carried out for underprivileged
1985:
Exhibit 8.
15,715 flags presented to schools, community buildings,
churches, parks.
2,611 trophies awarded for proficiency in American
history in high schools.
2,260 history plaques awarded to grade school students
proficient in American history.
3,699 American Patriot's Handbooks given to newly
naturalized citizens, teachers, libraries, etc.
2,859 compasses given to Scoutmasters.
162 honor plaques presented to persons performing
outstanding civic service.
78 conservation plaques presented to persons giving
high order of service in the field of conservation.
20 grave markers provided for unmarked graves.
156 wheelchairs provided to local lodges for community
use.
77 crutches provided to local lodges for community use.
98 canes provided to local lodges.
72 walkers provided to local lodges for community use.
277 pieces of equipment provided for fire fighters and
rescue squads.
drivers. 9,264 safe-driver pins awarded to worthy school bus
Furnished and equipped 61 community centers.
Assisted and equipped 29 centers for mentally retarded
and handicapped persons.
Provided equipment for 11 medical centers.
Provided equipment for 29 schools.
Equipment given to 29 orphanages and homes for aged.
Provided equipment for 9 centers for senior citizens.
Provided 6 pieces of playground equipment.
Assistance and equipment given to 43 health and welfare
agencies.
Provided 15 scholarships and aid for students.
Conducted 155 Statute of Liberty renovation projects.
Conducted 225 Christmas projects for the unfortunate.
Assisted 49 needy members.
185 lodges received funds for youth camps.
LAW OFFICES
ZUCKERT, SCOUTT, RASENBERGER & JOHNSON
BRAWNER BUILDING
COATES LEAR (1915-1963)
888 SEVENTEENTH STREET, N. W.
EUGENE M. ZUCKERT
OF COUNSEL
JERROLD SCOUTT. JR.
RAYMOND J. RASENBERGER
WASHINGTON, D. C. 20006-3959
LINWOOD HOLTON
THEODORE W. ROSENAK
R. TENNEY JOHNSON
MICHAEL DOWNEY RICE
LAWRENCE C. MERTHAN
TELEPHONE: (202) 298-8660
C. WESTBROOK MURPHY
MARVIN S. LIEBERMAN
FRANK J. COSTELLO
TELECOPIER: (202) 342-0683
EDGAR T. BELLINGER
RALPH L. KISSICK
CABLE: ZSRLAW
JAMES L. DEVALL
JOHN T. STEWART. JR."
WALTER DARNALL VINYARD. JR.
TELEX: 89648
WILLIAM H. CALLAWAY. JR.
RACHEL B. TRINDER
CHARLES J. SIMPSON. JR.
MONIQUE E. YINGLING
RICHARD A. ALLEN
ELENA W. KING
MALCOLM L. BENGE
JAMES A. HARRIS
JAYME 1. RIZZOLO
GIGI B. SOHN'
ANITA MOSNER LARSCHAN
CHRISTA VAN ANH VECCHI"
"NOT ADMITTED IN D.C.
April 3, 1987
Mr. Michael J. Kaufman
Office of Tax Analysis
U.S. Department of the Treasury
Room 4048
15th Street at
Pennsylvania Avenue, N.W.
Washington, D.C. 20220
Dear Mike:
In response to your request I enclose a history of the
unique and specific federal tax exemption for fraternal
beneficiary societies as well as a complete set of all relevant
source documents. We hope this will be helpful as Treasury
prepares to study fraternal beneficiary societies in accordance
with the requirement of the Tax Reform Act of 1986.
We appreciate your courtesy and cooperativeness. I am
available at any time to answer questions or to provide you with
any further information.
With best personal regards,
Sincerely Water yours,
WDV
Enclosure
HISTORY OF THE UNIQUE AND SPECIFIC FEDERAL TAX
EXEMPTION FOR FRATERNAL BENEFICIARY SOCIETIES
Walter D. Vinyard, Jr.
James A. Harris
Evan M. Migdail
Zuckert, Scoutt, Rasenberger s
Johnson
888 Seventeenth Street, N.W.
Washington, D.C. 20006
April 3, 1987
ZUCKERT. SCOUTT. RASENBERGER & JOHNSON
HISTORY OF THE UNIQUE AND SPECIFIC FEDERAL TAX
EXEMPTION FOR FRATERNAL BENEFICIARY SOCIETIES
TABLE OF CONTENTS
I. BACKGROUND
i
A. What is a fraternal beneficiary society?
1
B.
A specific federal tax exemption for
fraternals has existed virtually without
change for 93 years
2
1.
Statutory provisions
2
2.
Legislative history
5
3.
Income tax regulations
7
4.
Cases and rulings
8
a.
Lodge system
8
b. Insurance
10
C.
Membership
11
d. Permissible forms of benefits
14
II. THE FRATERNAL EXEMPTION SHOULD BE RETAINED
18
A.
The requirements of present law for
exemption as a fraternal are adequate
18
B.
Fraternals are unique
19
C.
Fraternals continue to carry out their
historic exempt purposes
2:
D.
Tax exemption does not give fraternals
an unfair competitive advantage
21
- i -
ZUCKERT. SCOUTT, RASENBERGER & JOHNSON
ATTACHMENTS
A
Tariff Tax Act of 1894
B
Pollock V. Farmers' Loan and Trust Co., 158 U.S. 601 (1895)
C
Tariff Act of 1909
D
Income Tax Act of 1913
E
Revenue Act of 1916
F
Revenue Act of 1918
G
Revenue Act of 1921
H
Revenue Act of 1924
I
Revenue Act of 1928
J
Revenue Act of 1932
K
Revenue Act of 1934
L
Revenue Act of 1936
M
Internal Revenue Code of 1939
N
Internal Revenue Code of 1954
O
Internal Revenue Code of 1986
P
H. Rep. No. 350, 67th Cong., 1st Sess. 13 (1921)
Q
H. Conf. Rep. No. 486, 67th Cong., 1st Sess. 32 (1921)
R
44 Cong. Rec. at 3937-38 (June 29, 1909)
S
44 Cong. Rec. at 3981 (June 30, 1909)
T
44 Cong. Rec. at 4063 (July 2, 1909)
U
Regulations 33, Art. 68 (1916 and 1917 Acts)
V
Income Tax Reg. § 1.501 (c) (8)-1 (a)
- ii -
ZUCKERT. SCOUTT., RASENBERGER & JOHNSON
W
Rev. Rul. 55-495, 1955-2 C.B. 259
X
Rev. Rul. 63-190, 1963-2 C.B. 212
Y
Western Funeral Benefit Association V. Hellmich, 2 F.2d 367
(E.D. Mo. 1924)
Z
Fraternal Order of Civitans V. Commissioner, 19 T.C. 240
(1952)
AA G.C.M 34607 (September 13, 1971)
BB O.D. 690, 3 C.B. 236 (1920)
CC I.T. 1516, I-2 C.B. 180 (1922)
DD Rev. Rul. 73-165, 1973-1 C.B. 224
EE Polish Army Veterans Post 247 V. Commissioner, 24 T.C. 891
(1955), aff'd, 236 F.2d 509 (3rd Cir. 1956)
FF Rev. Rul. 64-194, 1964-2 C.B. 149
GG Commercial Travelers Life and Accident Association V.
Rodway, 235 Fed. 370 (N.D. Ohio 1913)
HH National Union V. Marlow, 74 Fed. 775 (8th Cir. 1896)
II Philadelphia and Reading Relief Association V. Commissioner,
4 B.T.A. 713 (1926)
JJ Hip Sing Association V. Commissioner, T.C. Memo 82-203
(1982)
KK GCM 38192 (December 7, 1979)
LL Rev. Rul. 84-49, 1984-1 C.B. 134
MM G.C.M. 38312 (March 20, 1980)
NN G.C.M. 39575 (November 18, 1986)
00 Grange Insurance Association of California V. Commissioner.
37 T.C. 582 (1961), rev'g, 317 F.2d 222 (9th Cir. 1963)
PP G.C.M. 35639 (January 28, 1974)
- iii -
ZUCKERT. SCOUTT. RASENBERGER & JOHNSON
HISTORY OF THE
UNIQUE AND SPECIFIC
FEDERAL TAX EXEMPTION
FOR FRATERNAL BENEFICIARY SOCIETIES
I. BACKGROUND
A. What is a fraternal beneficiary society?
A fraternal beneficiary society ("fraternal") is a non-
profit mutual aid organization which: (1) insures members and
their families against death, disease and disability, and (2)
maintains an active lodge system.
The lodge system constitutes one of the most powerful forces
for good in the United States today. In recognition of this, IWC
large fraternals were awarded the President's Volunteer Action
Award by President Reagan in 1985 and 1986 for mobilization c 5
volunteers.
The mutual aid concept encompasses both the insuring of
members and their families as well as the volunteer, social,
religious, patriotic, educational, charitable and benevolent
activities of 43,491 lodges throughout the nation. Frequently
lodge members reach out to help other people in their communities
when they are in need. Fraternal lodges also help address
general community problems such as drug abuse. During 1985
ZUCKERT. SCOUTT, RÄSENBERGER & JOHNSON
10,000,000 lodge members in the United States devoted 26,834,387
volunteer hours in the performance of 6,953,095 acts of fraternal
service.
Fraternal benefit societies maintain and support orphanages,
homes for the aged, and other humanitarian institutions. They
provide welfare services for the destitute and indigent. They
give material and financial assistance to the stricken and
homeless at times of disaster. They provide the volunteer
support to help many community charitable projects succeed. They
work directly with the mentally retarded, the blind, and the
handicapped. During 1985 fraternals expended $242,438,746.00 to
maintain the lodge system and its many volunteer, charitable,
educational, patriotic and religious activities.
B. A specific federal tax exemption for fraternals
has existed virtually without change for 93 years
1. Statutory provisions
A specific federal tax exemption limited solely to
fraternals has appeared in every federal income tax law and
Internal Revenue Code enacted since the Tariff Tax Act of 1894.-
That statute imposed a two percent tax upon the net income of
1/
28 Stat. 509 (1894) See Attachment A. The Tariff Act of
1894 was ruled unconstitutional in Pollock V. Farmers' Loan and
Trust Co., 158 U.S. 601 (1895), Attachment B.
- 2 -
ZUCKERT. SCOUTT. RASENBERGER & JOHNSON
"
marine, life, and other insurance companies
and
all other corporations, companies, or associations doing business
for profit in the United States, no matter how created and
organized
"2/ The 1894 law included the following specific
exemption for:
[F] raternal beneficiary societies, orders, or
associations operating under the lodge system and
providing for the payment of life, sick, accident,
and other benefits to the members of such
societies, orders, or associations and dependents
of such members.
This exemption was carried forward without change into the
Tariff Act of 1909.4/ Congress incorporated the exemption into
the Income Tax Act of 1913 with a minor change extending the
exemption to cover companies that exclusively provide insurance
to members of a fraternal organization that operates under a
lodge system but that do not themselves operate under the lodge
system. The exemption was incorporated in the Revenue Act of
1916 with one modification, a change from the language "and other
benefits" to "or other benefits." 6/
2/ Id., S 32.
3/ Ibid.
4/ 36 Stat. 11, 113, Attachment C.
5/ 38 Stat. 114, 172, Attachment D.
6/ 39 Stat. 756, 766, Attachment E.
- 3 -
ZUCKERT. SCOUTT. RASENBERGER & OHNSON
Since 1916, the exemption has been reenacted by Congress
without significant change. The current language appears in
§ 501 (c) (8) of the Internal Revenue Code of 1986 and provides
exemption for:
Fraternal beneficiary societies, orders, or
associations-
(A) operating under the lodge system or for the
exclusive benefit of the members of a fraternity
itself operating under the lodge system, and
(B) providing for the payment of life, sick,
accident, or other benefits to the members of such
society, order, or association, or their
dependents. 8/
Congress has always made the provision of insurance to
members as a requirement for exemption as a fraternal. In its
version of the bill that became the Revenue Act of 1921,9/ the
House proposed to drop the insurance requirement for
fraternals. 10/ The Senate amendment to which the House receded,
7/ Revenue Act of 1918, 40 Stat. 1057, 1076 (Attachment F);
Revenue Act of 1921, 42 Stat. 227, 253 (Attachment G); Revenue
Act of 1924, 43 Stat. 253, 282 (Attachment H) ; Revenue Act of
1928, 45 Stat 791, 812 (Attachment I); Revenue Act of 1932, 47
Stat. 169, 193 (Attachment J) : Revenue Act of 1934, 48 Stat. 680,
700 (Attachment K); Revenue Act of 1936, 49 Stat. 1648, 1673-74
(Attachment L); Internal Revenue Code of 1939, Sec. 101(3), 53
Stat. (Part 1) 1, 33 (Attachment M); Internal Revenue Code of
1954, Sec. 501(c)(8), 68A Stat. 3, 163-164 (Attachment N)
8/ Internal Revenue Code § 501 (c) (8) (hereafter "Code"),
Attachment O.
9/ 42 Stat. 227, Attachment G.
10/ H. Rep. No. 350, 67th Cong., 1st Sess. 13 (1921),
Attachment P.
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ZUCKERT. SCOUTT. RASENBERGER & JOHNSON
"restore[ [d] the language of existing law omitted from the House
bill, granting exemption of such societies
only if they
provide for the payment of benefits to the members of such
societies or their dependents. "11/
2. Legislative history
Legislative history pertaining to the fraternal exemption is
meager because its need has never been questioned.
There is no surviving legislative history of the 1894 Act
other than the statute itself. On its face, however, the statute
is unambiguous. Congress taxed "for profit" life and nonlife
insurance companies no matter how created or organized, but
specifically exempted fraternals from tax. The fraternal
exemption covered the provision of "life, sick, accident and
other benefits" to members and dependents.
In 1909 Congress debated whether application of the proposed
corporate income tax to "every corporation, joint-stock company,
or association, organized for profit and having capital stock
represented by shares, and every insurance company, how or
hereafter organized under the laws of the United States or of any
State or Territory of the United States" would subject fraternals
to tax. 12/ This floor debate preceded amendment of the bill =
11/ H. Conf. Rep. No. 486, 67th Cong., 1st Sess. 32 (1921),
Attachment Q.
12/ See, 44 Cong. Rec. at 3937-3938 (June 29, 1909),
Attachment R.
- 5 -
ZUCKERT. SCOUTT. RASENBERGER & JOHNSON
include an express exemption for fraternals.
The Senators who debated the issue were concerned that
without an express exemption the language quoted above would tax
fraternals as insurers. Senator McCumber took the view the tax
would not cover fraternals, because it applied only to
corporations "organized for profit and having capital stock
represented by shares. "13/ Senator Cummins pointed out that the
language applied the tax without limitation to "all insurance
companies. "14/
The debate was inconclusive over whether fraternals would be
taxed as insurers without an exemption. Senator Flint opined
that fraternals were not subject to tax because "insurance is a
mere incident to the purpose of the organization. 15/ This point
of view, however, did not prevail. Senator Cummins believed the
appellation "insurance companies" could include fraternals
without a specific exemption:
I could mention a hundred in our State alone, without any
capital stock, that are as purely mutual and fraternal as
the Order of Railway Conductors or the Modern Woodmen. You
will find when we have gone into this subject that the
appellation "insurance companies" will cover a very great
number of organizations engaged in this business. 16/
13/ Id. at 3937.
14/ Ibid.
15/ Ibid.
16/ Id. at 3938.
- 6 -
ZUCKERT. SCOUTT. RASENBERGER & JOHNSON
In further debate the next day, Senator Cummins reiterated "I
have no doubt the Modern Woodmen of American would be held to be
an insurance company. 17/ To prevent this result, the Senate
adopted an amendment exempting fraternals two days later. 18/
This legislative history demonstrates that Congress
recognized the importance and uniqueness of fraternal insurance
in 1909. Congress exempted fraternals specifically SO they would
not be taxable as insurance companies. The statutory exemption
has always required that a fraternal insure its members.
3. Income tax regulations
Income Tax Regulations pertaining to the fraternal exemption
have focused on internal structure. The original regulations
provided that fraternals must be organized under a charter, have
properly elected officers, operate with an adopted ritual or
ceremony and hold meetings at stated intervals. 19/
Current regulations contain language virtually unchanged
from the regulations promulgated under the Revenue Act of 1918:
A fraternal beneficiary society is exempt from tax
only if operated under the "lodge system" or for
the exclusive benefit of the members so operating.
"Operating under the lodge system" means carrying
on its activities under a form of organization that
comprises local branches, chartered by a parent
organization and largely self-governing, called
lodges, chapters or the like. In order to be
17/ 44 Cong. Reg. at 3981 (June 30, 1909), Attachment S.
18/ 44 Cong. Rec. at 4063 (July 2, 1909), Attachment T.
19/ Regulations 33, Art. 68 (1916 and 1917 Acts), Attachment U.
- 7 -
ZUCKERT. SCOUTT. RASENBERGER & JOHNSON
exempt it is also necessary that the society have
an established system for the payment to its
members or their dependents of life, sick,
accident, or other benefits. 20/
4. Cases and rulings
The courts and the Internal Revenue Service have strictly
enforced the statutory requirements granting tax exemption to
fraternals. These requirements are discussed below.
a. Lodge system
The federal exemption has always required fraternals to be
organized under the "lodge system." A lodge system is a
structure in which there are local branches, chartered by a
parent organization, and governed by a representative form of
government. It is insufficient for an organization to have only
one lodge. 21/ Obviously, a fraternal with no lodges would not be
exempt. 22/
The requirement of an active lodge system prevents 501 (c) (8)
from being utilized as a tax shelter. During 1985 member
societies of the National Fraternal Congress of America expended
$242,438,746.00 in maintaining their lodge systems and in
carrying out fraternal programs. Many types of taxable entities
20/ Income Tax Reg. § 1.501 (c) (8) (a), Attachment V.
21/ Rev. Rul. 55-495, 1955-2 C.B. 259, Attachment W.
22/ Rev. Rul. 63-190, 1963-2 C.B. 212, Attachment X.
- 8 -
ZUCKERT. SCOUTT, RASENBERGER & JOHNSON
pay less annually in actual taxes to the U.S. Treasury than
fraternals expend to assist thousands of local communities
through the lodge system.
In an early case denying exemption for lack of a lodge
system, the court stated --
By the "lodge system" is generally understood
an organization which holds regular meetings
at a designated place, adopts a
representative form of government, and
performs its work according to a ritual. 23/
The evidence in the case revealed that the organization was run
like a business corporation and not like a fraternal. Its
purpose was to sell insurance to lodge members and to members of
other associations. The organization held a meeting every three
years at which delegates representing the local lodges were.
allowed to attend. The organization's business was run by a
board of directors, which consisted of its president, a
treasurer, a secretary, two members OE its audit committee and
three of its members.
A lodge system must be "active" i.e., a society's fraternal
and benevolent purposes must be manifested in tangible acts. 24/
23/ Western Funeral Benefit Association V. Hellmich, 2 F.2d 367,
369 (E.D. Mo. 1924), Attachment Y.
24/ Fraternal Order of Civitans V. Commissioner, 19 T.C. 240
(1952), Attachment Z.
- 9 -
ZUCKERT. SCOUTT, RASENBERGER & JOHNSON
Members may also participate in society-sponsored fraternal,
charitable and public service activities as well as through lodge
membership meetings and social functions. 25/
Fraternals are governed from the bottom up. Members
vigorously exercise the power to elect leaders of the individual
lodges as well as the national fraternal leadership. Members
also have the power to change the terms of their own fraternal
insurance contracts by amending the society's by-laws.
b. Insurance
Fraternals have always been required to provide insurance
benefits to members to qualify for the federal tax exemption.
Although the Service demonstrated early confusion about fraternal
insurance, 26/ it shortly thereafter restated the basic two-part
test for exemption:
[A] society in order to be exempt must meet
two tests:
(1) it must be operated under the lodge
system, or for the exclusive benefit of a
society so operating, and (2) it must have an
established system for the payment of life,
sick, accident, or other benefits to its
members or their dependents. Nowhere does
the statute or the regulation provide that
25/ See G.C.M. 34607 (September 13, 1971), Attachment AA.
26/ See, O.D. 690, 3 C.B. 236 (1920) (Attachment BB), revoked by
I.T. 1516, I-2 C.3. 180 (1922) (Attachment CC).
- 10 -
ZUCKERT. SCOUTT. RASENBERGER & JOHNSON
one of these features predominate. The only
requirement is that both of these features
shall be present. 27/ (Emphasis added.)
The Service reaffirmed this position in Rev. Rul. 73-165, 1973-1
C.B. 224. (Attachment DD)
The Tax Court has held the statutory requirement that the
organization qualifying for exemption provide "for the payment of
life, sick, accident, or other benefits to the members of such
society. " would not be satisfied if benefits were provided to
only one limited class of members. 28/ The Service, however, has
permitted an organization to have two classes of membership,
where one class was not entitled to receive benefits. 29/
C. Membership
A'society will not be tax-exempt if it does nothing more
than insure members. To qualify an organization must also be
fraternal - its members must share a common bond. 30/ The class.:
definition was formulated by the Eighth Circuit Court of Appeal
in 1896:
27/ I.T. 1516, supra.
28/ Polish Army Veterans Post 147 V. Commissioner, 24 T.C. 891
(1955), aff'd, 236 F.2d 509 (3rd Cir. 1956), Attachment EE.
29/ Rev. Rul. 64-194, 1964-2 C.B. 149, Attachment FF.
30/ See, Commercial Travelers Life and Accident Association %.
Rodway, 235 Fed. 370 (N.D. Ohio 1913) (Attachment GG) (exemption
denied to association that had no fraternal features and was not
organized according to the lodge system).
- 11 -
ZUCKERT. SCOUTT, RASENBERGER & JOHNSON
We must accordingly assume that the words
"fraternal-beneficial" were used in their
ordinary sense, -- to designate an
association or society that is engaged in
some work that is of a fraternal and
beneficial character. According to this
view, a fraternal-beneficial society, within
the purview of the Missouri statute, would be
one whose members have adopted the same, or a
very similar, calling, avocation, or
profession, or who are working in unison 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. It is a well-known fact
that there are at the present time many
voluntary or incorporated societies which are
made up exclusively of persons who are
engaged in the same avocation. As a general
rule such associations have been formed for
the purpose of promoting the social, moral,
and intellectual welfare of the members of
such associations, and their families, as
well as for advancing their interests in
other ways and in other respects.
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. Such associations may well be
described, in the language of the statute, as
"organizations formed for
fraternal-
beneficial purposes. We think,
therefore, that the legislature
declared, in effect, or intended to SO
declare, that when a certain number of
persons, among whom some natural bond of
sympathy or interest existed, should form an
- 12 -
ZUCKERT. SCOUTT, RASENBERGER & JOHNSON
association for self-improvement, or for the
purpose of aiding one another and
strengthening the bond of union, such
association might be consolidated into a
corporation, and incidentally, to further the
ends of creation, might provide for the
relief of members and their families, in case
of sickness or death, by levying assessments
and issuing benefit certificates. "31,
[Emphasis added. 1
The Board of Tax Appeals denied tax exemption to an
association organized to manage a relief fund for the payment of
sickness, accident, and death benefits to members on similar
grounds, namely that there were no distinctively fraternal
objects unifying the members. 32/ The court said of the
organization that --
It is entirely without any social
features.
[N]one of these [members]
look to the petitioner for any betterment in
social and laboring conditions. There is no
fraternal object which moves them to seek
membership in the Association, but rather the
motive is mercenary. The petitioner has
neither lodges, rituals, ceremonial, or
regalia; and it owes no allegiance to any
other authority or jurisdiction. It is not a
"fraternal beneficiary association" operating
under the lodge system, within the meaning of
Section 231(3) of the Revenue Act of 1918,
and, therefore, is not entitled to exemption
under the provisions of that section. 337
31/ National Union V. Marlow, 74 Fed. 775, 778 (8th Cir. 1896),
Attachment HH.
32/ Philadelphia and Reading Relief Association V. Commissioner,
4 B.T.A. 713 (1926), Attachment II.
33/ Philadelphia and Reading Relief Association, 4 B.T.A. at
726.
- 13 -
ZUCKERT. SCOUTT. RASENBERGER & JOHNSON
The mere fact of membership in the organization does not of
itself create the fraternal common bond. 34/ A "fraternal"
organization must not only recite its fraternal purposes in its
governing documents, but it also must actually engage in
activities to implement its purpose. 35/
In many cases, the fraternal purpose will be to better the
quality of life of the organizations' own members. For example,
the Hip Sing Association was formed and operated to conduct
social and religious activities at which English could be studied
as a means of preparing Chinese-Americans to obtain employment,
and generally to improve their social, moral, and intellectual
welfare. 36/
d. Permissible forms of benefits
Fraternals are required to offer insurance to their members
to be eligible for federal tax exemption. In addition to
insurance, fraternals may offer "other benefits."
34/ See, Polish Army Veterans Post 147 V. Commissioner, supra,
Attachment EE.
35/ Fraternal Order of Civitans V. Commissioner, 19 T.C. 240
(1952), Attachment z.
36/ Hip Sing Association V. Commissioner, T.C. Memo 82-203
(1982). (Attachment JJ) (Exemption was recognized as a section
501 (c) (10) fraternal order rather than a section 501 (c) (8)
fraternal beneficiary society due to the absence of a systematic
method for provision of life and other benefits.)
- 14 -
ZUCKERT. SCOUTT. RASENBERGER & JOHNSON
The Service has analyzed the term "other benefits" with
reference to the historical development of insurance in the
United States. Finding that life, sick and accident benefits
were commonly available at the turn of the century, the Service
has noted that the framers of the statute did not intend the
language to be limiting:
The historical development of life, accident,
and health insurance discloses that in 1909
when Congress included life, sick, and
accident benefits as those permitted to be
paid by an exempt fraternal beneficiary
society, these were also the only benefits
then commonly payable with respect to an
individual from commercial insurers. The
number and nature of risks against which an
individual may insure have greatly expanded
since that time. Given the state of the
insurance industry early in the century,
however, we are hard pressed to identify
benefits Congress might have intended to
exclude by limiting payments to "life, sick,
accident and other benefits." Arguably, in
1909, a "limitation" to life, sick, accident
and other benefits was not much of a
limitation at all. Accordingly, we believe
the term "other benefits" should be construed
liberally. This does not mean, however, that
a fraternal beneficiary society should be
able to insure its members against any risk
for which commercial insurance might now be
available; the application of the rule of
ejusdem generis requires that "other
benefits" be limited to benefits that are of
like kind and character to "life, sick, and
accident benefits. "37/
37/ G.C.M. 38192 (December 7, 1979) (footnotes and footnote
references omitted). (Attachment KK)
- 15 -
zuckert. SCOUTT. RASENBERGER & JOHNSON
The Service has taken the position that "other benefits"
must be types that insure against personal bodily injury or the
loss of earning power. 38/ Under this principle, health benefits
are permissible to the extent they reimburse the cost of hospital
care and the loss of income due to sickness. 39/ The operation of
an orphanage for the surviving children of deceased members is
permissible because the orphanages provide a service similar to
life insurance, i.e., provision for children is a form of
financial security. 40/
Legal defense benefits are permissible fraternal benefits to
the extent they provide protection against lawsuits that threaten
the risk of loss of earning power. 41/ In addition, annuities are
permissible benefits because they protect against the risk of
outliving one's earning power and accumulated savings. 42/
The Service and the Tax Court disagree with the Ninth
Circuit Court of Appeals as to whether fraternals may offer
property and casualty insurance. The Ninth Circuit ruled that
the term "accident" is a trade term in the insurance industry
38/ See, G.C.M. 38192, supra. (December 7, 1979).
39/ Ibid.
40/ Rev. Rul. 84-49, 1984-1 C.B. 134, Attachment LL.
41/ See, G.C.M. 38312 (March 20, 1980), Attachment MM.
42/ See, G.C.M. 39575 (November 18, 1986), Attachment NN.
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ZUCKERT. SCOUTT: RASENBERGER & JOHNSON
referring to accidents to property as well as to persons. 43/ The
Service's position has been that the word "accident" is limited
to accidents to persons. 44/
43/ Grange Insurance Association of California V. Commissioner,
317 F.2d 222 (9th Cir. 1963), rev'g, 37 T.C. 582 (1961),
Attachment 00.
44/ See, G.C.M. 35639 (January 28, 1974), Attachment PP.
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ZUCKERT, SCOUTT, RASENBERGER & JOHNSON
II. THE FRATERNAL EXEMPTION SHOULD BE RETAINED
A. The requirements of present law for
exemption as a fraternal are adequate
The Service and the Courts have been vigilant to assure
that unqualified organizations do not achieve exemption as
fraternals. The National Fraternal Congress of America strongly
supports increased funding for the Internal Revenue Service to
maintain and increase the size of its highly qualified audit
staff to prevent any possible misuse of the existing fraternal
exemption.
Each of the requirements for exemption as discussed above
has been at issue in a major case or ruling. Organizations have
been denied recognition as fraternals for lack of an active lodge
system, lack of a fraternal common bond, failure to provide
adequate member benefits, failure to engage in fraternal
activities, failure to qualify under state law as not for profit,
and failure to provide proper benefits.
These cases and rulings establish distinct and enforceable
guidelines for qualification as a fraternal. The Service's
record in the administration of these rules has been exemplary.
Recently, for example, Service auditors have raised a variety of
issues in connection with the type of benefits fraternals may
provide. These issues have been resolved by the National Office
on a case by case basis. In short, the present requirements for
exemption are meaningful and are strictly enforced in practice.
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ZUCKERT. SCOUTT, RASENBERGER & JOHNSON
B. Fraternals are unique
The major analytical flaw in recent inquiries about the
tax-exempt status of fraternals has been the attempt to analogize
fraternals to other types of tax-exempt or taxable organizations.
A fraternal bears some resemblance to an insurance company, a
membership club, an educational organization, and a public
charity. A fraternal, however, is none of these. Fraternals are
unique and must be judged on their own merits rather than by
misplaced comparisons.
Fraternals are member-directed organizations for mutual aid.
Insurance is an important element of this mutual aid. Fraternal
and benevolent programs also reflect the common bond of
fraternalism. While the stand-alone effect of a single lodge
program such as financial assistance for a disabled member,
transportation for the elderly, remodelling a parish church,
operation of a youth camp, etc., may be relatively small, the
cumulative impact of millions of such activities is enormous in
American society. Tax exemption makes this possible.
Fraternal volunteer programs extend to the public at large
in communities where lodges are located. Local lodge members
actively support community benevolent and charitable
organizations. Lodges themselves initiate and actively
participate in numerous acts of community service. Lodges also
regularly participate in programs initiated and funded by the
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ZUCKERT, SCOUTT. RASENBERGER & JOHNSON
national fraternal organization. Viewed in the aggregate, the
overall community impact of fraternal volunteers cannot be
underestimated.
The key to fraternalism is the lodge system where authority
and responsibility flow from the bottom upwards. Each lodge is
self-governing. The lodge system, however, is expensive to
maintain, support and nurture. This is the primary role of the
national organizations, which provide extensive financial,
personnel and program assistance to local lodges. National
organizations often initiate and fund fraternal programs to
benefit members and their communities. Seed money and grants
from national organizations generate additional contributions at
the local level when volunteers implement the program. One tax-
exempt dollar from the national organization can produce multiple
returns at the local lodge level.
During 1985 member societies of the National Fraternal
Congress of America expended $242,438,746.00 to maintain the
fraternal system. Of this amount $10,216,878.00 was devoted :0
charity; $11,348,642.00 went to educational programs;
$14,556,610.00 was spent on religious activities; $44,271,143.00
was allocated for lodge benevolence; and $81,259,153.00 went to
support local lodge activities. Tax-exemption makes this
possible.
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ZUCKERT. SCOUTT, RASENBERGER & JOHNSON
No other organization, exempt or taxable, has anything in
form or function which duplicates the fraternal system. Any
meaningful study of fraternals must focus on the lodge system,
including the public benefits from mutual aid and the private
costs to fraternals of maintaining the lodge system.
C. Fraternals continue to carry out their
historic exempt purposes
Fraternals have remained faithful to those historic exempt
purposes upon which their exemption was based. They have not
used earnings to acquire commercial businesses. State laws
forbid fraternals from generally selling insurance to nonmembers,
thereby precluding fraternals from competing for commercial
insurance business even if they desired to do SO. Fraternal
earnings have remained dedicated for fraternal purposes --
required insurance reserves, maintenance of the lodge system, and
fraternal, benevolent and charitable programs.
D. Tax exemption does not give fraternals
an unfair competitive advantage
The idea of fraternals competing with commercial insurers
for "customers" is untenable. A fraternal may provide insurance
only to persons who are members or eligible for membership.
Membership is based on religion, ethnic origin, vocation or some
other common bond independent of a desire for insurance coverage.
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ZUCKERT, SCOUTT, RASENBERGER & JOHNSON
If tax exemption allowed fraternals to compete unfairly
against commercial insurers, one would expect fraternals to have
gained business at the expense of commercial insurers. The truth
of the matter is just the opposite. Since the turn of the
century, the fraternal share of total insurance in force has
decreased steadily. Today fraternal insurance accounts for less
than 1.4 percent of the total life insurance in force in the
United States.
Fraternals cannot use their tax exemption for "competitive"
advantage because of the extensive benevolent, religious,
educational, patriotic, fraternal, charitable and volunteer
programs their very nature requires. Maintaining and supporting
a fraternal lodge system with its many forms of mutual aid and
community outreach requires ongoing commitments of substantial
time and money. The expense of maintaining a fraternal system
and program is the main reason why few new fraternals have been
formed since the early part of the century. The historic lack of
abuse in this area indicates strongly that the expense of
operating a fraternal society outweighs any perceived savings
from tax exemption.
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