Beneficial Association

Author:Jeffrey Lehman, Shirelle Phelps
 
INDEX
FREE EXCERPT

Page 13

An incorporated or voluntary nonprofit organization that has been created primarily to protect and aid its members and their dependents.

Beneficial association is an all-inclusive term that refers to an organization that exists for the mutual assistance of its members or its members' families, relatives, or designated beneficiaries, during times of hardship, such as illness or financial need. The assistance provided by a beneficial association can take the form of life, accident, health, or burial insurance. Beneficial associations may also be called benevolent associations, fraternal societies, fraternal orders, or friendly associations or societies.

History

Early beneficial associations were similar to the English friendly societies, which first appeared in the 1500s. Working people organized these clubs to provide sickness and death benefits for members. Several fraternal societies established branches in the United States and Canada in the early 1800s.

The Ancient Order of United Workmen, founded in 1868, was the first beneficial association to pay substantial death benefits. Other groups that followed its model were soon created. These early associations and societies furnished life insurance to members whose income was so low they could not have otherwise obtained insurance benefits. In addition, many of these associations provided companionship and social activities for their members.

The National Fraternal Congress was formed in 1886 to provide state regulation and uniform legislation for beneficial associations. In 1901, a group of associations and societies formed the Associated Fraternities of America. In 1913, the two groups merged to form the National Fraternal Congress of America.

Beneficial associations include the Police Benevolent Association, Loyal Order of the Moose, Knights of Columbus, Independent Order of Odd Fellows, and Benevolent and Protective Order of Elks. Many of these associations are secret lodges, with passwords, ceremonies, and initiation rites.

Organization and Incorporation

The common-law right of contract authorizes the formation of a beneficial association through the voluntary association of its members. Incorporation of a beneficial association may occur either by a specific legislative act or under general statutes that expressly authorize such incorporation. Some states codify laws pertaining to the formation and incorporation of beneficial...

To continue reading

FREE SIGN UP