Starting a nonprofit can feel like a maze, especially when you're trying to figure out which type fits your mission. If you've heard of 501(c)(3) and 501(c)(8) organizations and aren't sure what sets them apart, you're in the right place.
While both are nonprofit structures under the IRS code, they serve very different purposes, and choosing the right one can make all the difference for your organization’s future.
A 501(c)(8) nonprofit might be right for you if your group is focused on helping its own members through things like insurance or financial support. These are called fraternal benefit societies, and they’re all about building strong member communities. On the flip side, a 501(c)(3) is more focused on serving the public at large, think schools, animal rescues, or food banks.
Ready? Let’s break down what makes a 501(c)(8) nonprofit unique, how it compares to a 501(c)(3), and how to get started.
What is a 501(c)(8) nonprofit organization?
A 501(c)(8) nonprofit is a special type of organization called a fraternal benefit society. These groups are built around shared values, traditions, or beliefs, and they’re focused on helping their own members. Think of it like a club or a lodge where people come together to support each other, often offering things like life insurance or emergency aid.
To be recognized by the IRS as a 501(c)(8), the group must do two key things: provide benefits (like insurance or financial help) to its members and have a “fraternal purpose.” That means the group promotes community, connection, or common interests, not just handing out benefits. They also have to operate under a lodge system, which just means they’re made up of smaller, local chapters that report to a central organization.
These groups aren’t new, they’ve been around for decades. You’ve probably heard of organizations like the Knights of Columbus or the Elks. Those are real-world examples of 501(c)(8)s doing what they do best: serving their members while building strong communities.
What makes a 501(c)(8) stand out is that it’s all about mutual support. It’s not just “helping others”, it’s “we help each other.” If that sounds like your organization’s heartbeat, then a 501(c)(8) might be the right path for you.
Benefits and responsibilities of 501(c)(8) organizations
Being a 501(c)(8) comes with a mix of meaningful perks and a few important rules. The biggest benefit? These organizations are tax-exempt. That means they don’t pay federal income taxes on the money they bring in, as long as that money goes toward their mission of helping members. And while donations to a 501(c)(8) usually aren’t tax deductible for the donor (unlike a 501(c)(3)), the organization still gets to keep more of its funds to use for good.
One of the defining features of a 501(c)(8) is that it offers real benefits to its members. We’re talking about things like life insurance, help during tough times, or other support when someone needs it most. This is more than just being part of a club, it’s about being part of a community that looks out for each other.
But to keep that tax-exempt status, there are responsibilities, too. You need to stay focused on serving your members, not the general public. Your structure also needs to include a central body and local branches (remember that lodge system). Plus, you’ll have to handle IRS forms and annual filings to stay compliant, especially Form 990, which shows you’re doing what you promised.
It’s a bit of work, yes. But if your group is built on the idea of mutual support and shared values, these responsibilities usually feel like second nature. And if you ever feel stuck, just know you’re not alone, plenty of fraternal organizations have been there, and help (like Harness) is always close by.
How 501(c)(8) organizations operate under the lodge system
If you’ve never heard of a “lodge system” before, don’t worry, it’s simpler than it sounds. In a 501(c)(8) nonprofit, the lodge system is just a way of organizing the group into smaller local chapters that report to a central, national body. Think of it like a tree: the national office is the trunk, and the local lodges are the branches. Everyone’s connected, but each lodge has its own leadership and handles its own activities.
The IRS requires this setup for 501(c)(8) status because it keeps things organized and consistent. It also helps make sure that the group really is operating like a fraternal benefit society, with members gathering in person, supporting each other, and following shared values and goals. The lodge system isn’t just about structure, it’s about community.
Each local lodge usually hosts meetings, runs events, and offers support to its members. The central office gives overall direction, handles national-level benefits like insurance, and keeps everything compliant with IRS rules. This mix of local connection and national oversight is what makes the lodge system powerful, and pretty unique among nonprofit types.
If your group already has local chapters or is thinking about expanding that way, the lodge system might be a great fit. And if the idea of setting it up sounds intimidating, don’t stress. With the right tools and a little guidance, it’s totally doable, and incredibly rewarding.
Notable examples of 501(c)(8) organizations
Sometimes it helps to see how others are doing it, and 501(c)(8) organizations have some standout examples that show what this structure looks like in real life. One of the most well-known is the Knights of Columbus. They’re a fraternal organization built around faith, family, and financial support, offering everything from life insurance to community service programs across their lodges.
Then there’s the Elks, a group that brings members together to support local causes, provide scholarships, and build lifelong friendships. They’ve been doing it for over a century. Royal Neighbors of America is another great example, they focus on empowering women through insurance and volunteer work. And Modern Woodmen of America is one more, combining financial services with fraternal values to support their members and their communities.
What all of these organizations have in common is a deep commitment to their members. They use their nonprofit status not just to avoid taxes, but to invest more directly in their people, with real benefits, strong local support, and long-term community impact. These aren’t just clubs, they’re networks of people lifting each other up, one lodge at a time.
If your organization dreams of doing something similar, you’re in good company. These groups prove that with the right structure and purpose, a 501(c)(8) can go far, and help others go even further.
501(c)(3) vs 501(c)(8): Key differences and similarities
If you’re trying to choose between starting a 501(c)(3) or a 501(c)(8), you’re not alone, it’s one of the most common questions we hear. And the truth is, while both are tax-exempt nonprofits under the IRS code, their purpose, structure, and benefits are quite different.
A 501(c)(3) is what most people think of when they hear “nonprofit.” These are organizations set up to serve the public good, whether that’s through education, religion, science, relief of the poor, or other charitable work. Your local animal rescue, food pantry, or youth theater group probably falls under this category. One of the biggest advantages? Donations to 501(c)(3) groups are tax-deductible, which can be a huge incentive for donors.
A 501(c)(8), on the other hand, is focused on serving its own members, not the general public. These are fraternal benefit societies, think lodges or chapters made up of people who share a common bond like faith, heritage, or profession. These groups are built to provide life, sick, accident, or other benefits to members while also encouraging social connection and community service. But here’s the catch: donations to 501(c)(8) groups are not typically tax-deductible for the donor.
Structurally, they differ too:
- A 501(c)(3) can operate as a centralized nonprofit with no requirement for local chapters.
- A 501(c)(8) must operate under a lodge system, which means having local lodges or chapters connected to a central body.
How they serve:
- 501(c)(3) organizations serve the public at large.
- 501(c)(8) organizations serve a defined group of members.
Fundraising:
- 501(c)(3) groups often rely heavily on public donations and grants, especially since those donations are tax-deductible.
- 501(c)(8) groups may fund their work through member dues, insurance premiums, and internal fundraising, rather than broad public campaigns.
Mission clarity:
If your goal is to make a wide public impact, feeding families, funding education, saving wildlife, a 501(c)(3) is the right fit.
If your mission is to build a strong internal network, offering protection and benefits to members while also doing some community service, then 501(c)(8) is likely the better option.
It all comes down to who you serve and how your organization is structured. Both are powerful. Both are meaningful. It’s just a matter of aligning your legal framework with your vision.
Eligibility requirements and IRS guidelines
Getting 501(c)(8) status isn’t just about saying you want to help your members, you have to meet some specific rules set by the IRS. First off, your group needs a fraternal purpose. That means your organization exists to bring people together around shared beliefs, values, or goals, not just to provide financial perks.
The second big rule: your group must offer real benefits to its members, like life insurance, support during illness, or accident protection. These benefits are a core part of what makes a 501(c)(8) different from other nonprofits.
Then there’s the structure. The IRS requires that 501(c)(8) groups operate under the lodge system. You need a central organization and at least one local lodge that follows your group’s rules and goals. That lodge system isn’t optional, it’s a requirement.
And of course, there’s paperwork. You’ll need to file Form 1024 with the IRS to apply for tax-exempt status. This form explains what your group does, who it serves, and how it plans to meet all those eligibility rules. Once approved, you’ll also need to file annual reports (like Form 990) to stay in good standing.
The process might sound like a lot, but if your group already supports members and has a strong community feel, you might be closer to eligibility than you think. And if you’re unsure, there are tools (like Harness) and experts out there to walk you through every step.
How to start a 501(c)(8) nonprofit organization
Starting a 501(c)(8) might sound like a big job, but when you break it into steps, it becomes much more manageable. If your group is built on shared values and focused on helping members, this process will feel like a natural extension of what you're already doing.
1. Name your nonprofit organization
Pick a name that reflects your mission and values. It should be unique in your state and something your members can rally around.
2. Define your fraternal purpose and mission
What brings your members together? Whether it’s culture, faith, service, or something else, be clear about your reason for existing. This isn’t just a feel-good step, it’s required by the IRS.
3. Recruit board members and establish leadership
Every nonprofit needs a strong foundation. Gather a board of directors who believe in the mission and are ready to guide the organization.
4. Draft and finalize your bylaws
Your bylaws are your rulebook. They explain how your organization operates, how leaders are chosen, how meetings work, and how benefits are provided to members.
5. File articles of incorporation
Register your nonprofit with your state by filing incorporation documents. This officially creates your organization in the eyes of the law.
6. Apply for an EIN (Employer Identification Number)
Even if you won’t have employees, you’ll need an EIN from the IRS. It’s like a Social Security number for your nonprofit.
7. Submit IRS Form 1024 for tax exempt status
This is the big one. Form 1024 tells the IRS everything about your organization, your purpose, your structure, your benefits. Once approved, your group becomes officially tax-exempt under 501(c)(8).
8. Plan for long-term operation and compliance
Once you're up and running, it’s not just “set it and forget it.” You’ll need to file annual reports (like Form 990), stay compliant with lodge system requirements, and make sure your benefits keep serving members well.
The process takes some effort, but every step moves you closer to building something meaningful, and sustainable. And if you need help, you’re not on your own. With the right partners and tools (like Harness), it’s much easier than going it alone.
Operating tips for fraternal benefit nonprofits
Running a 501(c)(8) organization isn’t just about getting approved, it’s about staying strong and compliant for the long haul. Once you’re set up, the real work begins: serving your members, following the rules, and keeping things running smoothly.
One of the most important things to remember is that your benefits have to stay at the center of everything you do. The IRS expects your organization to consistently provide life, sick, accident, or other member-focused benefits. If that part slips, your tax-exempt status could be at risk.
You’ll also need to stay on top of your annual filings, especially Form 990. This keeps you transparent and in good standing with the IRS. And don’t forget about state-level filings, they can vary depending on where you operate.
Communication matters, too. Keep your members informed, your board involved, and your mission clear. That helps everyone stay aligned and excited about the work you’re doing.
Lastly, invest in tools that save time and make admin work easier. Whether it’s donor engagement, communications, or reporting, using the right platform can give your team more time to focus on your mission, not spreadsheets.
Fraternal benefit nonprofits have been thriving for over a century. With the right structure and habits, yours can too.
Grow your impact
Choosing between a 501(c)(3) and a 501(c)(8) isn’t just about tax codes, it’s about your mission and how you want to serve. If your heart is set on making a broad impact in your community, a 501(c)(3) might be your best fit. But if you’re building something more personal, focused on mutual support, shared values, and real benefits for members, a 501(c)(8) could be exactly what you need.
Both paths take planning, structure, and ongoing care. But the rewards? Huge. When people feel seen, supported, and connected, amazing things happen. That’s the power of community, and that’s what nonprofits are all about.
At Harness, we’ve helped all kinds of organizations, big and small, bring their missions to life. From managing donations to keeping supporters engaged, we’re here to help you grow your impact without burning out your team. If you're ready to move forward with confidence, Harness is here to walk with you.
