Study Shows Fraternal Benefit Societies Deliver $3.4 Billion in Annual Value

September 20, 2010 Phillip Swagel

Research by Phillip Swagel Shows How These Groups Fill Unmet Needs and Provide a Positive Return to Taxpayers

Fraternal benefit societies are a smart investment by the U.S. government, according to a new study by Phillip Swagel, visiting professor of finance at Georgetown University’s McDonough School of Business. Swagel finds that these not-for-profit mutual aid organizations give back $68 to U.S. society for every dollar of support from the federal government.

“In times of economic uncertainty and in the face of an enormous fiscal challenge, fraternal benefit societies work to strengthen families and communities across the country,” Swagel said. “These unique community-based networks provide a structure that supports volunteerism and builds social capital. This gives immense benefits to communities and a huge return to American taxpayers.”
 
The study sought to outline the economic impact of fraternal benefit societies. These not-for-profit, community-based membership organizations operate through local networks to carry out charitable, educational, and volunteer initiatives in communities, as well as protect the financial interests of their members by providing life insurance products.
 
Using two of the largest U.S. fraternal benefit societies – Thrivent Financial for Lutherans and the Knights of Columbus – as case studies, Swagel found that a $50 million investment by the government yielded a return of $3.4 billion. This figure combines $1.8 billion in direct value from volunteering and charitable contributions, including nearly 70 million in volunteer hours, and $1.6 billion in indirect value from improved social capital brought about through the activities of fraternal members.
 
Swagel also found that:
·         If public sector agencies were to fill the needs currently being met by fraternal benefit societies, the cost to government would far exceed the current government investment in sustaining fraternal benefit societies.
·         Fraternal benefit societies are reservoirs and generators of social capital, which creates socioeconomic benefits as networks of people act together for the greater good. Increased social capital promotes long-term economic stability in communities through a better educated population, higher incomes, a stronger economy, and lower incidence of social ills.
·         Fraternal benefit societies and their extensive networks of members generate economic value through charitable donations, volunteerism, and by the creation of social capital as members meet community needs.
·         By mobilizing their members in local chapters and councils, fraternal benefit societies are able to make a bigger – and qualitatively different – impact than typical corporate donations to community organizations.
 
The National Fraternal Congress of America has made the key findings of the study available online.
 
About Georgetown University’s McDonough School of Business
Georgetown University’s McDonough School of Business is a premier business school located at the center of world politics and business in Washington, D.C. Some 1,400 undergraduates, 1,000 MBA students, and 500 participants in executive education programs study business with an intensive focus on leadership and a global perspective. Founded in 1957, the business school today resides in the new Rafik B. Hariri Building, a state-of-the-art facility that blends the tradition of Georgetown University with forward-thinking functionality. For more information about Georgetown’s McDonough School of Business, visit http://msb.georgetown.edu.