THE UKRAINIAN NATIONAL ASSOCIATION FORUM (06/19/05)

THE UKRAINIAN NATIONAL ASSOCIATION FORUM

National Fraternal Congress works with Rep. Santorum to protect fraternal system

OAK BROOK, Ill. - Leaders from the National Fraternal Congress of America (NFCA) met with Sen. Rick Santorum (R-Pa.) and other key members of Congress to discuss the tax-exempt status of fraternal benefit system.

Sen. Santorum, a member of the Senate Finance Committee, is working with the NFCA to protect the interests of the 150-year-old fraternal system, which supports the fraternal and charitable activities that benefit American society.

These efforts are in response to the January 27, staff report of the federal Joint Committee on Taxation entitled, "Options to Improve Tax Compliance and Reform Tax Expenditures." The report contains a provision to eliminate the tax-exempt status of fraternal benefit societies.

On March 17, Sen. Santorum read a statement on the floor of the U.S. Senate in support of fraternal benefit societies and the retention of their tax-exempt status.

"We are pleased that Sen. Santorum supports the role that fraternal benefit societies play in our local communities, and that he agrees that our tax-exempt status should remain," said Michael Stivoric, vice-president - fraternal operations for Catholic Knights, and Chair of the Board of the NFCA. "The support of senators like Mr. Santorum goes a long way toward ensuring that the good our organizations do will not go away."

In his statement, Sen. Santorum explained how fraternal benefit societies represent one of the most powerful forces for altruistic good in the U.S. today. For example, in response to the 9/11 tragedy, fraternals nationwide raised and contributed more than $16.8 million. More recently, in response to the tsunami disaster, NFCA member-societies donated more than $8 million, including at least $2.5 million from individual members, with more relief aid on the way. The loss of the tax exemption would destroy this fraternal and charitable side of the fraternal benefit system, he underscored.

"The senator rightly points out that fraternal benefit societies show how the private sector can, and does, make a difference," Mr. Stivoric continued. "Last year alone, fraternal benefit societies contributed more than $345 million to charitable and fraternal programs. And our volunteers spent 83.7 million hours helping make their communities better. We are proud of the work we do - and we are proud to have Sen. Santorum's support."

The NFCA said it will continue working with Sen. Santorum in its campaign to uphold the tax-exempt status of fraternal benefit societies. To date, the NFCA has met with all but one of the members, or staffs of members, of the Senate Finance Committee, and a majority of members (or their staffers) on the House Ways and Means Committee. Meetings also have been held and contacts made with the leadership of the House and Senate on both sides of the aisle.

The 119-year-old NFCA unites 76 not-for-profit fraternal benefit societies operating in all 50 states, the District of Columbia and Canada. The association represents 10 million people in 36,000 local chapters, making it one of the continent's largest member networks. Fraternal benefit societies provide their members with leadership, social, educational, spiritual, patriotic, scholarship, financial and volunteer-service opportunities.

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Following is the text of Sen. Rick on fraternal benefit socieites delivered in the Senate on March 17.

Mr. President, on January 27, the staff of the Joint Committee on Taxation released a report requested by Senate Finance Chairman Grassley and the ranking member Max Baucus, titled "Options to Improve Tax Compliance and Reform Tax Expenditures." While I fully expect that many of the recommendations will be the subject of extended debate in the senate over the coming year, I want to highlight one recommendation that should be rejected immediately: the joint committee staff's proposal to revoke the tax-exempt status of fraternal benefit societies.

Beginning with the Tariff Act of 1894, every federal tax law has contained a specific exemption for fraternal benefit societies, and with good reason. These organizations, some of which have existed since the Civil War, are a major force for good in America today. Last year, for example, these organizations incurred almost $360 million in direct fraternal and charitable expenditures, while their individual members devoted more than 80 million volunteer hours - valued at $1.4 billion - in community and social services.

Fraternal benefit societies support their communities in every possible way, including helping families with critically ill children, supporting homeless shelters and homes for the aged, raising funds and supporting local food banks, repairing playgrounds and other community facilities, and helping underprivileged youth stay away from drugs. Fraternal benefit societies are among our nation's most important first responders; they acted quickly to provide almost $17 million in financial relief to families affected by 9/11, and have raised upwards of $8 million in tsunami relief and counting.

What makes this extraordinary effort possible is the requirement under the Internal Revenue Code that fraternal societies also make available to their members insurance against death, disease and disability, a tradition of mutual aid that goes back to the earliest days of fraternalism. I am troubled, Mr. President, by the fact that the Joint Committee staff has dredged up an old idea that has been rejected once before.

In 1984, the Treasury Department made a similar recommendation that resulted in Congress mandating an extensive study of fraternal benefit societies that was issued in 1993. In that study, Treasury concluded that fraternal societies do not use their tax exemption to compete unfairly against commercial insurers, but instead, use the revenues from insurance to support their fraternal and charitable activities. Treasury left the decision up to Congress, but noted that if the exemption was taken away, these fraternal and charitable activities would be extinguished.

If anything, the rationale for encouraging fraternal benefit societies is greater today than it has been at any other time in our history.

Fraternal societies have shown us that the private sector can and will step in to make a difference.

As our need for fraternals has grown, so too has their devotion to our communities. Fraternal and charitable expenditures were approximately $242 million in 1985, and the number of volunteer hours on behalf of society members was just over 26 million. Last year fraternal and charitable expenditures were almost $365 million and the number of volunteer hours had grown to 83 million. At the same time, the share of the insurance market represented by fraternals during this time period has remained steady at around 1.5 percent.

In other words, the good that these organizations do has gone way up; they are no more a threat to commercial businesses today than they were 20 years ago. Moreover, I can tell you from personal experience that the 10 million Americans who join fraternals are more devoted today to the cause that brought them together - whether religious, patriotic, or a shared heritage - than ever before. Pennsylvania is fortunate to be home to many of these organizations and dedicated citizens.

The Joint Committee staff has concluded that revoking the tax-exemption of fraternal benefit societies would raise $500 million over 10 years. This pales by comparison to the $4 billion that fraternals are likely to put back into society over the same time frame in direct fraternal and charitable expenditures, and the annual $1.4 billion that their members devote in volunteer time throughout the country.

Recognizing the importance of fostering this type of private-sector support for our communities, it is interesting to note that the platform of the Republican National Committee in 2004, 2000 and 1996 contained the following statement: "Because of the vital role of religious and fraternal benevolent societies in fostering charity and patriotism, they should not be subject to taxation."

Mr. President, it often has been said that the power to tax is the power to destroy. This is the time to encourage, not destroy, organizations that devote themselves to social good, organizations from which this nation has benefited immeasurably for more than 150 years. As Congress concluded in 1985, let us again make sure that this Joint Committee recommendation is taken off the table.

Detroit UNA'ers prep Dibrova estate for summer season

BRIGHTON, Mich. - The spirit of Dibrova Day was in full swing on May 21, when members of the Detroit District Committee of the Ukrainian National Association and the Dibrova Estate spent the day beautifying the grounds of Dibrova in preparation for the season. Seen above are some of the members who participated in the project.

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