Beneficial Association

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 associations in their nonprofit corporation

A sample bench warrant

law; they do so because beneficial associations may not be formed with the purpose of bringing a financial benefit to their founders.

A beneficial association is organized through its charter, constitution, and bylaws.

Charter The charter of a benevolent association is the basis of its legal existence and the source of its power to carry out the objects of its creation. A charter is analogous to articles of incorporation and becomes part of the contract of membership when one joins the beneficial association. For beneficial associations that elect to incorporate, the charter will be embodied in the articles of incorporation. Regardless of whether the association is incorporated, the charter incorporates by reference the general laws of the state in which the association is formed.

Constitution and Bylaws The constitution of a benevolent association defines the fundamental principles that will govern the duties of the association and its officers and the regulation of its membership. Unless the constitution is expressly embodied in the charter, it is regarded as a code of laws similar in effect to bylaws. A constitutional provision will prevail over a provision of a conflicting bylaw because it is viewed as a fundamental rule for the government of the association.

Beneficial associations may adopt bylaws that will determine all questions of discipline, doctrine, and internal policy and will regulate the association's general business activities. The enactment of a bylaw is governed by provisions contained in either the charter or the constitution. Bylaws must be in accordance with the law and public policy, must be reasonable, and must apply to all members uniformly. The constitution and the bylaws form a binding contract between and upon all the organization's members. Finally, bylaws also provide for the dissolution of a beneficial association.