Trade associations reflect the historical appeal of merchants’ guilds since the 1600’s. Today a proliferation of thousands of trade associations renders important support to members globally.
Purpose
Trade associations flourish to promote the interests of members generally, whether to defend against encroachments of potential legislation, to submit amicus curiae briefs to appellate courts in support of principles that promote the trade association’s members, or simply as a forum for self-education, networking and mutual acquaintances.
Tax Considerations
A trade association that promotes private purposes is generally taxable as a corporation. As a result, virtually all trade associations are structured as non-profit organizations with charters limiting their permitted activities to those in some public interest of a relatively large number of diverse members. Under U.S. federal tax law, no part of the income or assets of a non-profit organization may enure to the benefit of any member or subset of members or individuals.
Trade Associations as Purchasers of Outsourcing Services
Trade associations can serve to aggregate demand for generic services, such as travel, entertainment, lodging, subscriptions and other services. In the world of outsourcing, however, few trade associations serve as purchasers of common business processes for the members.
The coming wave of group purchasing in BPO poses significant opportunities for cost savings and productivity improvements. For further information, please contact us.