An association is a group of individuals who come together to achieve a common purpose or to pursue shared interests. Unlike entities that have formal charters (such as corporations), associations generally follow the methods and forms typical of incorporated bodies but do not hold a formal charter.
Associations can range from professional or trade organizations, clubs, environmental groups, charitable organizations, community groups, and many others. Some associations may be taxed as corporations under specific conditions.
Types of Associations
Incorporated Associations
These are associations that have chosen to incorporate, which provides them with legal recognition and limited liability for their members.
Unincorporated Associations
These associations are not formally registered as a corporation, which means they do not have legal recognition separate from their members and do not enjoy limited liability.
Non-Profit Associations
Associations often aim to further a particular social cause or advocate for a shared point of interest rather than earning profit for their members.
Professional and Trade Associations
These are formed by individuals or businesses working in the same industry or profession, seeking to promote mutual interests, set industry standards, and often provide a platform for networking and professional development.
Formation and Structure
An association usually starts with a group of like-minded individuals who wish to pursue a common goal. The structure often includes a governing body such as a board of directors, a set of rules or bylaws, and regular meetings. The bylaws outline the association’s objectives, membership requirements, election procedures, and other governance matters.
Historical Context
Associations have a long history dating back to ancient civilizations where guilds and societies were formed for mutual support and to advocate for collective interests. In the modern era, associations have become essential in various fields as they provide a platform for collective action and advocacy.
Taxable Entities
While most associations, especially non-profit ones, are not taxed heavily, certain conditions might classify an association as taxable akin to a corporation. This usually involves the nature of their activities and the income they generate.
Examples and Applicability
Example 1: The American Bar Association (ABA)
A professional body for lawyers and legal professionals in the United States that works to improve the legal profession, ensure the quality of legal education and enhance the administration of justice.
Example 2: Neighborhood Community Associations
Formed by residents of a neighborhood to manage communal resources and services, organize events, and advocate for the community’s interests.
Comparisons
Association vs. Corporation
- Legal Status: Corporations have a formal charter and are recognized as separate legal entities, while unincorporated associations do not have this recognition.
- Liability: Members of a corporation enjoy limited liability protection, while members of an unincorporated association may be held personally liable.
- Taxation: Corporations are taxed on profits. Associations, particularly non-profit ones, may be exempt from certain taxes unless they engage in taxable activities.
Related Terms
- Non-Governmental Organization (NGO): A type of association that operates independently from the government, often focused on humanitarian and social activities.
- Trade Union: An organized association of workers formed to protect and further their rights and interests.
- Club: A type of association organized for social, recreational, or philanthropic purposes.
FAQs
What is the difference between incorporated and unincorporated associations?
Are all associations non-profit?
Can associations be taxed like corporations?
References
- “Associations and Nonprofit Organizations,” The American Institute of Philanthropy.
- “Corporate vs. Unincorporated Associations,” The Association Law Handbook, Guidance for Lawyers and Association Managers.
- “The Role of Professional Associations,” Journal of Professional Development.
Summary
Associations play a critical role in advancing shared interests, whether they are professional, social, or community-oriented. Understanding their structure, types, and legal implications is essential for anyone looking to form or join an association. Within today’s dynamic environment, associations continue to provide a powerful platform for collective action and advocacy.
