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Polyfidelity (also sometimes called Polyexclusivity) is a form of polyamory where all members are considered equal partners and agree to be sexually active only with other members of the group. The term originated in the Kerista Village commune in San Francisco which practiced polyfidelity from 1971 to 1991. The community expected all of its members, within bounds of gender and sexual orientation, to be sexually active with all other members, and for exclusive relationships not to be formed. However, this aspect of polyfidelity is not always expected today.
Polyfaithful relationships are, like monogamous relationships, closed in the sense that partners agree not to be sexual outside the current members of the group. The difference is that more than two people are included in the closed group. New members may generally be added to the group only by unanimous consensus of the existing members, or the group may not accept new members.
Previous to the Kerista Village experience, people would have likely called this arrangement "complex marriage" or simply a "group marriage." Indeed, one might think of polyfidelity as being very much like monogamy except that it may include more than two people (and may or may not be open to adding new members). The modern, broader term polyamory was coined later, in the early 1990s. 
One commonly cited advantage of this form of polyamory is the ability to fluid bond among more than two people while maintaining relative safety regarding STDs, so long as any new members are sufficiently tested before fluid bonding with the group, and keep their commitments. This would have health advantages similar to monogamy, although risks rise somewhat with each person added.
Others seek emotional safety from the relatively closed nature of the polyfaithful commitment.
Some polyamorous people desire more flexibility than polyfidelity provides. For example, open relationships do not restrict sexual and emotional bonding in these ways. Some polyamorous people also report that it is difficult to find partners who are mutually compatible enough to form committed group marriages like polyfidelity.
In the book Lesbian Polyfidelity, author Celeste West uses the term polyfidelity in much the same way that others use polyamory. This may represent independent coinage of the same term within a different community, and this usage is not common among polyamorists in general. West uses the term to emphasize the concept (common in polyamory) that one can be faithful to one's commitments without those commitments including sexual exclusivity.
The term polyexclusivity is sometimes used to clarify misunderstandings relating to the multiple meanings of 'fidelity'. There are many polyamorous groups who are fidelitous or faithful to themselves but who are also open to new sexual/romantic relationships. In these cases the term polyfidelity can be misleading.