Where Does $100 to the NRA Go (2019)?

When most people think of the NRA they think of the National Rifle Association of America and the second amendment (“A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed”) but there are six separate non-profits that comprise the NRA:

• NRA (National Rifle Association of America):  501 (c)(4)
• NRA Foundation, Inc.:  501 (c)(3)
• NRA Freedom Action Foundation:  501 (c)(3)
• NRA Civil Rights Defense Fund:  501 (c)(3)
• NRA Special Contribution Fund: 501 (c) (3)
• NRA Political Victory Fund: PAC Section 527

NRA (National Rifle Association of America)

These are the big guns (no pun intended) – a 501 (c) (4) corporation at the heart of the NRA whose mission is to preserve the organization’s interpretation of the second amendment – and the subject of this post. A  501 (c)(4) differs from a 501 (c)(3) in four ways:  the organization can engage in unlimited lobbying as long as the lobbying pertains to their mission, participate in political activity, endorse or oppose political candidates, and donate money and/or time to political organizations.

Contributions made to a 501 (c)(4) are not tax-deductible which means the NRA relies primarily on other sources for income: membership dues, program fees, other contributions and grants, royalties, related organizations, investment income, sale of assets, advertising, subscriptions, and other sources.

The NRA hit the press in recent years for a variety of reasons:  accused of misuse of funds and an investigation of the President and CEO, Wayne LaPierre for criminal tax fraud by the IRS, a dispute between Wayne LaPierre, who is paid about $2 million  annually and Oliver North, a board member, who was paid $1 million annually from the public relations and advertising firm the NRA used, numerous lawsuits including the State of New York whose attorney general filed suit to dissolve the non-profit.

Consequently, the NRA spent tens of millions on legal fees (see below in detail of expenses) – about $70 million in 2018-2019.  Membership revenue decreased in 2019 (an estimated 1.3 million members left the NRA) which contributed to the NRA posting a $12 million loss in 2019 resulting in a further deterioration in net assets to a year-end balance of $10 million (compared to $75 million just 4 years prior in 2015). Despite the NRA’s claim the organization is on strong financial footing (the numbers tell a different story) , the organization filed for bankruptcy in NY – to escape culpability for alleged misspending by its executives – and plans to move to Texas.

For detail on the alleged allegations and misuse of funds, see Schedule L, Part V (pages 83-87) of the Form 990.

Revenue

In 2019, the NRA reported total revenue of $292 million (compared to $353 million in 2018), which came from the following sources:

• Member Dues ($113 million) and Program Fees ($21 million):  $134 million  (46% of total revenue)
• Contributions, Grants, and Related Organizations:  $109 million (37% of total revenue)
• Advertising:  $23 million  (8% of total revenue)
• Royalties and Subscriptions:  $13 million  (4% of total revenue)
• Sales of Inventory:  $5 million  (2% of total revenue)
• Other Sources:  $7 million  (2% of total revenue)

Membership Dues

The NRA does not release exact member figures annually except to say there are approximately 5 million members. Over the past several years annual membership dues have been between $40-$45 although a variety of member dues options are available with an average annual cost lower for longer commitments.  With annual membership ($45), 2-year ($75), 3-year ($100), 5-year ($150), and lifetime ($1,500) available, it is difficult to confirm membership figures because the NRA does not release membership composition figures either.

In 2019, membership dues totaled $113 million (compared to $170 million in 2018). If $113 million were divided by $45, then that means there were 2.5 million members. However, if an average of $40 was used (since arguably membership dues are not equal), then there were 2.8 million members. If an average of $30 was used, then there were 3.8 million members.

Membership revenue clearly dropped in 2019 – by $57 million – which means the NRA lost members because the membership fees didn’t change from year-to-year. Although the exact number was not released by the NRA, the numbers indicate the NRA lost more than 1 million members in 2019 ($57 million/$45 = 1.3 million).

Board 

The NRA has a 73 member board, of which 63 are independent.  However, the Form 990 (2019) lists 83 board members (which appears to be due to timing differences).  67 are males (81%) and 16 are females (19%).* Several board members (not employees) were provided more than $1,000 in compensation for doing their duties 1-5 hours per week, including:

• $986,015:  Oliver North, Director
• $659,386:  Wilson Phillips
• $220,350:  Marion P Hammer, Director
• $ 57,592:  David A Keene, Director
• $ 45,474:  Ted Nugent, Director
• $ 21,000:  David But, Director
• $ 16,119:  Julie Golob, Director
• $ 15,000:  Lance Olson, Director
• $ 13,750:  Bart Skelton, Director
• $  6,852:  Owen Buzz Mills
• $  1,666:  Carrie Lightfoot, Director

Expenses

Expenses totaled $300 million (not including $3 million in depreciation) in 2019, which were categorized as follows:

• $70 million (24% of revenue):  Member Communications
• $57 million (20% of revenue) :  Compensation
• $47  million (16% of revenue):  Fees for Services (primarily legal and professional fundraising)
• $26 million (9% of revenue):  Advertising
• $25  million (9% of revenue):  Training and Community Services Expenses
• $23  million (8% of revenue):  Printing and Publications
• $16  million (5% of revenue):  Other Expenses
• $16  million (5% of revenue):  Office Expenses
• $14  million (5% of revenue):  Travel and Conferences
• $ 6 million (2% of revenue):  ILA Program Expenses

As illustrated above, member communications is the largest expense (note: there is no detail on what this actually is). It is also unclear what the expenses were for training and community services and ILA (Institute for Legislative Action) program (the lobbying arm of the NRA) since there is no detail.

Compensation – the second largest expense -was for the 770  employees (46 less than the previous year) who received  $57 million or an average compensation of $74,000.  149 employees received more than $100,000 in compensation. The top 10 most highly compensated employees received more than $9 million with the most highly compensated employee reported to be Wayne LaPierre who received $1,884,709.  In addition, it is important to point out the NRA paid for first class or charter travel, companion travel, health club or social club dues or initiation fees, housing allowances or a residence for personal use, and provided tax indemnifications and gross up payments.

How Revenue Was Spent

Using the above information, every $100 in revenue was spent as follows:

$100:  Membership Dues

-$ 24:  Member Communication Expenses

-$ 20:  Compensation

-$ 16:  Fees for Services (primarily legal and fundraising)

-$  9:  Advertising

-$  9:  Training and Community Services Expenses

-$  8:  Printing and Publications

-$  5:  Office Expenses

-$  5:  Other Expenses

-$  5:  Travel and Conferences

-$  2:  ILA Program Expenses

-$103 : Total Expenses

As illustrated above, the NRA spent most revenue (86%) on member communications, compensation, fees for services (primarily legal and professional fundraising), advertising, training, and printing/publications.

Net Fund Assets

In 2015, the NRA had $75 million in net fund assets. By 2017, the net fund balance was down to $25 million – a significant decline that is probably due to a variety of reasons, including a decline in membership and and excess spending.

In 2018, the net fund balance fell to $16 million. This decline appears to be attributable to spending more than the organization brought in (appears to be for legal expenses: $25 million compared to $7 million in 2017) and a $5 million unrealized loss on investments, and $2 million in agency transactions between the NRA and the NRA Foundation for endowment contributions and earnings.

In 2019, the financial situation further deteriorated with a decline in revenue ($61 million with most in the membership dues category), high legal fees ($39 million), and spending more than they raised resulting in a further deterioration in net assets down to $10 million.  However, it is interesting to note the top 10 executives did not take salary cuts. In fact, they received more than $9 million in compensation in 2019, just as they did in 2018.  And, the NRA, who is largely supported by public funds, continued to pay for first class or by charter, companion travel, health or social club dues or initiation fees, residence or provide a housing allowance, and provide tax indemnification and gross up payments.

To read the IRS Form 990 (2019), click here.