Where Does $100 to the NRA Go (2020)?
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 seven (7) 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 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 has and 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. As a result, the NRA filed for bankruptcy (which a judge dismissed) and released a statement stating the NRA was leaving New York and relocating to Texas.
Consequently, the NRA has spent more than $100 million on legal fees (see below in detail of expenses) between 2018-2020. 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 5 years prior in 2015). In 2020, revenue continued to decline (by $10 million) but the NRA cut expenses drastically and spent $45 million less than the organization received which resulted in $49 million in net assets at year-end.
For detail on the alleged allegations and misuse of funds, see Schedule L, Part V (pages 83-87) of the Form 990.
In 2020, the NRA reported total revenue of $282 million (compared to $292 in 2019 and $353 million in 2018), which came from the following sources:
- Member Dues ($120 million) and Program Fees ($10 million): $130 million (46% of total revenue)
- Contributions, Grants, and Related Organizations: $105 million (37% of total revenue)
- Advertising: $21 million (7% of total revenue)
- Royalties and Subscriptions: $15 million (5% of total revenue)
- Sales of Inventory: $5 million (2% of total revenue)
- Other Sources: $6 million (2% of total revenue)
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 2020, membership dues totaled $120 million (compared to $113 million in 2019 and $170 million in 2018). If $120 million were divided by $45, then that means there were 2.7 million members. However, if an average of $40 was used (since arguably membership dues are not equal), then there were 3 million members. If an average of $30 was used, then there were 4 million members.
Membership revenue clearly dropped in 2020 – 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). In 2020, membership revenue increased by $7 million which appears to indicate a slight increase (maybe 150,000: $7 million/$45) in membership.
According to the Form 990(2020), the NRA has a 76 member board, of which 73 are independent (although the Form 990 lists 80 board members which appears to be due to timing differences). 63 are males (79%) and 17 are females 21%). Marion P Hammer, a Director who reportedly works 5 hours a week received $259,000 in compensation in 2020 ($5,000 per week or $1,000 per hour).
Expenses totaled $234 million (not including $3 million in depreciation) in 2020, which were categorized as follows:
- $55 million (20% of revenue): Fees for Services (primarily legal and professional fundraising)
- $52 million (18% of revenue): Member Communications
- $38 million (14% of revenue) : Compensation
- $20 million (7% of revenue): Printing and Publications
- $16 million (6% of revenue): Training and Community Services Expenses
- $14 million (5% of revenue): Other Expenses (i.e. fulfillment materials, banking fees, etc)
- $14 million (5% of revenue): Office Expenses
- $14 million (5% of revenue): ILA Program Expenses
- $ 7 million (2% of revenue): Advertising
- $ 4 million (1% of revenue): Travel and Conferences
As illustrated above, member communications is the largest expense (note: there is no detail on what this actually is) although it is important to report this line item totaled $70 million in 2019. 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 640 employees (130 less than in 2019 and 176 less than in 2018) who received $38 million or an average compensation of nearly $60,000. 107 employees received more than $100,000 in compensation (compared to 149 in 2019).
The top 10 most highly compensated employees received more than $9 million in 2019 and $7 million in 2020 with the most highly compensated employee reported to be Wayne LaPierre who received $1,665,627 in 2020 (compared to $1,884,709 in 2019). In addition, it is important to point out the NRA paid for first class or charter travel and housing allowances or a residence for personal use in 2020.
How Revenue Was Spent
Using the above information, every $100 in revenue was spent as follows:
$100: Membership Dues
-$ 20: Fees for Services (primarily legal and fundraising)
-$ 18: Member Communication Expenses
-$ 14: Compensation
-$ 7: Printing and Publications
-$ 6: Training and Community Services Expenses
-$ 5: Office Expenses
-$ 5: ILA Program Expenses
-$ 5: Other Expenses
-$ 2: Advertising
-$ 1: Travel and Conferences
-$ 83: Total Expenses
$ 17: Remaining Revenue: To General Fund
As illustrated above, the NRA spent more than half of revenue (52%) on fees for services (primarily legal and professional fundraising), printing/publications, training and compensation for the 640 employees. In a change from prior years, the NRA spent less than they received allocating $17 out of every $100 (which equates to about $45 million in 2020) to the general fund in 2020.
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 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 (by $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, a tax-exempt, non-profit organization, 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.
In 2020, the NRA cut expenses drastically (the 10 most highly compensated employees received nearly $7 million) but not first class or charter travel – which appears to be an attempt to increase the net assets and reverse the deterioration. The NRA actually spent $45 million less than they raised increasing the net assets to $49 million at year-end.
To read the IRS Form 990 (2020), click here
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