NRA may lose tax-exempt status due to internal corruption

A long article by Mike Spies, “Secrecy, Self-Dealing, and Greed at the N.R.A.,” in The New Yorker, April 17, 2019, describes the National Rifles Association (NRA) as being in serious trouble.

The Hill reports that the New Yorker article led gun-control group Everytown For Gun Safety (EFGS) to file an IRS complaint on April 19, claiming that the NRA is in violation of tax laws on charitable organizations and should be investigated. As EFGS says in a letter attached to their complaint:

The NRA is a purported charity and exempt from federal tax under section 501(c)(4) of the Internal Revenue Code and we write today to alert you to what we believe are activities that clearly fall outside of the NRA’s charitable purpose and mission. We call on the IRS to commence an investigation into whether (i) the NRA has violated the federal laws governing 501(c)(4) charitable organizations, and (ii) if so, consider what remedies are warranted, including potential revocation of the NRA’s 501(c)(4) status.

For his New Yorker article, Mike Spies conducted interviews and obtained the NRA’s federal tax forms, charity records, contracts, corporate filings, and internal communications. Although the “vast majority” of contributions to the NRA come from “millions of small individual donors”, what Spies uncovered is an organization of secrecy, corruption, and grossly overpaid executives. Memos by a senior NRA employee describe a workplace distinguished by secrecy, self-dealing, and greed, whose leaders have encouraged disastrous business ventures and questionable partnerships, while marginalizing those who object.

Spies’ article, “Secrecy, Self-Dealing, and Greed at the N.R.A.,” begins with an admission by NRA top executive Wayne LaPierre that the organization is “troubled”. Here are the signs of financial trouble:

  • In recent years, the NRA has run annual deficits of as much as $40 million.
  • A financial audit from 2017 revealed that the NRA had nearly reached the limit of a $25 million line of credit.
  • According to minutes of a meeting of the NRA board’s finance committee in December 1996, “the NRA has been technically insolvent for several years” and “has incurred substantial debt.”

To raise money, the NRA:

  • Raised its dues for the second time in two years.
  • Liquidated more than $2 million from an investment fund.
  • Borrowed almost $4 million from its officers’ life-insurance policies, while the costs of insurance increased by 341% from 2018 to 2019.
  • Tapped another $4 million from its affiliated charitable foundation.

To cut costs, the NRA:

  • Eliminated free coffee and water coolers at its headquarters.
  • Froze its employees’ pension plan.
  • Reduced spending on its avowed core mission of gun education, safety, and training to less than 10% of its total budget.

The source of the NRA’s insolvency is a small group of executives, contractors and vendors who “extracted hundreds of millions of dollars from the nonprofit’s budget, through gratuitous payments, sweetheart deals, and opaque financial arrangements“.

The small elite group who’s bleeding the NRA dry includes:

  1. LaPierre, who earns more than $1 million a year.
  2. Dana Loesch, NRA spokesperson and former Breitbart News editor, who earned close to $1 million in at least one year.
  3. Oliver North, NRA president and former Iran-Contra operative, is paid roughly $1 million a year.
  4. Kyle Weaver, former executive director of NRA’s general operations who was fired in the fall of 2016, nevertheless was paid $720,000 for that year. State filings show Weaver also received $150,000 upon his exit, and continued to be paid through 2018, receiving “a final lump sum” this past January.
  5. Weaver’s successor, Josh Powell, was paid nearly $800,000 in 2017. Powell came to the NRA after running two clothing catalogues that catered to men who enjoy adventure, venison, and fine wine. He was sued at least 20 times by businesses that had worked with him, for unpaid bills amounting to more than $400,000. In December, 2018, Powell was moved out of the job of executive director of general operations, and was “promoted” to the NRA’s legal team as  a “senior strategist” although he is not an attorney.
  6. Mike Marcellin was a senior NRA employee for almost 23 years who oversaw the NRA’s relationship with Lockton Affinity, an insurance administrator that worked on Carry Guard and other NRA-branded insurance products. Iin 2016, Marcellin retired from the NRA and started a private consultancy. Although he had worked only the first few weeks of January, the NRA paid him a full year’s salary — nearly $630,000, mostly in the form of a bonus. During the same year, Lockton paid him about $450,000. No one was aware that Marcellin was receiving income from both organizations—a situation that should have been disclosed on the NRA’s 2016 tax filings.
  7. Curiously, North and Loesch technically are not employed by the NRA, but are paid by Oklahoma-based public-relations firm Ackerman McQueen, which has shaped the NRA’s public identity for more than 30 years, wields great influence over the NRA’s initiatives, and is involved with nearly all of the group’s divisions. In 2017, according to tax filings, the NRA paid Ackerman McQueen and its affiliates $40.9 million, or about 12% of the NRA’s total expenses that year.

The NRA and Ackerman McQueen have become so intertwined that it is difficult to tell where one ends and the other begins. Top officials and staff move freely between the two organizations. For instance, Ackerman has worked closely with LaPierre’s wife, Susan, who maintains an Ackerman e-mail address and was briefly employed there in the mid-1990s.

Many NRA employees have long suspected Ackerman of inflating the cost of the services it provides. Aaron Davis, a former special-education teacher from rural South Carolina who spent a decade working in the NRA’s fund-raising department, told The New Yorker: “Most staffers think that Ackerman is too expensive. They think they’re just using the N.R.A. to make a massive profit.”

On April 12, the NRA sued Ackerman McQueen, claiming that the PR firm has denied the NRA access to basic business records, including the terms of Oliver North’s contract, and blaming Ackerman for the NRA’s financial insolvency.

Marc Owens, who was head of the Internal Revenue Service division that oversees tax-exempt enterprises for 10 years, recently reviewed the NRA’s records, said:

“The litany of red flags is just extraordinary. The materials reflect one of the broadest arrays of likely transgressions that I’ve ever seen. There is a tremendous range of what appears to be the misuse of assets for the benefit of certain venders and people in control. Those facts, if confirmed, could lead to the revocation of the N.R.A.’s tax-exempt status.

Without its tax-exempt status, the NRA likely will not survive.

H/t truckjunkie and Guns & Gadgets

~Eowyn

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pigpen51Baer45Steven BroilesTrailDustPhilly Recent comment authors
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Auntie Lulu
Guest
Auntie Lulu

Wow! This is just like a kick in the gut. If they are declared to be a for profit entity, there is no doubt but what they will fold. Even staunch members will be sickened by the news that we have been milked for every penny we have contributed. I truly find that I am greatly sorrowed by the evil that these people have done, as opposed to the good they have done. Without the NRA, there will not be a focused effort to oppose all these various proposed laws aimed at taking our guns, and our liberty away. May… Read more »

Franz Kindler
Guest
Franz Kindler

This NRA article appears to be yet another attempt by the leftist media mob to destroy the NRA and our Second Amendment rights. Who but a feckless fool believes anything spewing out of these putrified, pulitzer putzes.

Lophatt
Member
Lophatt

I’ve been a member for years but I’ve never been “happy” with them. They are notorious for this sort of thing. What chaffs my hide is their willingness to play footsie with the legislators.

There are other groups who are much better philosophically but don’t have the clout. This is like labor unions. They may have been needed at one time but they are so corrupt that they’re just a scam.

I hope they get their act together. We need help with this now more than ever before.

DCG
Editor

Mike originally published this on The Trace. The Trace was established in 2015 by Everytown. In other words, Spies is being paid to write this story by Bloomberg. So consider the source in that… The quote here from the New Yorker article stating Owens is the “head of the IRS division…” is incorrect in that Owens served for 10 years (no longer in charge) as the …. While I don’t question (right now at least) what Mike saw in the federal tax forms (can’t he publish/release that info though if it’s a non profit?), I do know that it is… Read more »

Alma
Member
Alma

I’m in shock. Yes I hope they get their act together as Lophatt wrote, I am a member and wouldn’t want to see the NRA maligned by the left, it would be giving ammunition they don’t need. DCG’s good comments give me some hope as to the real truth behind the article.

Luther Loxxley
Guest
Luther Loxxley

I am so not surprised. I have always supported the NRA, but when they added Ollie North to their ranks, I knew it was just a matter of time.
Wayne should kick his ass to the curb and pronto too.

DCG
Editor

More proof The Trace (Everytown/Bloomberg) has a serious anti-gun/NRA agenda…They retweeted this: “Anthropologist: Guns have an almost supernatural potency to change the people who possess them into unethical agents.”

https://twitter.com/teamtrace/status/1120492619736453120

RH Burns
Guest
RH Burns

This is entirely bogus: The NRA lost it’s tax deduction status decades ago. Only separate museum type entities maintain tax exempt status. I recently contributed an old car to a NRA fund raising effort, and it was made very clear that the contribution was NOT tax deductible.

William
Member
William

This is very bad because to most people the NRA is synonymous with 2A and gun owners. At a time when 2A is under increasing assault all they seem to be concerned with is stuffing money in their pockets. When you are making a million a year, money changes everything. Someone here mentioned Gun Owners of America. That’s the way to go IMO. And Oliver North? That particular West Point medal collector was involved in setting up the Nicaraguan Contra cocaine smuggling operation to provide, among other things, off-the-books funding for countering movements of indigenous nationalism. As well as being… Read more »

Chuck C
Guest

While the source of the article may be questionable, the facts are accurate. I have been a long time member of the NRA but certainly felt that they stopped working for the interest of the average gun owner a while ago. A million dollars a year for a salary is pricey for anyone in NFP organization. Having a host of million dollar employees requires an explanation.

MarkyMark
Guest
MarkyMark

Well, I say good riddance! It’s a fitting end to one of the leading gun CONTROL organizations in America. Yes, you read that right; the NRA is one of the leading GUN CONTROL organizations in the US. For example, they supported the 1968 Gun Control Act. Did you know that they also helped FDR’s administration draft the 1934 National Firearms Act and the 1938 Gun Control Act? Did you know that they were behind the creation of conceal-carry permits? Why wouldn’t they be, since they provide the TRAINING for CCP holders?! I could go on, but you get my point.… Read more »

YouKnowWho
Guest
YouKnowWho

Right. And Trump is guilty too. Despite the fact that there was no collusion or obstruction. He’s just got to be guilty of something.(sarc)

D3F1ANT
Guest
D3F1ANT

LOL! But the baby-part sellers are still funded by tax money! Our country is so totally F-ed. The good guys simply aren’t allowed to win anymore.

Philly
Guest
Philly

How does the NRA’s structure and pay scales, etc differ from the Clinton “Foundation”? I suspect the NRA’s is much closer to legitimate. Why hasn’t the New Yorker “investigated” the Clinton “Foundation” to uncover dirty deeds there?
Wait, what? Never mind.

TrailDust
Admin

What a shame! Our trusted ally the NRA can no longer be trusted.

Steven Broiles
Member

This is a disgrace, because we NEED a National Rifle Association. (And I thought Dana Loesch was pretty good). We need an advocacy organization, or the Second Amendment is in jeopardy.

For those interested, check out Gun Owners of America. They’re a smaller organization, but they may be better organized and run.

Baer45
Guest

Noting the source alone of the story is enough to cast doubt. GOA is actually accomplishing more today. I’m a proud life member of the NRA and always will be.

pigpen51
Guest
pigpen51

The biggest issue is that the NRA has been very much ignoring the members concerns for a long time. Wayne LaPierre for some reason is in a position of power, when I am not even sure that the by laws of the NRA allows for his position to exist. Ollie North, while a truly good man, might not have been the best one for the job when he was elected president last year. Dana Loesh is a good spokesperson, but the money paid for that position is simply not justified. There are many others who are able to do the… Read more »