The National Rifle Association financial firepowerwhich was partly created by his large and loyal member filehas long been one of the weapons group’s main sources of strength.
But the NRA has faced a financial tsunami in recent years, which came to light after the 2016 elections. A swirl of disagreements with long-term business partnersallegations of waste and misuseskyrocketing debts and lawsuits from the New York and Washington, DC Attorneys General have caused one humiliation after another. The NRA tried to declare bankruptcy to cushion some of these blows, without luck.
At this point, the threat of being forced to close by the authorities due to alleged improprieties is minimal. But has the NRA managed to weather the financial storm?
As an accounting researcher who focuses on the financial performance of non-profit organizations, I have closely studied NRA finances during the crisis. I can say that the financial picture of the NRA as of early 2023 is a mixed bag. The arms group has strengthened its financial position in recent years. However, the manner in which that financial recovery came about risked a hemorrhage among the NRA’s core supporters.
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Digging out of a financial hole
At the same time, the NRA’s financial problems arose scandalous aspects of the organization’s woes — like that of former NRA leader Wayne LaPierre free hunting trips And luxury suit purchases billed to an NRA contractor – attracted the attention of the public.
Perhaps the best measure of a nonprofit’s financial health is the unrestricted net worth – the money the organization has after subtracting amounts it must spend on activities promised to donors and what it owes to others. An unlimited multi-million dollar net asset reserve for an organization the size of the NRA can provide financial security. On the other hand, a negative reserve is usually a sign of serious trouble.
The NRA’s reserve was negative at the end of 2017, with a deficit of more than $30 million – a clear sign of the problems already underway. Such a negative balance indicates that after fulfilling donor promises, the organization owes more money to others than the value of its assets.
Things only got worse over the next two years, with the NRA approaching an unlimited net worth deficit of nearly $50 million in 2019. This degree of weakness even led the organization to suggest that the risk imminent failure. However, there was time for a turnaround.
And that’s what happened. In 2020, the NRA has lowered its unlimited net activate short with over $38 million. Ironically, it was shortly after achieving this marked improvement that the unsuccessfully filed for bankruptcy.
This financial revival continued into 2021, with the organization’s reporting it had been eliminated unlimited net worth deficit, building a surplus of more than $10 million. When also counting the money set aside for specific purposes determined by donors – from the group net assets – the NRA’s total available funds reached more than $75 million.
These developments may seem to bode well for the organization’s ability to withstand it persistent financial problems. Beneath the surface, however, there is an ominous trend.
Selective cutbacks
How did the NRA gain a more stable financial footing?
It wasn’t growth. The NRA’s revenues fell in 2020 by 4% from $296 million to $284 million, even without factoring in inflation. Sales fell another 18% in 2021 to less than $234 million.
Instead, it cut many core programsincluding education and training, field service, law enforcement initiatives, and recreational shooting.
Cost cutting can help stabilize faltering businesses or non-profits depending on the cost they save. The NRAs more than 4 million dues paying members may tolerate meager spending only on certain things and only for so long. What the NRA spending on programs declined by $45 million – down more than 35% – in 2020. The organization was quick to attribute the change to the country’s response to the Covid-19 pandemic.
However, program spending fell even further into 2021when life started to get back to normal, especially for gun enthusiasts. The NRA spent just $75 million on its programs in 2021, nearly $53 million less than two years earlier.
It hasn’t reduced all costs during these lean years.
Administrative expenses in the “legal, audit and tax” category skyrocketed, from just over $4 million in 2017 to nearly $47 million in 2021. Much of this reflects the money the NRA has paid for its various legal entanglements, largely in fees for new legal team.
What was once a member-focused organization has quickly become one whose main growth area is legal costs.
Was 2022 a turning point?
While the NRA has apparently improved its bottom line, the financial neglect of programs such as firearm training, matches and field services could ultimately disappoint its members and donors.
The organization has seen contributions fall in recent years, with a loss of more than 1 million members since the start of the crisis. I see the risk of a downward spiral: lower revenues, leading to less spending on programs, leading to further drops in dues, donations, and so on.
The full 2022 NRA financial statement is not yet available, but there are early signs that this may have been a turning point.
Journalist Stephen Gutowski reported to The Reload that NRA membership is declining meant that even with its more streamlined spending profile, the organization was poised to end 2022 at a loss.
I think with fewer members and fewer items yet to be dropped, the NRA may well take more drastic steps in the coming years. And since 2022 was an election year — prime time for the NRA to take center stage — falling funds prevented an all-out political spending blitz.
Although it once seemed like the NRA would suddenly implode because of his weak finances, its decline today is more of a slow burn that shrinks its size and threatens its future. The growth of other pro-gun groups, such as Gun Owners of America and the Second Amendment Foundationposes even more risks for a shrinking NRA.
In my opinion, the NRA’s risky strategy of cutting program costs while spending more on legal battles could herald further and continued weakening of the organization in years to come.
