This story was published in partnership with the Trace.
The National Rifle Association suffered a sharp decline in membership dues last year despite a historic fee hike, according to financial statements made public Wednesday. The statements, covering the NRA’s operations in 2017 and obtained by the Center for Responsive Politics, also showed a substantial decline in total revenue and a drop in the NRA’s ability to cover its debts.
The roughly 22 percent drop in membership revenue—from $163 million in 2016 to $128 million last year—is striking given that the NRA increased its membership dues in March 2016 for the first time in decades (and then raised them a second time last summer). It also recently began claiming a membership of six million, up from “more than five million” in January 2016. The NRA offers a variety of different membership programs at different price points—one-year, three-year, lifetime, etc.—but experts contacted by the Trace were unable to explain how the group could be drawing less revenue from more members charged higher prices.
We asked Marcus Owens, a lawyer specializing in nonprofit law and a partner at Loeb and Loeb, if it looks like the NRA was shedding members. “I think that’s a reasonable explanation for the difference in the numbers,” he said.
Dues from members accounted for just 40 percent of the NRA’s total revenue in 2017—the lowest percentage in a decade. In 2008, more than 58 percent of revenue came from dues, indicating that the NRA may have hit a ceiling on its efforts to increase membership even as demands on its commitment to fund the GOP’s political efforts—to the tune of a $100 million surge in 2016—continue to grow.
“This is a continuation of long-term trends for the NRA,” said Brian Mittendorf, chair of the accounting department at Ohio State University’s Fisher College of Business. “Revenues are down across the board, and the expenses aren’t down enough to cover it.”
Mittendorf points to the group’s unrestricted net assets—the total amount of available money it has to cover its debts—as a red flag. In 2016, that number was underwater at negative $14 million. Last year, it fell much further, to negative $31 million.
There are indications in the statements that the NRA—which frequently raises money that is restricted by donors to particular uses, like education or hunter services—was hungry for ready cash. In 2017, according to the statements, it took out a $5 million loan from the NRA Foundation, an affiliated nonprofit that, as a 501(c)(3), is barred from supporting political campaigns. The NRA already had a $25 million line of credit from a bank that was nearly maxed out; turning to the foundation for a loan may be a sign that it was in need of operational funds.
“I think they needed the cash,” said Owens, adding that the loan was notable because 501(c)(3) organizations like the NRA Foundation can’t grant money to 501(c)(4) groups like the NRA unless the money is restricted to a charitable purpose and the foundation makes a substantial grant to the NRA each year for programs that meet that standard. Loans, however, are not restricted, and “treating the foundation like a piggy bank” could end up skirting laws designed to keep tax-exempt donations from funding political activity, Owens said.
The NRA, which declined to comment, has recently claimed to be in dire financial straits. In May, it sued New York State over its regulatory efforts to stop the sale of NRA-branded Carry Guard liability insurance, claiming that the campaign has cost it more than $20 million and has “imperiled the NRA’s access to basic banking services” and other essential business relationships.
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