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Member dues plummet, leaving the NRA in the red for second straight year

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The National Rifle Association is traditionally one of the most powerful and financially intimidating interest groups in Washington. But a new third-party audit of the group’s finances obtained by OpenSecrets raises questions about its long-term fiscal health.

The document offers the first look at the NRA’s finances in the wake of the 2016 elections. It shows that for the last two years, the NRA saw plummeting income from dues-paying members, and that has, in turn, fueled growing deficits.

The 2016 Bonanza

The NRA went big in 2016, breaking its own spending records to help catapult Donald Trump into the White House and protect Republican majorities in the House and Senate. The organization’s Federal Election Commission reports show that the nation’s preeminent gun-rights group spent at least $54.4 million boosting Republicans — with Donald Trump being, by far, the biggest beneficiary of that firepower, reaping $31.2 million in support.

The bulk of the NRA’s spending in 2016, $35.2 million, was channeled not through its political action committee, but through its 501(c)(4) nonprofit arm. It’s this section of the NRA — which doesn’t have to disclose its donors — whose finances are reported in the audit obtained by OpenSecrets.

Such nonprofits are not supposed to have politics as their primary purpose, but they can raise and spend unlimited funds from anonymous donors and easily spend millions on elections without much oversight from the IRS or the FEC. The fact that they can do so without disclosing their donors is why they are often referred to as “dark money” groups. 

The NRA’s massive 2016 push was part of what ultimately became a $100 million spike in the group’s outlays between 2015 and 2016. But that spending wasn’t matched with similar growth in revenue, leaving the NRA with a deficit of more than $14.8 million.

This deficit is in what’s called “unrestricted” net assets, which are funds that are available to be spent at the discretion of a board.

A year later, with its chosen candidate in office, the NRA’s spending plummeted by $76 million, according to the audit.

Life in the red

It’s normal for the spending of an organization as politically active as the NRA to rise during election years and fall in off-years when such groups tend to fundraise and try to get their financials in order. But even with such a steep decline in spending, the NRA — one of the wealthiest, most powerful political forces in the nation — remained in the red, as its revenues tumbled by $56 million.

“Their current business model cannot be sustained the way it is going,” said Brian Mittendorf, an accounting professor from Ohio State University. “It can be sustained in the short term, but not the long term. The financial statements would indicate that.”

By the end of 2017, the group spent $26.1 million more than it brought in, expanding its existing deficit from the previous year to $31.8 million.

“The big takeaway is that there were some red flags about their long-term financial health in 2016,” Mittendorf told OpenSecrets, “and nothing alleviates those concerns in their 2017 financials. If anything, it shows they’re coming to fruition.”

This two-year deficit is a steep decline from the NRA’s $27.8 million in positive assets from 2015.

More striking is that one of the biggest drivers of the group’s falling revenue is dwindling dues from NRA members, which fell from more than $163 million in 2016 to $128 million in 2017.

“It’s not extremely uncommon for an organization of its size and stature to be in that circumstance,” Mittendorf said, “It would say to me, though, that something needs to give at some point. Either they need to shrink or find new sources of revenue.”

Dues were down slightly in 2016 as well, and an analysis of the NRA audits going back to 2009 — the earliest year for which such audits are available — shows that 2016 to 2017 was the only period during which dues declined for more than a single year. In 2014, for example, the NRA’s dues revenue fell by more than $47 million, but they bounced back by $37 million in 2015.

The audit includes none of the NRA’s affiliated nonprofit entities like the NRA Foundation, the group’s 501(c)(3) charitable arm. Nor is the NRA’s PAC included.

It will take time to know if the NRA bounces back in 2018 because the tax returns and audits covering the current year won’t be filed with state and federal regulators until late 2019. The NRA did not respond to questions from OpenSecrets about its finances.

But one possible indication that the group’s finances aren’t as robust as they have been in past cycles is that its election spending has slowed down considerably in 2018. The NRA has reported $2.7 million so far this cycle — mostly from its PAC — down from $19.2 million at this point in 2016 and $10.7 million at this point in 2014, the last midterm election cycle.

At the same time, the organization has reportedly been drawn into the investigations surrounding Russian meddling in the 2016 election, and it has openly begun to sound alarm bells about the possible financial impacts of “blacklisting” that is happening at the state-level in New York and elsewhere.

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Read From Source… [OpenSecrets Blog]

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