NRA's path to recovery from financial woes leaves the gun group vulnerable to new problems
Published in Business News
The National Rifle Association’s financial firepower, which arose in part due to its large and loyal membership base, has long been one of the gun group’s main sources of strength.
But the NRA has in recent years faced a financial tsunami, one that came to light after the 2016 election. A swirl of disagreements with longtime business partners, accusations of waste and misspending, ballooning debt and lawsuits from the New York and Washington, D.C. attorneys general have triggered one embarrassment after another. The NRA tried to declare bankruptcy to cushion some of these blows, with no luck.
At this point, the threat of being forced by the authorities to shut down due to alleged improprieties is minimal. But has the NRA managed to weather its financial storm?
As an accounting researcher who focuses on the financial performance of nonprofits, I have been closely studying NRA finances throughout its crisis. I can say the NRA financial picture is, as of early 2023, a mixed bag. The gun group has shored up its financial position over the last few years. However, the way in which that financial recovery came about risks hemorrhaging the NRA’s core supporters.
The NRA’s financial troubles arose at the same time that scandalous aspects of the organization’s woes – such as longtime NRA leader Wayne LaPierre’s free yacht getaways and luxury suit purchases billed to an NRA contractor – were drawing public attention.
Perhaps the best measure of a nonprofit’s financial health is its unrestricted net assets – the money at the organization’s disposal after leaving out amounts it has to spend on activities promised to donors and what it owes to others. A multimillion-dollar unrestricted net asset reserve for an organization the size of the NRA can provide financial security. On the other hand, a negative reserve is typically a sign of serious trouble.
The NRA’s reserve was negative at the end of 2017, with a deficit of more than US$30 million – a sure sign of the troubles already underway. Such a negative balance indicates that after satisfying donor promises, the organization owes more money to others than the value of its assets.
Things only got worse in the following two years, with the NRA approaching an unrestricted net asset deficit of nearly $50 million in 2019. This degree of weakness even led the organization to suggest that it risked imminent failure. However, there was time for a turnaround.
And that’s what happened. In 2020, the NRA slashed its unrestricted net asset deficit by over $38 million. Ironically, it was shortly after pulling off this marked improvement that it filed – unsuccessfully – for bankruptcy.
This financial resurgence continued in 2021, with the organization reporting it had eliminated its unrestricted net asset deficit, building up a surplus of over $10 million. When also including the money set aside for specific uses stipulated by donors – the group’s net assets – the NRA’s total available funds reached over $75 million.