By Elizabeth Schmidt, University of Massachusetts Amherst
The National Rifle Association keeps getting itself into trouble by flouting the best practices all nonprofits should follow.
As I often explain to college and graduate students who are learning the basics of nonprofit management, all nonprofit boards of directors should ensure that those groups uphold their missions without wasting money. These students also learn that it’s against the law for nonprofit board members or staff to benefit through the personal use of the group’s assets.
I began to use the NRA as a case study when serious allegations about its mismanagement emerged in 2019. The gun group’s wobbly finances and other woes make it the epitome of a poorly run nonprofit, because it violates four key legal and management principles.
Moving forward, I’ll draw on new information that emerged from the NRA’s bankruptcy trial, which a federal judge in Texas dismissed on May 11, 2021. The trial’s dismissal means that the NRA cannot carry through on its bid to use bankruptcy protection to get out of being sued by New York state authorities for alleged misdeeds.
1. No one running or overseeing a nonprofit should make a profit
During the NRA’s bankruptcy trial, Wayne LaPierre, its top executive, admitted he personally benefited from the organization’s assets beyond reasonable levels of compensation. He also suggested that he had stopped doing so – after “self-correction.”
Information the NRA disclosed in its 2019 tax filings shows that LaPierre, to whom the NRA paid US$1.9 million that year, had reimbursed the NRA $300,000, plus interest, for improper expenses, and that he faced another $75,000 in federal tax penalties. That same paperwork indicated that current and former NRA executives had received at least $1.3 million in “excess benefits,” as the organization had improperly paid for their meals, travel and sporting events.
New York authorities allege that LaPierre and others have diverted millions of dollars for themselves that should have been used to fund NRA operations. Among the lawsuit’s allegations is that LaPierre frequently took personal trips on private jets on the NRA’s dime. He procured personal benefits, including lucrative contracts, for board members, vendors and former employees.
On the list of LaPierre’s inappropriate expenses were golf memberships and millions of dollars of home security measures, improbably including $800 for mosquito treatment on his property. In 2019 the NRA began to negotiate to buy him a $6.5 million mansion in Dallas before the deal fell through.
New York’s complaint also alleges that the NRA had improper business dealings with board members and their firms. Approximately one-fourth of the 76-member board had contracts or made deals with the NRA, a practice that is legal only as long as the board determines the deal is “fair, reasonable, and in the corporation’s best interest.”
A board this size is inadvisable. Experts recommend that nonprofit boards have between eight and 14 members so they can act as one group, with each member feeling responsible. After critics blamed scandals at the American Red Cross in the early 2000s on the board’s large size, it was scaled back. That board now ranges between 12 and 20 members, down from about 50 in 2005.
2. Nonprofit boards are responsible for good governance
A nonprofit board’s fiduciary duties include overseeing operations and ensuring that missions are upheld. Members must act in the organization’s interest rather than their own. They hire, supervise and, if necessary, fire the top executive.
Had the NRA’s board done its job, I doubt the gun group would be in all this trouble.
Instead of ensuring good governance, the NRA board has let it be run as “Wayne’s Kingdom,” in the words of Phillip Journey, a Kansas judge and NRA board member who testified during the bankruptcy trial. LaPierre actually hid the bankruptcy filing from most board members, the NRA’s top lawyer and its chief financial officer. In his decision to dismiss the bankruptcy case, Judge Harlin Hale said he found this lack of communication “nothing less than shocking.”
Board members who raised questions about the NRA’s activities say they lost committee assignments and were, on one occasion, told to “sit back, shut [your] mouth, stop asking questions, and trust that NRA management had everything under control.”
LaPierre also secured a $17 million post-employment contract, without the board’s knowledge, according to the New York lawsuit.
Among the additional details regarding these transgressions that came to light during the bankruptcy trial, perhaps the most stunning has to do with a vendor’s 108-foot boat called Illusions. LaPierre said he sailed to the Bahamas on that yacht because he “was looking for a place to be safe” following mass shootings like those at Sandy Hook Elementary School in Newtown, Connecticut, and Marjory Stoneman Douglas High School in Parkland, Florida.
New York’s NRA complaint reads like a textbook case of governance failure. It alleges that the board neither followed its own procedures nor documented its compensation decisions. Its audit committee ignored its obligation to oversee internal controls, failed to review related-party transactions and brushed off whistleblowers.
It’s no wonder that several board members have resigned since 2019, when irregularities became harder to ignore.
The NRA now says it is making strides in the right direction through a “renewed commitment to good governance.” But with LaPierre remaining at its helm, and a board that’s still loyal to him after all these allegations, I question whether the organization can fully clean up its act.
3. Nonprofit leaders must mind the finances of their organizations
Unsurprisingly, the NRA’s finances have suffered and its membership dues have fallen in recent years.
The NRA’s legal troubles cost $100 million from mid-2018 to mid-2020, according to leaked a recording reported by NPR. That figure, of course, doesn’t include expenditures tied to the dismissed bankruptcy trial.
Other signs of financial mismanagement are surfacing. The NRA’s former chief financial officer, Woody Phillips, declined to testify at the bankruptcy trial. When his successor, Craig Spray, testified, he said he wasn’t informed in advance about the decision to file for bankruptcy and that he had concerns about the accuracy of the NRA’s 2019 tax filings. Spray left the NRA in January 2021.
Nonetheless, the NRA has insisted it is in its “strongest financial condition in
years.” In turn, Hale said that this solvency would mean the NRA should be able to pay its creditors in full.
4. The purpose of a nonprofit is to advance its mission
A nonprofit with shoddy oversight undercuts its mission. At the least, the NRA could have devoted the money it’s spending on legal costs on its mission, which largely consists of protecting the Second Amendment rights of U.S. gun owners.
Whatever you think about that mission, that’s not related to the NRA’s legal troubles. Because the nonprofit sector has room for opposing views or causes, it includes both groups that support abortion rights and groups that want abortion banned, just as there are organizations that want more restrictions on gun ownership and those seeking fewer such rules.
But all nonprofits have something in common. They agree to pursue their mission in exchange for tax breaks.
Any nonprofit that loses sight of that mission, as the NRA has done, runs the risk of losing that exemption and even of the right to keep operating. Given that the New York lawsuit asks for its dissolution and the Internal Revenue Service entered the bankruptcy proceeding as a creditor – which indicates it is examining the NRA’s actions – those outcomes have now become a real possibility.
Elizabeth Schmidt, Professor of Practice, Nonprofit Organizations; Social & Environmental Enterprises, University of Massachusetts Amherst
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Well written and analyzed. Having served on the BoD of a national nonprofit, I’ve always been amazed that it took so long for this to come out — as the author observes, Wayne’s World did EVERYTHING they teach you not to do in the world of nonprofits.
If a court could simply kick Wayne and his cronies out and force the election of a new, independent BoD, I suspect the problems would solve themselves: a new board could unleash the lawyers on Wayne, Hammer, Cotton, et al., as well as on the former members of the BoD who so grossly failed to satisfy the fiduciary duties to the organization. Sadly, Wayne has given the NYAG the perfect weapon to dismantle the NRA.
Anybody who read Neal Knox essays 25 years ago knows this stuff didn’t take this long to come out. It was public knowledge but so firmly entrenched that all reasonable efforts to stop it failed.
I remember reading several articles..in maybe Shotgun News? Knox and son IIRC or son and Dad had written same things. Hard to remember but they exposed the NRA and were pretty much burned at stake.
Dear everyone here…
I don’t care at all, that Wayne is pocketing money, authorized or not. Don’t care. At all. I wouldn’t care if the NRA was a “FOR-PROFIT” organization. I wouldn’t care if Wayne was paid a million dollars a year, and spent half his time on a yacht, with a 20 year old hottie in each arm, with a Sauvignon Blanc. Still wouldn’t care, I would still hand them some money, as long as he and the rest of the NRA did a good job protecting gun rights, and fighting the good fights in the courts. All of you can take that… and suck on it.
1) Having the NRA get targeted by a leftist ultrawoke AG looking to score fists of solidarity with fellow tards ending up getting dissolved or similar is a losing situation for gun rights advocates. Where do you think that money is going to go? Back to the NRA members? No. The NRA was superior to other organizations in the velocity and weight they could throw around in the political sphere. Having them destroyed, however corrupt they are, is a loss to our cause.
2) Having the NRA continue to exist with the board of directors looking to rule till death, swimming in corruption, cronyism, fake negotiations showing a façade that they actually care about guns rights, and wastefulness of gun rights supporters donations, many from impoverished people, who work hard, is a losing situation for gun rights advocates.
Everything about this situation sucks.
Yes, it does.
Actually, it is your attitude that has led to the NRA being the poster child for corrupt, self-serving grifters fleecing the mentally challenged members of the POTG.
As a member of the NRA, you have a duty to provide oversight and ensure your organization is conducting itself in an honest, ethical and upright manner and utilizing the funds provided for the mission of the NRA as publicly stated.
You abandoned that duty and are now publicly stating that you do not care that the organization you support is a bunch of unethical grifters, fleecing the cognitively challenged members.
You, Donald Trump and Steve Bannon are birds of a feather, willing to lie, cheat and steal in order to self-enrich, all while claiming to be patriots as you stuff your pockets.
The anti-gun extremists appreciate your efforts to compromise the integrity of the NRA.
Bring back Ollie North . . .
Oliver north is a lying, cheating treasonous bastard who was the architect of a successful scheme to provide millions of dollars of arms to the muslim fundamentalists in Iran.
The ayatollahs appreciate your support.
In the meantime Biden is Bankrupting the US. Crisis after crisis and only in the fourth month. But I bet she does not teach how NOT to run a Country. Else were, The former Washing and Lee University in Northern Virginia is teaching a class on “how to Takeover a Country. And in Marxism 101. I bet she loves that. Screw these Antifa, Liberals. She can go f herself.
ooooookay. A little off topic. But thank you for contributing.
Earnie Bass never saw any of your comments concerning the deficit when Trump ran up the highest deficits in ever in the history of the country. Glad you’re concerned now.
The outgoing president’s last budget is the incoming president’s first, which he either signs off on or risks a shutdown by rejecting. For good or ill, Trump made the call to sign off on Obama’s last budget, but the onus is on Trump’s predecessor for saddling him with it.
Wasn’t that also Obama’s first budget? I know there were years he didn’t even submit one, and years when Congress didn’t pass one. And like several presidents before him, the national debt doubled during his tenure, GOP or Dem made no difference, doubled under each president. I suspect it will triple under Faux President Biden, but time will tell.
WASHINGTON and Lee is located in Lexington, VA in the Shenandoah Valley, not in “Northern Virginia” by any stretch of any fevered imagination.
And who is “she”, pray tell? You have a personal pronoun with no named antecedent.
No matter though, as your comment was gibberish from the get-go.
I’m sure Prof. Schmidt is very pro gun, supports 2A, and is only writing about this for our own good.
She may well have an agenda. But it doesn’t mean she’s wrong on this.
Do you disagree that any of her four enumerated points are fundamental principles of nonprofit operations? If so, which ones are not?
Do you disagree that Wayne’s World grossly violated each of those four principles? If so, which one(s) did they not violate?
If you don’t disagree with her stated principles or that NRA under Wayno grossly violated them, pray tell me what your point is?
LKB,
Agree. If the anti-gunners can help put WLP in jail, along with members of the corrupt board, they will be doing us a favor. Then, the NRA can build back better (to borrow a phrase).
I suspect NRA won’t be building back at all. And I’m a Benefactor Life member, but I’m done.
“Agree. If the anti-gunners can help put WLP in jail, along with members of the corrupt board, they will be doing us a favor.”
The ‘pound of flesh’ they want for such a ‘favor’ is the destruction of the NRA itself.
The resolution we need is a good upper-management house cleaning…
You gullible puppets of the MSM are pathetic tools. You delite in the NYT, CNN, WOPP manipulate you. WHY IS THAT?
“Whatever you think about that mission, that’s not related to the NRA’s legal troubles.”
I think she pretty much outs herself here on her political views, but she also points out that it doesn’t matter. Nowhere did she criticize the NRA as having a misguided or bogus purpose — just that Wayne and company were not following that purpose, which is the reason for a non-profit to exist. She doesn’t even call for the dissolution because of Wayne’s actions, but she does state that he’s handed James a pretty good case to do it. She doesn’t even mention bonehead actions like continuing to employ Wayne’s executive assistant who was convicted of embezzlement from a previous job and caught stealing $40k from the NRA. These are “unforced errors” and if the NRA is destroyed, it’s the fault of Wayne and the Board that didn’t oversee him properly. It’ll James’ fault if she gives the NRA’s assets to “gun safety” groups like Everytown or Gifford instead of FPC, 2AF, GOA, etc, but it’ll be Wayne that empowered her to do it.
Jim and Tammy Faye Bakker, Jerry Falwell Jr, and numerous other Christian leaders have been involved in scandals. Are only members of their congregations allowed to opine, while others must remain silent even if they have expertise is financial or sexual malfeasance?
Will Wayne and his cronies see the inside of a jail house or will they all get to retire on their ill gotten gains?
“Wayne’s executive assistant who was convicted of embezzlement from a previous job and caught stealing $40k from the NRA.“
“Jim and Tammy Faye Bakker, Jerry Falwell Jr, and numerous other Christian leaders have been involved in scandals”
I would love for someone to advance a hypothesis as to why conservatives are so gullible.
Is it willful ignorance or actual cognitive deficits, who knows…
Says the “progressive” who conveniently forgets the 200+ million people his ideology has starved and murdered in the past century.
“…hypothesis as to why conservatives are so gullible.”
Go for it, but first do three years of nonstop RUSSIAN COLLUSION conspiracy theories, and how a large segment of the population continue to buy it to this day, not just without any proof, but with actual proof of it being a lie from the beginning.
Miner,
We are never going to give you are guns. Okay? Listen. It’s not going to happen buddy. Ever. Your daily routine here? –> it’s a waste of your time. Not going to happen. Ever.
Does not matter what her personal politics may be. The truth of what she is saying about non-profits and how they should operate is universal. Stealing, mismanaging, betraying its own purpose for existing is all bad.
And all on Wayne’s head and those who support him on the NRA BoD.
–>”I’m sure Prof. Schmidt is very pro gun, supports 2A, and is only writing about this for our own good.”
Exactly. The first thing I thought was who the f*** is Prof Schmidt??? And my guess is – a soon to be ultrawoke professor, pending a PC leftist allegiance test, followed by ultrawoke progressive reprogramming, that is already mostly there as a teacher at U of masshole.
Here’s one now!
Unable to rationally respond to the actual content of the article, he chooses to attack the writer and ignore completely the validity of her observations.
That’s because the point of her article has less to do with actual non-profits and more to do with smearing the NRA because guns.
She likely wouldn’t have written the article, if it hadn’t been about the NRA.
Suppose the NRA is shut down. What happens to the NRA-ILA, a completely separate entity?
Well I’ll tell yah, if I’d have been paying money to the NRA to get gunm stuff done then find out one of the CEOs was getting rich off them donations I’d be wanting some money back.
Wayne cut the word from contributors to suckers, takes less ink, saves money.
The solution here is simple. Texas governance declares Texas a sanctuary state for gun rights orgs, and the NRA, simply ignores the AG. Mass non-compliance. Mass dismissal of federal law enforcement. Force the feds to force their hand, and see how that goes in the state of Texas.
At the very least – it will be greatly entertaining.
Yes that would be great, Texas could do their best to protect grifter Wayne Lapierre and his cronies as they loot the pockets of honest gun owners.
Again, is it willful ignorance or truly cognitive deficiencies?
Miner49er,
“Again, is it willful ignorance or truly cognitive deficiencies?”
It is both. People abhor unpleasant/awful ideas, concepts, and possibilities. They will go way out of their way to deny and/or rationalize reasons to avoid considering such unpleasantries.
That immutable fact of human psychology applies to people of all political persuasions–from Far Left to Far Right and everything in between.
Uncommon and Miner.
Wayne is really old. In fact, many on the board, are very old. They aren’t going to last much longer, and the NRA can be taken back. And I think that is better, than the alternative. 99% or more of the NRA are people worth keeping.
Unc, you are correct in everything you say, gullibility is rampant in America.
And you can bet Steve Bannon is going to get Trump’s Wall built, just as soon as he finishes that cruise on the Chinese billionaires yacht.
–>” Yes that would be great, Texas could do their best to protect grifter Wayne Lapierre and his cronies as they loot the pockets of honest gun owners.”
I’m going to be honest Miner.
I don’t care at all, that Wayne is pocketing money, authorized or not. Don’t care. At all. I wouldn’t care if the NRA was a “FOR-PROFIT” organization. I wouldn’t care if Wayne was paid a million dollars a year, and spent half his time on a yacht, with a 20 year old hottie in each arm, with a Sauvignon Blanc. Still wouldn’t care, as long as he and the rest of the NRA did a good job protecting gun rights, fighting the good fights in the courts, and flipping fake gun rights supporters like you, the bird, you little dumb ass troll.
It is your support of Wayne’s dishonesty and cheating that opened the door for the New York State Attorney General to perform her duties of oversight of nonprofit corporations chartered in New York State.
Once again, the anti-gunners thank you for your efforts on their behalf, your embrace of the grifters has materially advanced their efforts.
With its heading, surprised the last section didn’t get into the times the NRA openly worked against its mission like it’s endorsement of the Hughes Amendment (while lying to its members to the contrary), NICS, and red flag laws.
minor49iq…your time would be better spent organizing your anthony weiner photos.
If New York succeeds in killing the NRA, won’t they be surprised to learn it was the “moderate” gun rights group all along?
Killing the NRA is really about destroying donors to conservatives.
There’s just nothing about this I don’t hate… But fuck the NRA. LaPierre should be forced to swim the Atlantic Ocean laterally with ham hocks tied to his ankles, and every one of those colluding, gritting pieces of shit should be right behind him. But God I hate to see it go. Sometimes though, when the gangrene starts, the limb must be amputated to save the body.
GRIFTING
Shame on the NRA leadership. Not a red cent more from me, a life member, ever again. Everything that’s come to light, and the same cronies are still running the place.
Leftist prog lawyer says…
AND you tools of the MSM.
The New York Attorney General is discharging her duty to oversee the operations of nonprofit corporations chartered in the state of New York.
Your position is interesting, it seems many conservatives are just fine with grifters like Wayne Lapierre and Donald Trump, some sort of inverted hero worship I guess.
This is more of a case study non how not to run any organization and not to become what you were paid to fight
Let’s just break this down into the simplest terms… as a Felon, Wayn(ker) LaPayout should be prohibited from having anything whatsoever to do with firearms, especially while misrepresenting the mishandling of legitimate funds that he and the BoD apparently burned their way through…. can’t be rid of these grifters soon enough !!!
Wayne was brought into the NRA as a Lobbyist. Lobbyists In general spend a lot of money winning and dining and spending frivolous and massive amounts to influence votes. Now personally I believe Lobbying is really a contemptible practice morally and ethically, and more bad and worthless legislation has been passed due to Lobbying, but the Constitution allows it so we’re stuck with it. So it’s no wonder to me that Wayne still thinks and acts like a Lobbyist, even though that hasn’t been his role anymore.
Does anyone really believe that ousting Wayne and other Board members from their leadership and control, would influence the NYAG to withdraw the lawsuit she’s made? Because I doubt that will happen. She’d be pursuing her windmill tilting regardless of who is in leadership roles.
Fire Wayne, replace and downsize the board and get on with the mission as a non-profit or take it private, and then who cares. The free market will support it or not as it sees fit.
I’m hoping for a class action suit to get my lifetime funds back! Please join the 2nd amendment foundation, or the GOA!
Many churches, T.V. ministers, united way all have went crazy with other peoples monies.
This is not new or news, do not get me started on government.
We’re they a non profit trying to protect your rights? No just your common charlatans begging on your sympathy!
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