National Rifle Association (NRA)

CharityWatch has issued a "?" rating for the National Rifle Association (NRA) due to concerns related to its governance practices, which may impact the reliability of the NRA's financial reporting, and because it filed for Chapter 11 bankruptcy protection in January 2021, which may impact how the NRA uses future donations to the organization. CharityWatch has also issued a Governance Exception for the NRA due to the multiple incidents of excess benefit transactions (described in IRS Form 990, Schedule L disclosures, as cited below), and due to the pending legal action against the organization by the New York State Attorney General and District of Columbia Attorney General, respectively. 

–  A July 12, 2019 article in The New York Times reported that the attorney general for the District of Columbia (DC AG) opened an investigation into the NRA and issued subpoenas "as part of an investigation into whether [the NRA and its related Foundation] violated the district's Nonprofit Act." The DC AG is interested in "examining 'financial records, payments to vendors, and payments to officers and directors,'" according to the article. The DC AG also intends to examine "whether the N.R.A. used charitable funds to provide private benefits to N.R.A. officials, and whether payments were improperly made by N.R.A. contractors like Ackerman McQueen, the association's former advertising firm, which paid hundreds of thousands of dollars for clothing and travel expenses for [NRA CEO/Executive VP] Mr. LaPierre," reports the NY Times. 

–  According to an August 6, 2019 article in The New York Times, a spokesperson for the Office of the New York Attorney General (NY AG) stated that the NY AG "has been scrutinizing whether the N.R.A. was using funds designated for charitable purposes appropriately, and if payments made to board members, officers and affiliated parties complied with relevant tax laws and fiduciary requirements." In August 2019 the NY AG "issued a subpoena seeking documents from more than 90 current and former members of the organization's board," in an effort to obtain information that "would shed light on spending decisions made by the board," according to the article.

–  According to a January 15, 2021 article in USA Today, the NRA filed for Chapter 11 bankruptcy protection.

–  According to a May 12, 2021 article published by the Associated Press, "a federal bankruptcy judge in Dallas, dismissed the NRA's case... He ruled the organization's leadership sought Chapter 11 protection in bad faith — without informing most of its 76-member board – and did so to gain an 'unfair advantage' in its fight with New York regulators."

–  According to a March 2, 2022 article in Reuters, a judge "rejected the effort by New York's attorney general to put the National Rifle Association out of business for alleged corruption, but she can still seek the ouster of the gun rights group's longtime Chief Executive Wayne LaPierre." 

[For links to referenced articles, please see Related External Articles in the "Articles & Alerts" section, below. For more information regarding the lawsuits against the NRA, see CharityWatch's August 2020 article: NRA and NRA Foundation Facing Lawsuits—NY AG Seeks to Shutter NRA...]

According to the NRA audited Statement of Financial Position as of December 31, 2020, the NRA reported a total net assets without donor restrictions deficit of $(11,503,671) at December 31, 2020; included in the deficit is a cumulative pension liability of $(36,532,477).

The NRA reported a total net assets balance of $49,304,273 at December 31, 2020. The total net assets balance consists of the $(11,503,671) in net assets without donor restrictions deficit, cited above, plus $60,807,944 in net assets with donor restrictions, according to the audited Statement of Financial Position as of December 31, 2020.

According to the NRA audit of December 31, 2020 (Note 1 re: Classification of Net Assets):

"Net assets without donor restrictions represent resources that are not restricted by donor-imposed stipulations. They are available for support of the NRA's general operations.

"Net assets with donor restrictions represent contributions and other inflows of assets whose use by the NRA for its programs are limited by donor-imposed stipulations..."

CharityWatch's rating of the National Rifle Association (NRA) is for the the 501(c)(4) tax exempt, social welfare organization (tax ID #53-0116130). CharityWatch issues a separate rating for the related 501(c)(3) public charity entity, NRA Foundation (tax ID #52-1710886).

CharityWatch does not provide a rating for the other NRA affiliates, which according to Note 1 of the NRA 2020 audit, include the following: the NRA Civil Rights Defense Fund, the NRA Political Victory Fund, the NRA Special Contribution Fund, the NRA Freedom Action Foundation, and the NRA Victory Fund (VF). 

CharityWatch separates the ratings for 501(c)(3) & 501(c)(4) organizations, even when the financial activities of both entities are included together in a consolidated audit, due to their differing tax treatments by the IRS. For more information on this topic, please see our sections on Types of Non-Profits, Tax Status, and Treatment of Related Organizations, which can be found on the Our Process page. For more information about things to consider when donating to organizations that have related public charity and social welfare entities, read "Sorting Out Nonprofit Pairs" in the "Articles & Alerts" section, below.

According to the National Rifle Association (NRA) audit of December 31, 2020 (Note 16, Related Parties):

"The NRA and the NRA Foundation are financially interrelated entities as the NRA is able to influence the Foundation's operating and financial decisions as well as the NRA having ongoing economic interest in the net assets of the Foundation. The NRA is affiliated with CRDF [NRA Civil Rights Defense Fund], SCF [NRA Special Contribution Fund] and the FAF [NRA Freedom Action Foundation] by virtue of the control vested with the NRA's Board of Directors to appoint the Board of Trustees of each affiliate. The PVF [NRA Political Victory Fund] is a separately unincorporated political action committee of the NRA whose five officers are NRA employees. The NRA provides certain benefits to the affiliates at no cost, among which are the use of office space and other administrative and support services. Management has determined that the fair value of these benefits is minimal, and accordingly, no amounts are reflected in these [audited] financial statements.

"The Foundation reimburses the NRA for certain expenses, such as salaries, benefits, and general operating expenses, paid by the NRA on the Foundation's behalf. These expenses totaled $8,585,076 and $15,377,886 for the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020 and 2019, $32,366,076 and $32,252,080 respectively, was owed to the NRA... In addition, certain qualified NRA programs were funded by Foundation grants totaling $5,663,860 and $12,073,526 for the years ended December 31, 2020 and 2019, respectively.

"The CRDF [NRA Civil Rights Defense Fund] reimburses the NRA for general operating expenses paid by the NRA on the CRDF's behalf. As of December 31, 2020 and 2019, $1,000 and $1,374, respectively, was owed to the NRA for general operating expenses... The CDRF reimburses the NRA for qualified legal costs totaling $114,104 and $652,384 for the years ended December 31, 2020 and 2019, respectively.

"All permanent employees of the SCF [NRA Special Contribution Fund] are maintained as employees of the NRA and the SCF reimburses the NRA for the total employee costs including benefits. The SCF reimburses the NRA for certain other expenses paid by the NRA on the SCF's behalf. These expenses totaled $1,500,083 and $2,034,855 for the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020 and 2019, $130,495 and $342,184, respectively, was owed to the NRA for salaries, insurance and benefits net of certain other expenses owed by the NRA to the SCF...

"The FAF [NRA Freedom Action Foundation] reimburses the NRA for qualified legal costs totaling $628,621 and $977,377 for the years ended December 31, 2020 and 2019, respectively. 

"The NRA paid administrative and fundraising expenses of $3,880,247 and $2,908,114 for the years ended December 31, 2020 and 2019, respectively, on behalf of the PVF [NRA Political Victory Fund]. The PVF reimburses the NRA for salary expenses that totaled $501,742 and $78,979 for the years ended December 31, 2020 and 2019, respectively.

""The NRA paid administrative and fundraising expenses of $112,673 for the year ended December 31, 2020, on behalf of the VF [the NRA Victory Fund]. In addition, the NRA made grants of $8,432,805 to the VF for the year ended December 31, 2020.

"While members of the NRA Board of Directors serve as uncompensated volunteers, some directors receive compensation from the NRA, either directly or through business organizations, for other professional services provided to the NRA. Other directors receive membership recruitment commissions (personally or through other entities) on the same terms as available to any other recruiter and in amounts that are not material for the purposes of these [audited financial] statements.

"To ensure that individuals are adequately represented in connection with investigations or litigation arising from their service to the NRA, the NRA from time to time advances or reimburses legal expenses to certain officers, directors, or employees."

According to the National Rifle Association (NRA) audit of December 31, 2020 (Note 18, Risks and Uncertainties): 

"As a result of the spread of the COVID-19 coronavirus, NRA has experienced disruptions to daily operations. Economic uncertainties have arisen which are likely to negatively impact revenues. COVID-19 forced cancellation of all competition events, 2020 and 2021 Annual Meetings of members and the 2021 GAOS. Other financial impacts could occur, though such potential impact is unknown at this time."

According to the National Rifle Association (NRA) audit of December 31, 2020 (Note 17, Bankruptcy Subsequent Events): 

"In January 2021, the NRA and a wholly owned subsidiary, Sea Girt LLC, filed for bankruptcy protection in the U.S. District Court for the Northern District of Texas. The case was dismissed without prejudice in May 2021 and the NRA is no longer under the supervision of the bankruptcy court. In anticipation of the litigation, the NRA deposited fees in a trust account with Brewer, Attorneys and Counselors; some of those funds were used to pay fees during the bankruptcy litigation, and the unspent balance was returned after the dismissal."

According to the National Rifle Association (NRA) audit of December 31, 2020 (Note 15, Commitments and Contingencies, Litigation and claims): 

"NRA is subject to various legal proceedings as well as federal and state government agency inquiries. In the opinion of the management of the NRA, there are no material pending legal proceedings to which the NRA will be found liable. Management also believes the federal and state inquiries have no merit and will be resolved to the benefit of the NRA. 

"In addition, New York State Attorney General Letitia James commenced an action in New York State Supreme Court on August 6, 2020, which seeks to dissolve the NRA's corporate existence and redistribute its assets. The lawsuit also purports to sue, directly and derivatively, two current and two former officers of the NRA: Executive Vice President Wayne LaPierre, Secretary and General Counsel John Frazer, former Treasurer Wilson H. Phillips, and former Executive Director of General Operations and Chief of Staff Joshua Powell. This matter is expected to proceed to trial during summer 2022. 

"During 2020, the NRA was involved in an arbitration arising from a contractual dispute with a former executive. The matter was settled in August 2021.

"The NRA is involved in ongoing litigation with its former advertising agency, Ackerman McQueen, Inc. The NRA has sued Ackerman McQueen for claims including trademark infringement, conversion, fraud, breach of fiduciary duty, and breach of contract. Ackerman has responded with its own counterclaims. The case is scheduled for trial in March 2022."

According to the NRA 2020 tax filing, the NRA reports re: Excess Benefit Transactions:

"The National Rifle Association has identified what it believes are excess benefit transactions in which it engaged in 2019 and in prior calendar years of which it became aware but were not reported on its prior Forms 990. These transactions are explained below. There are other transactions in 2019 and prior calendar years that are still under review by the NRA and/or are currently subject to dispute in [certain] legal proceedings...

"The NRA cannot at the time this Form 990 is filed determine whether these other transactions [subject to the legal proceedings listed] are excess benefit transactions" (IRS Form 990, Schedule L, Part V re: Part I - 1).

The individuals, dollar amounts, and other information the NRA reports in connection with excess benefit transactions includes the following:

1) Excess Benefit Transactions for "Personal Transportation" involving Wayne R. LaPierre (Officer): 

"It has been determined that in 2013 and 2014, there were six (6) trips on chartered jets that resulted in an excess benefit to Mr. LaPierre. Mr. LaPierre was, during those years, the Executive Vice President and Chief Executive Officer of the NRA... The NRA estimates that its expenses for these trips, which constitute automatic excess benefits to Mr. LaPierre because these amounts were not intended to be compensation, totaled $43,743.83, for which the NRA expects to receive reimbursement from Mr. LaPierre plus interest. The NRA estimates that the total...excise tax on these excess benefit transactions is $10,935.96" (IRS Form 990, Schedule L, Part V re: Part I - 2).

2) Excess Benefit Transactions for "Personal Transportation" involving Wilson "Woody" Phillips (former Officer): 

"From 2014 through 2018, Mr. Philips was submitting and receiving reimbursements from the NRA for airfare from his home in Dallas, Texas to Washington, D.C. Mr. Phillips served as Treasurer and Chief Financial Officer of the NRA... If these trips constitute commuting (which the NRA is presently investigating), the NRA believes such reimbursement would constitute excess benefit transactions. The total amount reimbursed by the NRA to Mr. Phillips from 2014 through 2018 is estimated to be $74,751.31, which would generate...excise tax due from Mr. Phillips of $18,687.83. The NRA is currently unaware as to whether Mr. Phillips intends to repay the amount of any excess benefit transactions, plus interest" (IRS Form 990, Schedule L, Part V re: Part I - 2).

3) Excess Benefit Transactions for "Cosmetics" involving Susan LaPierre: 

"The NRA has learned that from 2016 through 2018, the NRA paid for expenses incurred for professional makeup and hair services in connection with the attendance of Mrs. Susan LaPierre at certain NRA functions. Mrs. LaPierre is a disqualified person... Professional makeup and hair services may not be deductible as a trade or business expense if paid by Mrs. LaPierre, and as such, may be excess benefit transactions. The NRA is investigating the circumstances, number of times and cost of professional makeup and hair services for Mrs. LaPierre. The NRA expects to receive reimbursement from Mrs. LaPierre, plus interest, if it is determined that there is an excess benefit" (IRS Form 990, Schedule L, Part V re: Part I - 3)

4) Excess Benefit Transactions for "Gifts" involving Wayne LaPierre (Officer) and Susan LaPierre:

"The NRA has learned that from 2011 through 2017, Wayne and Susan LaPierre have been reimbursed by the NRA for gifts provided to NRA vendors, donors, and employees, and perhaps others, apparently related to furthering the charitable purpose of the NRA. Because many of the gifts made to non-NRA employees were in excess of the $25 per donee business gift deduction limitation, the NRA believes the excess amount likely constitutes automatic excess benefits to Mr. LaPierre because these amounts were not intended to be compensation. At this time the NRA cannot calculate the exact amount of any such excess benefit. The NRA expects to receive reimbursement from Mr. LaPierre, plus interest, for amounts exceeding $25 per gift, per donee" (IRS Form 990, Schedule L, Part V re: Part I - 4).

5) Excess Benefit Transactions for "Auto Leases" involving John Frazer (Officer), Wilson Phillips (former Officer), and Wayne LaPierre (Officer): 

"The NRA has learned that in 2019 and prior years, certain employees obtained an economic benefit indirectly from the NRA when they purchased vehicles that had previously been leased to the NRA from a third-party commercial leasing company at prices that were less than their fair market value. Some of the employees who purchased the previously leased vehicles were disqualified persons. At the termination of a vehicle lease, the NRA had the opportunity to sell the vehicles at auction, pay the leasing company the contracted termination value, and retain any excess proceeds. The NRA did not own the vehicles itself, and it did not sell the vehicles to the employees directly; therefore, the vehicle purchases were not direct excess benefit transactions. The NRA believes that following disqualified persons may have engaged in indirect excess benefit transactions when they availed themselves of (or allowed a relative) the opportunity to purchase previously leased vehicles from the leasing company at prices that were less than their respective fair market values:

1. John Frazer; year of transaction: 2018; excess benefit: $13,118; estimated excise tax: $3,279.50. 
2. Wilson Phillips; year of transaction: 2019; excess benefit: $10,208; estimated excise tax: $2,552. 
3. Wayne LaPierre; year of transaction: 2019; excess benefit: $3,653; estimated excise tax: $913.25. 

"Mr. Frazer has repaid this excess benefit to NRA, plus interest and therefore the excess benefit has been corrected. The NRA expects to receive reimbursement from Mr. LaPierre, plus interest. The NRA is currently unaware as to whether Mr. Phillips intends to repay the amount of any excess benefit transactions, plus interest" (IRS Form 990, Schedule L, Part V re: Part I - 5).

6) Excess Benefit Transactions involving Joseph P. DeBergalis, Jr. [updated from 2019 reporting]:

"On Schedule L of its 2019 Form 990, the NRA reported that Mr. DeBergalis, a former NRA Director who has been an NRA employee and, later, Officer from January 25, 2107 to the present, may have used business class travel paid for by the NRA without authorization, which may have constituted excess benefit transactions. After further review of NRA records, it appears that Mr. DeBergalis had, in fact, received the appropriate approval in September 2018... Therefore, no excess benefit transactions occurred with respect to Mr. DeBergalis" (IRS Form 990, Schedule L, Part V re: Part I - 6).

7) Excess Benefit Transactions involving First Class Travel and Entertainment:

"On its Form 990 for 2019, the NRA reported that it was reviewing NRA board members' use of first class or business class travel in 2019 or earlier years. Based on review of available records to date, the NRA believes that such travel was for legitimate business purposes and did not constitute excess benefit transactions. In 2021, the NRA adopted comprehensively revised travel policies and procedures to prevent unauthorized upgrades" (IRS Form 990, Schedule L, Part V re: Part I - 7).

In addition, the NRA 2020 tax filing reports re: Business Transactions Involving Interested Persons (IRS Form 990, Schedule L, Part IV): (1) a transaction in the amount of $259,000 involving Marion P. Hammer, Board Director; and (2) a transaction in the amount of $22,500 involving Ted Nugent, Board Director. The reported descriptions of the transactions are: (1) "Marion P Hammer provided consulting services in the form of advice, analysis and other duties reasonably assigned by the Executive Vice President of the NRA and Executive Director of ILA during 2020"; and (2) "The NRA sponsored a television series hosted by Ted Nugent entitled Ted Nugent Spirit of the Wild."

As previously reported, the Excess Benefit Transactions reported in the NRA 2019 tax filing included:

1) Joshua Powell, from 2016 through January 30, 2020 served the NRA as Executive Director of General Operations, Chief of Staff, and Senior Strategist: "...The aggregate excess benefit determined to be provided to Mr. Powell from 2016 through 2019 was $54,904.45. ... The NRA has rejected the check [tendered by Powell to the NRA for $40,760.20, in purported full settlement], so correction of the excess benefit has not yet been made. ... The amount of excise tax due...by Mr. Powell is determined to be $13,726.11. In addition, the New York State Office of the Attorney General has challenged, as unreasonable, compensation paid to Mr. Powell during the period from 2016 through 2019" (IRS Form 990, Schedule L, Part V re: Part I, line 1 - 1b).

2) Christopher Cox, from 2002 through June 26, 2019 served as Executive Director of the NRA's Institute for Legislative Action (ILA) and was also an officer of the NRA: "...To date, the aggregate excess benefit from 2015 to June 26, 2019, determined to be provided to Mr. Cox is in excess of $1 million, which the NRA is seeking to recover. This is being disputed by Mr. Cox... The NRA believes that the amount of excise tax due...by Mr. Cox would be approximately $328,001.50" (IRS Form 990, Schedule L, Part V re: Part I, line 1 - 2).

3) David Lehman, from 2002 through September 13, 2019 served as Deputy Executive Director: "...Upon information and belief, from 2015 to September 13, 2019, Mr. Lehman caused the NRA to pay for personal travel, club, and meal expenses in the aggregate amount of at least $87,595.83. The NRA has not yet completed its investigation of the extent to which Mr. Lehman may have received improper benefits, but if such expenses are substantiated, they were likely not approved nor intended to be compensated to Mr. Lehman by the NRA, and would thus likely constitute automatic excess benefits..." (IRS Form 990, Schedule L, Part V re: Part I, line 1 - 3).

4) Wayne LaPierre, Executive Vice President and Chief Executive Officer of the NRA: "...From 2015 through 2019, the NRA estimates that it paid on behalf of Mr. LaPierre, directly or indirectly, travel expenses...in the aggregate amount of $299,778.78. The NRA has determined to treat the payments as automatic excess benefits... Mr. LaPierre has repaid this excess benefit to National Rifle Association, plus interest, and therefore the excess benefit has been corrected. The amount of excise tax due...by Mr. LaPierre has been estimated to be $74,944.70. In addition, the New York State Office of the Attorney General has challenged, as unreasonable, compensation paid to Mr. LaPierre during his tenure" (IRS Form 990, Schedule L, Part V re: Part I, line 1 - 4).

5) Wilson Phillips, from 1993 through September 13, 2018 served as Treasurer and Chief Financial Officer of the NRA: "...The New York State Office of the Attorney General has alleged that compensation paid to Mr. Phillips during and after...his tenure was unreasonable" (IRS Form 990, Schedule L, Part V re: Part I, line 1 - 5).

6) John Frazer, from 2015 through the present served as Secretary and General Counsel of the NRA: "...The New York State Office of the Attorney General has alleged that compensation paid to Mr. Frazer has been unreasonable" (IRS Form 990, Schedule L, Part V re: Part I, line 1 - 6).

7) Oliver North, served as President of the NRA at times in 2018 and 2019; within the five prior years, he was also a voting member of its Board of Directors: "...Upon information and belief, during certain times in 2018 and 2019, Mr. North was employed by Ackerman McQueen, Inc. ('AM'), a third-party vendor of the National Rifle Association, to host a television show produced by AM. During the same period, AM invoiced the NRA for a variety of expenses which are now the subject of litigation, but are believed to have included salary, benefits, and related perquisites furnished by AM to North in connection with North's employment by AM. NRA paid all of these invoices to AM. Such payments may constitute an indirect benefit from National Rifle Association to Mr. North. ... The NRA has reason to believe that North failed to perform the services for which he had been contracted by AM, and for which he may have been indirectly compensated by the NRA. If that is true, then all or part of North's compensation by AM, paid indirectly by the NRA, would constitute an excess benefit..." (IRS Form 990, Schedule L, Part V re: Part I, line 1 - 7).

8) Joseph P. DeBergalis, Jr., from 2015 through early 2017 was an NRA Director; from January 25, 2017 to the present, has served as an NRA Executive and Officer, including as Executive Director of General Operations: "...The NRA is currently reviewing whether Mr. DeBergalis may have used business class travel without authorization required under the NRA's travel policy. At the time of filing, the NRA is unable to estimate the amount of excess costs incurred, if any. If such expenses are substantiated, they were likely not approved nor intended to be compensated to Mr. DeBergalis by the NRA, and would thus likely constitute automatic excess benefits..." (IRS Form 990, Schedule L, Part V re: Part I, line 1 - 8).

9) Board Member Travel: "The NRA is currently reviewing whether in 2019 and prior years, various board members may have used first class or business class travel without authorization required under the NRA's travel policy. At the time of filing, the NRA is unable to estimate the amount of excess costs incurred, if any. ... If such excess costs are substantiated, they would thus likely constitute excess benefits..." (IRS Form 990, Schedule L, Part V re: Part I, line 1 - 9).

According to the NRA 2020 tax filing, NRA reports re: Compensation, Supplemental Information (IRS Form 990, Schedule J, Part III):

Regarding the payment or accrual of any compensation to officers, directors, trustees, key employees and highest compensated employees contingent on the revenues of the organization (Schedule J, Part I, Lines 5a):

"One individual listed on Form 990, Part VII, Section A, line 1a [Compensation of Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees], Todd Grable, receives incentive compensation based on revenues received from certain marketing, recruiting, and licensing programs."

NRA reports a "Bonus & incentive compensation" payment in 2020 to Todd Grable, Executive Director, Membership, in the amount of $141,305, with reported total compensation of $597,638.

Regarding nonfixed payments to officers, directors, trustees, key employees and highest compensated employees (Schedule J, Part I, Line 7):

"Three individuals listed on Form 990, Part VII, Section A, line 1a [Compensation of Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees] (Mr. LaPierre, Mr. Spray and Mr. Frazer) received discretionary bonuses approved by the board of directors. Mr. Hamlin received discretionary bonuses approved by his supervisor."

NRA reports "Bonus & incentive compensation" payments in the following amounts to Mr. LaPierre, Mr. Spray, Mr. Frazer, and Mr. Hamlin in 2020 (IRS Form 990, Schedule J, Part II):

(1) Wayne R. LaPierre, Executive Vice President: $455,000, with reported total compensation of $1,665,267.

(2) Craig B. Spray, Treasurer: $210,000, with reported total compensation of $797,402.

(3) John C. Frazer, Secretary: $54,100, with reported total compensation of $429,206.

(4) Doug Hamlin, Executive Director, Publications: $80,000, with reported total compensation of $603,237.