CharityWatch has issued a "?" rating for the National Rifle Association (NRA) Foundation due to concerns related to its governance practices which may impact the reliability of the NRA Foundation's financial reporting. CharityWatch has also issued a Governance Exception for the NRA Foundation on the basis that it is currently under investigation by the Office of the Attorney General for the District of Columbia.
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.
[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 and NRA Foundation, see CharityWatch's August 2020 article: NRA and NRA Foundation Facing Lawsuits—NY AG Seeks to Shutter NRA; DC AG Accuses NRA Foundation of Misusing Charitable Funds...]
CharityWatch's rating of The NRA Foundation is for the 501(c)(3) public charity (tax ID #52-1710886). CharityWatch issues a separate rating for the related 501(c)(4) tax-exempt, social welfare organization, the National Rifle Association of America (NRA) (tax ID #53-0116130).
CharityWatch does not provide a rating for the other NRA Foundation affiliates, which according to Note 9 of The NRA Foundation 2019 audit, include the following: NRA Civil Rights Defense Fund, NRA Freedom Action Foundation, and NRA Special Contribution Fund.
CharityWatch separates the ratings for 501(c)(3) & 501(c)(4) organizations, even when the financial activities of the 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 NRA Foundation audit of December 31, 2019 (Note 9, Related Parties):
"The Foundation is affiliated with the NRA by virtue of the control vested with the NRA's Board of Directors to appoint the Trustees of the Foundation. The Foundation has received certain benefits from this affiliation at no cost, among which are various 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 $15,377,886 and $17,482,315 for the years ended December 31, 2019 and 2018, respectively...
"During 2017, the Foundation extended a $5,000,000 short-term loan to [the] NRA expiring February 2, 2018, at an interest rate of 7%, whereby NRA's accounts receivable served as collateral. In January 2018, the agreement was amended to extend the loan to June 2, 2018 with interest to be paid monthly. The loan was repaid in March 2018, before the extended due date. In June 2018, the Foundation extended a new $5,000,000 loan to NRA expiring October 2, 2019, with monthly interest payments at a rate of 7%, and NRA's accounts receivable as collateral. Monthly interest payments continued on the outstanding balance between October 2019 and January 2020, when the agreement was amended to extend the due date of the loan to October 3, 2020. At December 31, 2019 and 2018, $5,000,000 was payable under the respective agreements.
"The Foundation funded certain qualified NRA programs with grants totaling $12,073,526 and $13,498,464 for the years ended December 31, 2019 and 2018, respectively.
"The Foundation funded certain qualified NRA Civil Rights Defense Fund programs with grants totaling $25,535 and $96,000 for the years ended December 31, 2019 and 2018, respectively..."
According to The NRA Foundation 2019 tax filing, the Foundation reports re: Business Transactions Involving Interested Persons (IRS Form 990, Schedule L, Part IV):
(1) A transaction in the amount of $3,943,931 for "grant fulfillment merchandise" involving Crow Shooting Supply. In the column for "Relationship between interested person and the organization," the NRA Foundation reports: "Pete Brownell, Ex Officio, owns more than 35% interest of Crow Shooting Supply."
(2) A transaction in the amount of $2,417 for "grant fulfillment merchandise" involving Brownells, Inc. In the column for "Relationship between interested person and the organization," the NRA Foundation reports: "Pete Brownell, Ex Officio, owns more than 35% interest of Brownells, Inc."
(3) A transaction in the amount of $57,710 for "fundraising event merchandise" involving Nosler, Inc. In the column for "Relationship between interested person and the organization," the NRA Foundation reports: "Robert A. Nosler, Trustee, owns more than 35% interest of Nosler, Inc."