Will Move to Dissolve the NRA Hurt Your Nonprofit?

This post is about the attempt of New York’s Attorney General to dissolve the National Rifle Association. However, this is NOT a political post. Whether or not you support the NRA, the legal fight over its future has potential implications for your nonprofit organization. Let’s take a closer look.

Doug White, a philanthropy advisor, author, and teacher, writes:

In a 169-page document made public earlier today (you can read the entire lawsuit here), [New York Attorney General] Letitia James alleges that NRA insiders have violated New York’s nonprofit laws by illegally diverting tens of millions of dollars from the group through excessive expenses and contracts that benefited relatives or close associates. The suit alleges that longtime CEO Wayne LaPierre and three other top officials ‘instituted a culture of self-dealing, mismanagement, and negligent oversight at the NRA,’ failed to properly manage the organization’s money and violated numerous state and federal laws.

The lawsuit asks for a dozen measures to be taken. The first one: ‘Dissolving the NRA and directing that its remaining assets and any future assets be applied to charitable uses consistent with the mission set forth in the NRA’s certificate of incorporation.’”

White further notes that the legal action has been filed against the 501 (c)(4) organization, and not against any 501 (c)(3) organizations related to the NRA.

So, how could the case of the NRA affect your nonprofit organization?

Erosion of Public Trust: The mere accusations against the NRA, whether or not they are ultimately proven in court, have the power to not only erode confidence in the NRA, they have the potential to erode trust in all nonprofit organizations. If that happens, it could make fundraising more difficult. A special report in 2018 from the Better Business Bureau’s Give.org found:

While the majority of respondents (73 percent) say it is very important to trust a charity before giving, only a small portion of respondents (19 percent) say they highly trust charities and an even smaller portion (10 percent) are optimistic about the sector becoming more trustworthy over time.”

Enhancement of the Public Trust: On the other hand, New York’s action could enhance the level of trust people have in the nonprofit sector. If the Attorney General can prove her case, it would show the public that government officials are exercising appropriate oversight of the nonprofit sector which could elevate the public’s confidence that their donations to any nonprofit will be used appropriately. We know there is a correlation between the level of trust people have and the likelihood they will give as well as the amount of their giving.

Impact on Support to Controversial Organizations: If New York succeeds in liquidating the NRA, it will have the power to disburse the organization’s assets as it sees fit. How will this affect support to other controversial nonprofits if donors know that their donations could be redistributed by the state? It’s possible that this could result in more cautious behavior by donors.