NRA Finished 2020 in the Black Due to Massive Spending Cuts After Revenue Falls, Legal Costs Skyrocket

[Charlie T Waite]

The NRA’s finances stayed above water in 2020. But only because it continued to make significant spending cuts.

The gun-rights group ran a surplus of just over $40.5 million last year, according to a copy of its financial statements obtained by The Reload. That makes 2020 the second year in a row where the NRA spent less than it brought in, reversing a years-long trend of operating in the red. But the better books came at the cost of deep cuts to most of its key programs.

The group’s 2020 spending was down more than $54 million, or about 15.3 percent, from 2019. It’s down over $124 million, or about 29.3 percent, compared to the group’s financial statements from the last election cycle in 2018. The cuts affected core areas of the group’s activities, with tens of millions less being spent on legislative programs, training, and member services compared to the previous election cycle. Revenue fell by eight figures too, down $19.4 million from 2019 and $78.2 million from 2018.

While revenue and spending fell, the group’s legal expenses rose. The NRA’s 2020 legal spending increased by $245,892 from the previous year to more than $46 million. The NRA noted the total includes audit and tax expenses but declined to break out the numbers more specifically. It also said those fees were spent on a variety of legal costs, including activism.

“This includes work in support of the Second Amendment, such as the Supreme Court case in which the NRA is involved,” the gun-rights group told The Reload.

The report provides further insight into the group’s legal spending. While the overall increase in legal spending was modest, the group’s spending on legislative and fundraising legal expenses fell by $8.8 million but its administrative legal costs rose by more than $9 million to over $42.5 million. Those costs are likely associated with the NRA’s failed bankruptcy filing and ongoing fight against a New York corruption suit that threatens its continued existence.

Outside legal counsel Bill Brewer has masterminded the group’s legal maneuvering over the past several years, but his firm has faced opposition from critics inside and outside the group. It has been accused of charging exorbitant fees and not working in the organization’s best interest. Two NRA members and a former board member who filed a motion to intervene in the dissolution case have argued the judge should bar Brewer from representing the group in the case over those allegations.

NRA leadership has consistently defended the law firm as worth the money, though. And there is no indication the group has pursued or even considered different legal representation. The NRA’s board of directors has also continued to approve Brewer’s legal strategies during its fight against New York Attorney General Letitia James (D.) as she attempts to dissolve the group over accusations executives ran millions of dollars in personal expenses through the group.

Overall, the group has spent more than $125.4 million on legal, audit, and tax expenses since 2018, when they first faced legal trouble in New York. Nearly $98 million of that has gone towards administrative legal costs, over four-and-a-half times the amount spent on legislative legal costs.

The legal spending is up tremendously from just three years prior. In 2017, the NRA spent just $12.9 million on legal, audit, and tax costs, and just $4.6 million of those costs were administrative. Administrative legal costs per year have increased ninefold as of 2020.

Brian Mittendorf, a professor of accounting at Ohio State University who has followed the NRA’s finances for years, said the NRA’s 2020 financials represented a “strange mix” of good and bad news.

“Amidst a bankruptcy filing, the organization was actually shoring up its financial position,” he told The Reload. “After years of declining unrestricted net assets, it showed a substantial increase in 2020. And, this improved financial position also permitted the organization to begin paying down debts it had accumulated. This positive financial picture, however, may mask longer-term issues since it came about due to drastic cuts in the organization’s core programs.”

The NRA said the fundraising crunch and spending cuts were primarily due to fundraising challenges it faced during the coronavirus pandemic.

“As a result of the pandemic – and much like other major businesses and non-profits, we experienced a major disruption in our events and revenue streams,” the group said. “We had less than half of our Friends events last year and will not be at 100% for 2021. We were not able to have our annual meeting for 2020 and 2021. We are not immune from global economic effects of a global pandemic.”

The gun-rights group said those challenges were not unique to them and noted many groups struggled even more or shut down entirely. To that point, the NRA avoided taking government assistance from the Payment Protection Program in 2020, while gun-control group the Brady Center took nearly a million dollars in assistance.

“Like other non-profits, the Brady Center is funded by giving and fundraising events, both of which obviously have been impacted and will be impacted for the foreseeable future,” Liam Sullivan, a spokesman for the Brady Center, told the Washington Free Beacon last year. “We just applied and were approved, obviously, under the same sort of criteria as others with concerns for payroll.”

The NRA said the group is a “more streamlined, focused and stronger organization” after the 2020 cuts. Mittendorf agreed the group was in good financial shape at the end of 2020 but said the cuts to many of its key programs combined with increasing legal costs would likely catch up with it eventually.

“Though shoring up financial standing, this also creates a circumstance that may be untenable as a new normal: members continue to pay to support the organization and its mission, but an increasing share of resources is being devoted to the organization’s own legal defense while core programs are being cut notably,” he said.

“Whether members will permit such an arrangement and for how long is uncertain.”

https://thereload.com/nra-finished-2020-in-the-black-due-to-massive-spending-cuts-after-revenue-falls-legal-costs-skyrocket/