District of Columbia Attorney General Brian L. Schwalb last week announced a resolution of his office’s lawsuit against the National Rifle Association (NRA) and the NRA Foundation that alleges misuse of nonprofit funds and other violations of the District’s Nonprofit Corporation Act (NCA).
The terms of the do not include any financial penalty but require additional oversight and operational changes to ensure that the NRA Foundation operates independently from the NRA and fully complies with nonprofit laws. The District’s nonprofit statute does not authorize penalties; rather, its focus is to bring nonprofits in violation of the law into compliance.
The NRA agreed to the changes but without admitting any liability. The gun rights group denies the District’s allegations.
The NRA Foundation collects tax-deductible contributions to be used for charitable, educational, and scientific purposes related to firearms, firearm safety, hunting safety, firearm history, and marksmanship, and it is authorized to provide grants and sponsorships to organizations across the country related to these charitable purposes.
While the Foundation can provide financial support to the NRA, it can only fund NRA activities consistent with its stated charitable purposes, according to Schwalb.
OAG’s 2020 lawsuit alleged that the Foundation disregarded its duty to operate independently by permitting the NRA and its executives to dictate its spending. The District said NRA tapped the Foundation’s coffers for grants and loans when the NRA needed money due to financial problems, decreasing membership, and lavish spending by its executive leadership.
A New York jury recently found such spending to be part of a pattern of corruption and mismanagement by the NRA and its leaders. The jury found that the NRA’s longtime chief executive, Wayne LaPierre, misspent millions of dollars of the organization’s money on exotic getaways and trips on private planes and yachts.
“Donors are entitled to know that their charitable contributions will be used in furtherance of a nonprofit organization’s stated charitable mission. The NRA Foundation—the charitable arm of the NRA—violated this sacred public trust, allowing the NRA to use them as an unchecked piggy bank,” stated Schwalb.
The attorney general said the Foundation diverted millions of dollars to the NRA in grants and loans that were repaid only after the District filed its lawsuit.
The terms of the District settlement include requiring that the NRA Foundation conduct annual nonprofit compliance training for every board member or officer; form an audit committee to ensure Foundation’s financial affairs are in order and work with an external auditor; establish a new conflict-of-interest policy; adopt new policies governing grantmaking, loans, and shared services; adhere to the Foundation’s nonprofit mission; and report any Foundation policy changes to OAG within 30 days.
Topics Gun Liability
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