The New Yorker Radio Hour - The N.R.A.’s Financial Mess

Episode Date: April 19, 2019

Last March, Wayne LaPierre sent a fund-raising letter to his members—an urgent plea for money. LaPierre described an attack on the Second Amendment that is unprecedented in the history of the country. But, in reality, what is endangering the N.R.A. isn’t constitutional law; it’s destructive business relationships that have damaged the organization financially, and have put it in legal jeopardy. Searching through N.R.A. tax forms, charity records, contracts, and internal communications, the reporter Mike Spies discovered that “a small group of N.R.A executives, contractors, and venders have extracted hundreds of millions of dollars from the nonprofit’s budget, enriching themselves in the process.” While the organization is quick to lay blame on its political opponents, Spies says, it’s its questionable financial practices that have weakened it from the inside. Central to the story of the N.R.A’s financial problems is an Oklahoma-based P.R. firm called Ackerman McQueen. Ack-Mac didn’t just write press releases: for decades, it has steered the N.R.A.’s imaging on all platforms, and its executives routinely took positions within the N.R.A. In 2017, the N.R.A. paid Ackerman and affiliates almost forty-one million dollars, which totalled about twelve per cent of the N.R.A.’s total expenses that year. Ostensibly just a contractor, Ackerman influenced N.R.A. decision-making from inside, and the for-profit company seems to have used the nonprofit company as a vast source of funds to enrich itself. Spies interviewed Aaron Davis, who worked in the N.R.A.’s fund-raising operation for a decade. “I think there is an inherent conflict of interest,” Davis says. “And it just doesn’t seem like N.R.A. leadership is all that concerned about this.”   (After this interview took place, the N.R.A. sued Ackerman McQueen, claiming that the contractor had hidden important documentation from it that detailed the business relationships.) New Yorker Radio Hour listeners, we want to hear from you.  We have a few questions about the show and how you listen to it. The survey takes about twenty minutes, and your feedback will help us make our podcast better.  Take the survey here.

From One World Trade Center in Manhattan, this is the New Yorker Radio Hour, a co-production of the New Yorker and WNYC Studios. Welcome to The New Yorker Radio Hour. I'm David Remnick. Just a few weeks ago, I talked on the show with Mike Spees. Mike is a reporter for The Trace, a website that covers guns in the gun industry, and he contributes to the New Yorker as well. One of the things that Mike talked about was the precarious financial state of the NRA. He said that pensions there had been frozen. And one detail that really surprised me, Mike said that the NRA had stopped providing free coffee in the office, which is never a good sign for any business.

Over the years, we've come to think of the NRA as practically omnipotent in Washington and in many state capitals as well. But the problems, financial and legal, run very deep. Here's Mike's piece. So back in March, last month, Wayne LaPierre, the NRA's top official, sent out a fundraising letter to his members. And it was what I would describe as an urgent plea for money.

And what he was telling them specifically was, we're facing an attack that's unprecedented, not just in the history of the NRA, but in the entire history of our country. The Second Amendment cannot survive without the NRA, and the NRA cannot survive without your help. right now. Wayne LaPierre is right. The NRA is troubled.

In 2017, the organization had to borrow millions of dollars from its foundation, from its officers' life insurance policies, and it also liquidated several million more dollars from an investment fund. I wanted to find out the root cause of why the NRA is convulsing. One of the people I spoke with was Aaron Davis. Davis started at the NRA in 2005 and worked for a decade in the organization's fundraising department. He grew up with the NRA, reading its magazines as a boy. And for him, working at the organization was a kind of dream.

Part of the allure of working at the NRA was you could feel the power. You were intimidated by the power, but you respected it and you looked up to it. And we felt that the folks we were working for were top-notch and didn't even think about what did they make. Now, of course, you'd heard, oh, I think this person makes $400,000 a year, and you're like, what? That doesn't make sense. But when you're in your meetings, you're thinking, oh, my gosh, this person is going to change America.

We're going to be the best organization there ever was in the face of the planet. And so whatever they cost, that's what they cost. The key to the NRA's problems is what it does with, money. I've been searching through tons of documents, federal tax forms, charity records, contracts, corporate filings, and internal communications. And it seems a small group of NRA executives, contractors, and vendors have extracted hundreds of millions of dollars from the non-profits budget, enriching themselves in the process. central to this story is a for-profit public relations firm called Ackerman McQueen.

So Ackerman McQueen was a very professional for-profit organization, a marketing firm, if you will, that had been doing a lot of projects around NRA. They weren't NRA members by any stretch. What do you mean by that? Well, they were just paid to be part of a marketing firm. So you're typical like New York, Austin types, but they've been. weren't your folks who were interested in Second Amendment politics. For more than three decades, Ackerman has shaped the NRA's public identity, helping to build it from

a niche activist organization into a ubiquitous presence in American culture. Ackerman has produced and devised the NRA's most successful and divisive ad campaigns. In fact, when you're hearing from the NRA, most of the time you're really hearing. from Ackerman McQueen. The only way we save our country and our freedom is to fight this violence of lies with the clenched fist of truth. I'm the National Rifle Association of America, and I'm freedom's safest place. The NRA and Ackerman have become so intertwined that it's often difficult to tell where one ends and the other begins. In Aaron's fundraising department, they were going after big money donors with highly produced marketing materials that cost a lot of money to make.

In 2008, Aaron's boss was a guy named Ben Case, who had been at the organization for several years. Ben hired what I still perceived to be the guru, and I'm not going to say his name, but the guru of major guest fundraising in all of the nation. He hires him to come in and give us a day-long training to raise more money. We say, we're having trouble. We're not raising what we think. And so he holds up one of our marketing materials that Ackerman had produced. And he goes, this actually will hurt you from raising big money. Donors don't want to see that you're spending so much money when they give a large gift.

The best types of fundraising materials are black and white with a couple of, you know, color photos. and there was an argument right there between some of our, especially one of our directors and this fundraising guru saying, no, that's not true. And so it was, that always had that in my mind, like, well, if this is more effective, why are we doing it this way? Two years after this seminar, Ben Case was removed from his position, and a former Ackerman McQueen executive, Tyler Shrop, was installed in his place. Tyler, unlike Ben, had limited fundraising experience, and as soon as he took over, most of the fundraising team's outside business was sent to Ackerman McQueen. They were so close to us. They were always in our offices. Their account executive was always in our offices, and he was doing projects with us, and our budget was increasing. We were doing more of that sort of thing. But in my 10 years of fundraising there, I saw that fundraising in NRA was very difficult.

We had, I'd say at least 80% of our fundraisers didn't raise as much as they cost. It was not an easy place to raise big dollars for. After Tyler came in, do you have a sense overall of how much of the total expenses being generated by the advancement team were ultimately being steered into Akron & McQueen's coffees? I don't. That was kept under wraps. I only saw my budget. But overall, I did not know where all the money went. And it just rubbed a lot of people the wrong way. I kind of want to make that point that it, this is not something that, oh, Aaron feels like something's being done wrong. It was the entire department from what I could tell felt the same way. We all felt that there was too much of this, like, inside. baseball type thing. It was not, it did not seem above the bar. And we felt bad about it. A lot of us felt bad about it. Which is interesting, right? Because it's, you would think that those expenses would have to be justified in some sense. There'd have to be some clear return on the big investment.

Absolutely. And a lot of board members kind of knew that. In 2017, the NRA paid Akram McQueen and its affiliates almost four. $41 million. That number accounted for 12% of the organization's total expenses that year. So you've got a company that is sucking up a huge amount of the NRA's budget and is also exerting an incredible amount of control over the organization. They're a for-profit organization trying to make money, trying to do things that would bring more money to them. So they have completely different intentions than a nonprofit should have,

which is for the common good, for the better good. And so those lines were just so blurry. But as you read and you learn the laws and you see what the IRS is writing, you get to this kind of push and pull, and it even made me question anything I was saying in donor meetings when I was pushing gifts. Is this okay? Can I have this meeting with this Congress person? Is that okay? You know, am I supposed to be even doing an event with Rob Portman? I don't know. Right, right. There's almost like an inherent conflict of interest. I think so. I think there is an inherent conflict of interest. It just, and it just doesn't seem, and I think one of the reasons I'm willing to come forward is it just doesn't seem like inter-A leadership is all that concerned about this.

The Ackerman relationship is just one example of a host of opaque, sketchy arrangements that the NRA leadership has forged over a number of years. It goes beyond just the NRA's inflammatory rhetoric. It's a systemic problem that infects the entire organization. I actually got copies of internal handwritten memos. they were created by Emily Cummins, who until November was the NRA's managing director of tax and risk management. So I'm looking at one of the pages now, and you can see that Emily has flagged a list of top concerns. The memos assert that the NRA pays overbill, deceptive, vague invoices to preferred vendors and contractors. staff is told to process payments without documentation. And the memos also say, and this is perhaps

maybe the worst thing, that the board hasn't been told of what's embarrassing. And that's the part that rubs up against nonprofit law. If a business arrangement poses an obvious conflict of interest, the board has a responsibility to not only know about the arrangement, but it also has to provide a reasonable justification for okaying it. And if they don't, then that's a major red flag. And the NRA, as it turns out, has a number of red flags. Now, nonprofit law is fairly murky. So I spoke with the former head of the IRS's nonprofit division. And he told me that if these red flags are in fact violations of the law, that the New York Attorney General could take a number of actions, the Attorney General could sanction board members or disband the board or go to court and

ultimately argue that the organization is so far gone that it could be disbanded entirely. Developing right now the National Rifle Association is suing one of its long-time ad partners. We're talking about Ackerman McQueen advertising agency. In a surprising twist, the NRA has now turned on its long-time collaborator. Earlier this month, the NRA filed a lawsuit against Akerman McQueen over concerns about Akerman's activities and accounting practices, suggesting that the NRA doesn't actually know the details of its most significant business arrangement. And yet all this financial stuff doesn't completely explain why Aaron Davis, who had been so

proud to work for the NRA is taking the rare step of blowing the whistle. Aaron, like many of his co-workers, believed wholeheartedly in the mission of the NRA. But the NRA, as a big institution, doesn't welcome dissent. People who have spoken out have been marginalized or even shunned. So for Aaron, the best way forward in the end was just to quit. in a way, Mike, it kind of feels like you're drinking the Kool-Aid. And while some of what NRA says is right, I mean, it is an American organization that loves America. I don't know if they love Americans.

I don't know if they love people that don't look like them because it's all about politics and winning. And that especially came to a head as Sandy Hook after that happened. and in the office, as I was sitting in the office, and we actually had the lights out in the office. We weren't allowed to send emails. That period of time between when the shooting happened to when Wayne Lappier actually spoke, which I think was like seven or nine days,

we weren't even allowed to really do work, but we started coming to the office, and we were scared. The staff was scared. We're going to lose our jobs. The NRA is over. And the message that came from Wayne, we didn't hear until he came on TV.

The only thing that stops a bad guy with a gun is a good guy with a gun. Would you rather have your 911 call bring a good guy with a gun? And after the television interview, which I thought didn't go well. It wasn't empathetic at all. Everyone in the office was just like, oh my gosh, we won. And I don't know how you win something. something like that. I don't know how, and you know, everyone felt better after that. And except for maybe there was, my manager at the time, she was scared for her children's life. Right. That was like the extent of it. But it's like, let's move on. We won that battle, that political battle. Let's go on. Right. And it's just, that's not okay. I mean, that's not who we are as humans. Right. We have to be more cognizant. You know, you can have a belief in the Second Amendment and you could believe it as a individual right and Supreme Court, this and that. But you have to be more cognizant. You know, you can have a belief in the Second Amendment. And you have. But you have. You know, you have. You know, it's a individual right. And you can believe it. But you. But you. But you have. But you have to care about people that are citizens of this country.

I just feel like there's a sickness of the heart within NRAE leadership. That's Aaron Davis, speaking with reporter Mike Spees. Davis worked for the NRA from 2005 to 2015. You can find Mike Spees' reporting on the NRA at New Yorker.com. I'm David Remnick, and thanks for joining us. See you next time. The New Yorker Radio Hour is a co-production of WNYC Studios and The New Yorker. Our theme music was composed and performed by Merrill Garbus of Tune Yards with additional music by Alexis Quadrato.

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