Tuesday, January 22, 2013

Fundraising by the NRA

As debates over gun control heat up, one group facing substantial scrutiny is the National Rifle Association (NRA).  I know little about guns and even less about the efficacy of different programs aimed at reducing gun violence.  So, you will be happy to hear that this blog post has nothing to do with gun control or the 2nd amendment.  However, since the NRA is a nonprofit organization that is at the center of the debates, I figured I would look into their financial statements.  As regular readers of this blog know, I have been particularly interested in the use of third-party fundraisers (e.g., telemarketers) by nonprofits.  It is this aspect of the NRA I want to focus on here.

Since 2008, when the new Form 990 was adopted by the IRS, nonprofits have been required (in Schedule G) to provide information about fundraising activities by outside parties.  As a result, we now have a window into the practices of organizations seeking donations.  Many organizations refuse to use outside parties and instead rely on their own efforts to solicit funds.  As reported here previously, however, many have chosen to rely on other parties to raise funds on their behalf.  These efforts are often much less efficient in that the third parties keep more funds than donors probably realize.  As it turns out, the NRA has not only decided to rely on third party fundraisers but it has also expanded such efforts in recent years.  The next chart shows both the total funds raised by third parties and the amounts ultimately received by the NRA since 2008. (Note, the figures from 2008-2010 are from the respective Form 990 submitted by the NRA.  Because the 2011 Form 990 is not readily available, the figures from 2011 are the amounts reported by the NRA's primary third party fundraiser, InfoCision, in the NY State Attorney General report).

A few things to note from the data...
  1. Donations solicited through third parties have increased by an annual growth rate of 28.5% since 2008.
  2. The increased use of third parties has not led to more efficient fundraising in that the NRA has consistently only received about 40% of donations (with the rest being kept by the third party fundraisers).
  3. For some context about efficiency of fundraising, a general rule of thumb is that a nonprofit should be able to collect around $10 for every $1 spent on fundraising.  The NRA's fundraising efforts through third parties are only reaching around $1.70 collected for every $1 spent.

In fairness to the NRA, solicited donations are not their primary source of revenue.  In fact, their annual member dues are in the range of $100 million.  That said, it is not clear why they have become increasingly reliant on third party fundraisers who themselves retain much of the funds raised.  If someone wants to complain about the NRA, perhaps it should be their donors.

1 comment:

  1. When I was younger I don't have money to put on fundraising campaigns but now that I am working I can now help them.