Oliver North sought a second term as president of the National Rifle Association.
It was not to be.
NRA first Vice President Richard Childress read a note from North aloud to thousands of the gun group’s members at their annual convention in Indianapolis. It relayed news of the retired lieutenant colonel’s departure and raised the specter of an existential threat to the organization.
As North had put it in a letter to the NRA board: “I am deeply concerned that these allegations of financial improprieties could threaten our nonprofit status.”
Could they? And what did North mean when he expressed concern about the NRA’s “nonprofit status”?
I’m an attorney who has worked for the Internal Revenue Service on legal matters associated with tax-exempt organizations and a professor who studies nonprofit law. It strikes me as unlikely that the IRS would strip the NRA of its tax-exempt status.
At the same time, I think it’s possible that the New York authorities investigating the group might remove officers and members of its 76-member board of directors. There is even a slight possibility, as NRA CEO Wayne LaPierre warned in a fundraising letter, that New York authorities could cause the NRA “to shut down forever.” But I doubt it.
The NRA and the IRS
The NRA consists of multiple kinds of entities, including a political action committee and four affiliated charities.
There is no charitable contribution deduction for paying NRA membership dues or donating to the social welfare organization.
What does tax-exemption do for the NRA then? Just like a charity, it generally doesn’t pay taxes on the money it raises or earns.
In exchange for that special status, the NRA must benefit the public according to a very broad definition. Advocacy and education, including about gun safety and gun ownership qualifies. The NRA must also submit mandatory paperwork to the IRS every year.
There are a few things the NRA can’t do as a nonprofit, too. It can’t primarily benefit private individuals through excessive compensation or companies rather than the public. It can’t make engaging in politics its main purpose. And it can’t break laws, including campaign finance laws.