NRA has major financial issues - but could it really collapse?

Chris Riotta
A gun enthusiast looks at a shotgun during the annual National Rifle Association (NRA) convention in Dallas, Texas, U.S., May 5, 2018: REUTERS

The National Rifle Association (NRA) may be the most powerful gun lobbying group in the world.

Each year, the organisation blocks significant gun control research and legislation in Congress, while influencing local and national elections through funding, media and outreach to its self-reported five millions members.

This week, however, the NRA became the focus of a national news story — not for falling prey to an alleged Russian spy, or failing to respond after a deadly mass shooting, two issues the group has recently endured — about its supposedly dire economic state.

The NRA claims to be in a severe financial bind caused directly by Andrew Cuomo, New York’s Democratic governor, who launched an aggressive campaign demanding companies conducting business in his state to cut ties with the organisation.

In its lawsuit against Mr Cuomo and the New York Department of Financial Services, the group alleges state officials sought to "deprive the NRA and its constituents of their First Amendment rights to speak freely about gun-related issues and defend the Second Amendment."

Is the NRA really running out of money?

In the complaint, the NRA describes its internal state of affairs as having virtually depleted all resources while heading towards bankruptcy.

However, while the non-profit's multi-million dollar media entities might actually be in real jeopardy in the coming months, the NRA’s foundation remains mostly intact.

Despite having a track record of financial instability — the group overspent by nearly $46m in 2016, according to a ProPublica investigation — the NRA continues to maintain steady donations from its nationwide members. The organisation saw a spike in donations following the Parkland school shooting earlier this year, increasing by nearly 500 per cent from the week prior to the historic tragedy.

In 2018, the NRA set fundraising records by garnering the most political donations of any group in a single month, according to Federal Elections Commission records. The NRA Political Victory Fund took in nearly $2.4m in the month of March alone, with the majority of those coming from small donors across the country.

The reason why the NRA is sounding the alarm about its financial state is because it reportedly cannot find insurance companies to support its media components. The group said its media liability insurance coverage was ended shortly after Mr Cuomo began his campaign against the organisation adding that it fears other companies could soon cut ties as well.

"The NRA’s inability to obtain insurance in connection with media liability raises risks that are especially acute; if insurers remain afraid to transact with the NRA, there is a substantial risk that NRATV will be forced to cease operating," the court filings read, claiming Mr Cuomo’s actions "will imminently deprive the NRA of basic bank-depository services … and other financial services essential to the NRA’s corporate existence".

Why is Andrew Cuomo at war with the NRA?

Under Mr Cuomo, New York has continued becoming one of the most influential states enforcing successful gun control measures in the age of Donald Trump.

But the fight between the Democratic governor and the NRA goes deeper than that — financial regulators in New York were seemingly keen to crack down on the gun lobby after the NRA began providing illegal insurance coverage policies to its gun-carrying members in New York.

The NRA established a program which would pay its members legal fees that were incurred by firing a gun, before the state determined the group “unlawfully provided liability insurance to gun owners for certain acts of intentional wrongdoing”.

With an upcoming primary election against his celebrity progressive opponent Cynthia Nixon, Mr Cuomo appears to be taking a personal interest in the fight.

"In New York, we won't be intimidated by frivolous court actions from a group of lobbyists bent on chipping away at common sense gun safety laws that many responsible gun owners actually support," the governor’s office said in a statement responding to the NRA’s lawsuit. "I am proud of my 'F' rating from the NRA, and I will continue to do everything I can to keep New Yorkers safe."

Does this have to do with recent gun violence in America?

While the lawsuit in question doesn't directly correlate to an increase in mass shootings, public sentiment is growing increasingly frustrated with elected officials who have been unable to prevent or reduce violence.

Following the Parkland shooting, the NRA became a contentious point of focus for Democrats, who demanded the organisation present Mr Trump’s administration with solutions, as well as Republicans, who defended the group and its advocacy for the 2nd Amendment. Student survivors from the shooting urged to cut ties with the NRA, spurring announcements from over a dozen major companies saying they had done just that.

Backlash to the increase in shootings have impacted elected leaders from both parties alike — protests in Chicago this week demanded the city’s Democratic Mayor Rahm Emanuel resign from his post over continued soaring gun violence and homicide rates, while the Florida student victims of the Parkland shooting aggressively lobbied against Republican officials in the state like Marco Rubio, who they said was not adequately protecting his constituents.

The ongoing violence paired with campaigns like Mr Cuomo’s has not placed doing business with the NRA in a favourable light: activists have said the group “has blood on its hands” for the recent tragedies in Florida, Las Vegas and elsewhere.

What comes next for the gun lobby group?

The NRA — which did not respond to enquiries — is asking for an immediate injunction to prevent Mr Cuomo and other officials from "interfering with, terminating, or diminishing any of the NRA’s contracts and/or business relationships with any organisations".

But the governor is not letting up either, describing the lawsuit as “a futile and desperate attempt to advance its dangerous agenda to sell more guns” in his statement.

It remains unclear whether other insurance companies will refuse to work with the NRA, though proper liability coverage is an essential necessity for any organisation with media properties. If the NRA is unable to locate other partners for insurance, it may be forced to close down NRATV, its streaming platform, along with other print publications, including its magazine.

In short, it may be true that the NRA is suffering from financial instability. Whether any of that is directly caused by Mr Cuomo’s actions remains unknown.

But one thing is for sure: the gun lobbying group is not going to suddenly disappear in the next several months or foreseeable future. For all intents and purpose, the NRA will continue finding ways to push its agenda for years to come, though perhaps not necessarily in the forms it is capable of today.