Attorney General Schwalb Forces NRA Foundation Reform After NRA Used Charitable Donations Without Oversight

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WASHINGTON, DC - Attorney General Brian L. Schwalb today announced a resolution in the Office of the Attorney General's (OAG) lawsuit against the National Rifle Association (NRA) and the NRA Foundation for misusing nonprofit funds and other violations of the District's Nonprofit Corporation Act (NCA). The terms of the settlement require thorough oversight and extensive operational changes to ensure that the Foundation operates independently from the NRA and fully complies with District nonprofit laws.

"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," said Attorney General Schwalb. "Caving to pressure from the NRA, the Foundation diverted millions of dollars to the NRA in grants and risky loans that were repaid only after OAG filed its lawsuit. Tax-exempt nonprofits are a form of public trust-abusing that trust as the NRA did violates both the public interest and District law. Today's outcome builds on our longstanding commitment to safeguarding nonprofit donors' money and ensuring that all nonprofits operating in the District of Columbia follow the law."

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 specific charitable purposes. While the Foundation can provide financial support to the NRA, it can only fund NRA activities consistent with its stated charitable purposes.

OAG's 2020 lawsuit alleged that the Foundation disregarded its duty to protect its donors' contributions and to operate independently, instead permitting the NRA and its executives to dictate its spending. The 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.

Under the terms of the settlement, the NRA Foundation must:

• Adhere to its articles of incorporation and bylaws in all decision-making processes, in and outside of formal Board meetings.
  
• 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, shared services, and other activity with the NRA to ensure transparency, Foundation independence, and adherence to the Foundation's nonprofit mission.
  
• Report any Foundation policy changes to OAG within 30 days of approval for the duration of the agreement.

The District's nonprofit statute, as currently drafted, does not authorize the collection of penalties; rather, its focus is to bring nonprofits in violation of the law into compliance, ensuring transparency and accountability for nonprofit funds. The agreement remains in effect until December of 2026, provided that the Foundation complies with mandated changes within 180 days.

The full settlement is available here.

This case was handled by Assistant Attorneys General Cara Spencer, Leonor Miranda, William Margrabe, and Anna Rosenfeld, Senior Trial Counsel Ryan Wilson, Paralegals Amanda Bangle and Leland Held, and Antitrust & Nonprofit Enforcement Section Chief Adam Gitlin.

OAG's Nonprofit Enforcement Work

Since 2015, OAG has steadily expanded its capacity to enforce District laws governing nonprofits. Most recently, OAG sued the former Treasurer of an elementary school's parent-teacher organization for using nonprofit funds for personal enrichment. OAG also resolved actions against a lodge of the Fraternal Order of Police for running an illegal off-premises liquor sales program, the Coast Guard Auxiliary Association for improper payments to its Board President, and Delta Phi Epsilon, Inc. for using nonprofit funds for personal gain. OAG has also litigated or resolved cases against several charter schools, including Options Public Charter School, as well as the president of the Park Southern Neighborhood Corporation, an affordable housing building, for mismanagement of nonprofit funds. OAG has also sued several organizations for misuse of charitable funds, including Casa Ruby, a DC organization that misused funds intended to serve LGBTQ+ youth. Additionally, OAG has obtained a court order requiring District nonprofit Howard Theatre Restoration, Inc. to dissolve for failing to function in support of the District's historic Howard Theatre, and secured $950,000 from the Washington Hebrew Congregation's preschool for violations of the NCA in addition to several childcare safety violations that put children at risk, and intervened to resolve a board dispute at an internet freedom organization.

If you suspect that a nonprofit or officer of a nonprofit doing business in the District of Columbia is violating District law, please contact OAG at (202) 727-3400.