Lawsuit
OAG oversees nonprofit business activities in the District of Columbia. In its complaint, OAG alleges that the NRA Foundation’s trustees and officers violated the District’s Nonprofit Corporations Act by:
Allowing charitable funds to be used for non-charitable purposes: The Foundation failed to provide the oversight necessary to ensure that fees it paid the NRA were being used to support its charitable purposes. In fact, OAG’s investigation revealed that the NRA wasted fees paid by the Foundation on, for example, lavish consulting agreements with individuals who provided no discernible benefit to the Foundation and its charitable purposes.
Failing to uphold their fiduciary duty: Contrary to its fiduciary duties, the Foundation’s Board made financial decisions based on what was good for the NRA, not the Foundation. The Board approved multi-million-dollar loans to the NRA with the knowledge that the NRA had financial problems, and the Foundation might not be repaid. The Board also agreed to pay millions more in fees to the NRA without any apparent benefit to the Foundation.
Abandoning the Foundation’s charitable purpose: The Foundation awards national grants and sponsorships to organizations across the country that meet its charitable purpose. These programs are funded from contributions made to the Foundation. By approving the two loans and the increase in management fees to the NRA, the Foundation undermined its own ability to make grants between 2017 and 2019.
Placing the interests of the NRA above those of the Foundation: Under District law, the Foundation must have a Board of Trustees that acts independently and protects the Foundation’s interests. However, the NRA controls the election of Foundation trustees and the appointment of officers and there is significant overlap between the membership of the Foundation’s Board and the NRA’s Board. As a result, the majority of the Foundation’s board did whatever the NRA requested without question, investigation, or inquiry into the best interest of the Foundation. Trustees typically voted in favor of NRA demands, even when those demands harmed the Foundation.