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Internal Documents Show Gun Lobby Giant In The Red

June 26, 1995 GMT

WASHINGTON (AP) _ After the National Rifle Association ran a budget deficit for a third straight year, the president of the powerful gun lobby asked a blunt question: Just how are we spending the money?

``Many questions are coming up that I simply am unable to answer. I think these are justifiable questions and I don’t know any reason why the answers should be kept from at least the finance committee,″ NRA President Thomas Washington wrote Treasurer Wilson Phillips on May 6, 1994.

The missive asked for details on everything from how many NRA officials had six-figure salaries to how much the organization was paying its consultants.

Washington’s correspondence, along with confidential NRA balance sheets obtained by The Associated Press, show the group has operated in the red since 1991 and has been forced to draw down its cash reserves and investments drastically.

Locked in a struggle against gun control, the NRA has run cumulative operating deficits of $69 million between 1991 and 1993 and projects an additional $3 million deficit for last year, according to the internal balance sheets prepared for the NRA board of directors.

The documents also show that NRA officials have depleted the group’s assets _ mainly cash accounts and investments _ which went from $103 million in 1991 to a projected $47 million in 1994.

The largest components of the recent spending, according to the documents, have been expensive fund-raising efforts, and construction of a shimmering, six-story headquarters in the Washington suburb of Fairfax, Va.

NRA officials, including Washington, Phillips and Executive Vice President Wayne LaPierre, declined comment. ``There is not much of a desire to weigh in on this,″ NRA spokesman Bill Powers said.

But in a recent television broadcast, a key NRA executive said the group is on solid financial ground. ``The NRA is in great shape,″ Tanya Metaksa, the NRA’s lobbyist, said on National Empowerment Television.

Metaksa is one whose salary would appear to be over $100,000; Jim Baker, her immediate predecessor as the NRA’s chief lobbyist, made $148,292 in 1993, documents show. LaPierre, meanwhile, was slated to be paid more than $166,000 in 1994, another document reveals. Washington’s salary could not immediately be determined.

An accountant who specializes in tax-exempt organizations, however, said the documents depict a group in financial distress.

``I think some might say that the organization borders on insolvency,″ said James Nesbitt, a senior managing partner at BDO Seidman who reviewed the documents at AP’s request.

J. Warren Cassidy, executive vice president of the NRA from 1986 to 1991, gave a similar assessment.

``The people who run this place now are like a couple of young heirs who came into an estate built up by their parents and grandparents who say, `What was wrong with those frugal old folks?‴ Cassidy said. ``They are spending money like drunken sailors.″

The documents’ portrayal of worsening finances is just one of several woes plaguing the group.

The Internal Revenue Service recently began an audit to determine whether the NRA should retain its tax-exempt status, and the group has been on the defensive since it sent a fund-raising letter that referred to federal agents as ``jack-booted government thugs.″ That language prompted former President George Bush to quit his membership.

According to the balance sheets obtained by AP, the group ran a deficit of $9.6 million in 1991, $37.4 million in 1992 and $22 million for 1993 _ for a total of $69 million.

Its preliminary figures project an additional deficit of $3 million for last year. A one-time accounting adjustment allowed the group to pare $11 million from its 1993 deficit.

At its annual convention in Phoenix last month, the NRA put the deficit at $52 million.

The drop in the group’s assets appears to have caught the eye of financial institutions.

When the NRA took out a $6 million line of credit and a $32 million mortgage on its headquarters last September, the lending bank stipulated that the NRA’s cash and investments ``shall not at any time fall below $39 million″ as long as the line of credit remained outstanding.

The group recently launched a campaign to retire the mortgage.

But a fund-raising expert said the NRA’s approach _ a direct-mail appeal to many of its 3.5 million members _ runs counter to the traditional way of raising money for big-dollar projects.

Usually, capital fund-raising efforts like the NRA’s focus on persuading big donors ``to give five, maybe 10 times what they normally would give,″ said Ira Cooperman, a development officer at Temple University.

Cooperman added that while the NRA’s hard-core constituency may indeed give generously, ``I would be surprised if they could raise $32 million.″

Current and former NRA officials complain about the cost of membership recruitment, even though the group has gone from 2.4 million members to 3.5 million in the past three years.

The records show that in 1992, the NRA spent $30.5 million for fund-raising and recruitment mailings. The expenditure climbed to $33.4 million in 1993, the last for which complete figures are available. In 1991, the total was just $17.6 million.

In 1993, the NRA spent $157.2 million. After membership mailings, the next biggest expenditures were $28.3 million for state and local lobbying, $19.9 million for publications and $18.5 million for various services for its members, the documents show.