Should New York Govern The Reformed National Rifle Association?
New York and the NRA will be back in court this week. In the “Remedial Phase,” according to the NY Times, the parties will be arguing over the State’s right to oversee NRA’s governance going forward. NY is essentially seeking continuing governance authority over the NRA and that is raising fundamental issues about Civil Society. The State, of course, represents the citizens on whose authority NRA’s corporate existence derives, and who have ultimate, though widely diffused ownership of charitable assets. So the State has in interest in who governs the NRA, as it does with all other charities within its jurisdiction.
But state supervision of charities is contrary to the whole notion of an independent sector, especially the version described by de Tocqueville. LaPierre’s attorney even attached de Tocqueville as an exhibit to his separate opposition to NY. State supervision of nonprofit governance probably should be tolerated only under two circumstances outside of the criminal context: (1) when charitable assets are in proven jeopardy, and (2) when the organization constitutes a proven imminent and illegal threat to the State’s existence. I don’t need to flesh out that second rationale right now (I am not even sure its right) because New York’s case is based on the first one.
A jury has already found all that is necessary to prove private inurement and excess benefit, and to impose monetary remedies. Here, from the complaint, is what the State is seeking by way of non-monetary remedies:
Therefore, to secure the proper administration of the NRA, the Attorney General seeks injunctive relief, including without limitation the appointment of an independent compliance monitor with responsibility to report to the Attorney General and the Court; the appointment of an independent governance expert to advise the Court on reforms necessary to the governance of the NRA to ensure the proper administration of charitable assets; directing the NRA to implement such governance reforms as the Court deems necessary ensure the proper administration of charitable assets and such other and further relief that the Court deems appropriate.
NY’s explicit and legitimate interest in NRA is the preservation of charitable assets, and in this instance NY wants to impose good governance to that end. It does not explicitly challenge the NRA’s views or advocacy.
But once the state assumes governance authority and supervision over a charitable organization, it is better able to control an organization’s substantive policies if that’s what an apparatchik wants to do. What if the State thinks it’s a bad idea for NRA to oppose gun control and support mental health treatment? Couldn’t the State exercise monitoring and governance authority in a manner that leads NRA towards acceptance of more gun control? And how does State supervision impact donations? Some potential donors, for example, might decide to withhold financial support for fear of government appropriation. Because if donors want to contribute to a government controlled effort, they can just pay taxes. That result — depressed donations — could be an indirect means of controlling NRA’s message or views. So a court should be careful about putting an organization into the sort of government receivership NY is advocating.
The NRA’s trial brief in opposition to the State’s efforts is really good about all of this. It explains that all the miscreant insiders and enablers have been fired or banished, better than good-governance measures have been voluntarily adopted and intricately woven into the new culture, and monies have been recovered (via fines and penalties already imposed by the court). Thus, according to the pleading, the NRA is no longer in need of the supervision the State seeks to impose through appointment of monitors and supervisors answerable to the State. The implicit accusation is that NY is seeking to control NRA’s advocacy.
That is not a bad argument and whether it is true in this instance is not very important. What is important is whether the measures sought by the state are amenable to an effort to control a charitable organization. If the State’s legitimate interest is the preservation of public assets, NRA’s assertions (if true) prove the State’s interest is currently protected. The Court should grant the State’s request only if there is a continuing threat of waste that cannot be mitigated by less drastic means, such as monthly or quarterly verified reports. Less drastic means that would not simultaneously raise the danger that the State is controlling the NRA’s message.
Look, I hate the NRA. I am objective enough to think that in the absence of an ongoing threat to charitable assets, the State’s interest in monitoring and supervising might be motivated by my almost universally-felt hatred for NRA’s advocacy. To guard against that possibility, the State should not be granted more supervisory authority over NRA than is necessary to protect charitable assets. Any other measures are illegitimate because they facilitate government infiltration and idea suppression.
Here are excerpts from NRA’s excellent brief:
The purported benefits of the NYAG’s proposed relief (e.g., independent monitoring) would merely duplicate measures already in place at the NRA (e.g., a Chief Compliance Officer, internal audit, and Aprio’s special procedures testing). These redundant “benefits” would be levied at grave cost to the NRA’s finances, operations, and reputation—at a precarious moment for the Association. The imposition of a monitor would have a marked negative impact on donations and membership. Simply put, donors are not interested in contributing to fund a compliance monitor at the expense of the NRA’s core mission related-programs. The NYAG’s own expert admits that donor intent should matter greatly.
Imposition of a monitor would be perceived as an indication that NRA leadership cannot be trusted and would send a negative signal to potential donors and members. [Hamlin Depo. 141:14-142:11] (“If we get a monitor, it’s devastating. The members aren’t going to come back because it shows distrust, in my opinion.”); Ex. 10 [Bachenberg Depo. 131:25-132:10] (“[A]ny connotation of a monitor would be detrimental to our members and donors. I believe it reinforces that we . . . can’t be trusted and our policies and procedures in place are not sufficient.”). Indeed, imposition of a monitor would be perceived as the NRA losing its independence and control of its mission. Ex. 16 [Commerford Depo. 12:12-13:25, 23:4-25:12, 47:19–51:11, 93:16–94:16, 112:423]. A monitorship would also raise questions among donors and members about the privacy of their personal information, and the government’s ability to access such information. Id. 27:9-20, 53:19-54:11, 93:16–94-16.
In addition to the substantial, continuing loss of donors and members that a monitor would occasion, a monitorship would impose substantial direct costs on the NRA. Such costs include the fees for the monitor and any staff he or she would hire, which would be borne by the NRA, along with the diversion of NRA staff resources “to devote to the monitorship itself” instead of funding core NRA programs, developing new donors and members, or hiring additional compliance personnel. Ex. 22 [Sullivan Depo. 263:10–264:8, 286:14-287:15]. Those costs would be substantial. Ex. 23 [Sullivan & Blacker May 24 Supplemental Report pp. 40-42]. They would impair the ability of the NRA to hire more compliance employees. Ex. 17 [Rowling Depo. 135:3136:8]. And monitorships carry with them a well-recognized risk of scope creep, where the scope of the monitorship expands over time. Ex. 69 [Suffecool Depo. 148:8-151:5].
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Against this constitutionally concerning backdrop, the NYAG proposes that a monitor be imposed upon a political advocacy group by direct court order, over the NRA’s own objection.
darryll k. jones