Disfavored organizations and disgruntled citizens have something new to ponder. On August 6, 2020, a new and sinister element of the 2020 election interference phenomenon emerged. In a move designed to undermine the ability of a political foe in the upcoming November election, New York State Attorney General Letitia James filed a civil suit against the National Rifle Association to dissolve a charter it has held since it was formed in 1871, “New York Attorney General Sues to Force the NRA to Dissolve”.
Taking advantage of the State of New York’s unusually powerful ability to interfere in the affairs of companies and organizations chartered in it, James has chosen to plunge the state into the internal governance of the NRA. The organization was formed in 1871 under a State of New York charter.
Alleging that top executives misused around $64 million in funds over the course of three years, New York decided to bypass and disenfranchise normal forms of addressing potential lapses in the adequacy of internal controls including means of control exercisable by boards of directors and residual claimants, in this case, the NRA’s estimated 5 million members.
On the grand scale of things, that’s $21 million a year if the New York Attorney General’s office is spot on. The thing is that the NRA’s annual budget has been running around $400 million per year during this time. That translates to a 5.25% wastage rate per year.
Normally, well intentioned regulatory bodies in the United States deal with such matters seeking to resolve these matters by enabling changes in governance that ultimately result in the re-emergence of a stronger and healthier organization. This is probably not Ms. James desire here. The Wikipedia entry for her touts a long history of partisan activism.
“Letitia Ann “Tish” James (born October 18, 1958) is an American lawyer, activist, and politician. She is a member of the Democratic Party, and is the Attorney General of New York having won the 2018 election to succeed appointed attorney general Barbara Underwood. She is the first African-American and first woman to be elected to the position.” – Wikipedia
Potential to Backfire
The question raised by New York, not just for the NRA, but for any “disfavored” entity under the jurisdiction of the state is, “Is that an artifact worthy of invoking an order to disband?” The question raises a potentially difficult civil lawsuit question concerning malicious or harassing prosecution by official government agencies that could, if things go badly for the state, severely restrict the ability of any regulatory body from acting with impunity in the future. Weirder things have happened at the US Supreme Court.
It is not as if the State of New York has not blown their anti-gun efforts before. The State has to withdraw a law in a desperate effort to prevent the United States Supreme Court from taking up a case caused by the City of New York that would have altered the gun laws ecosystem throughout the United States. The Saturday Night Live like “never mind” plea that a case that was a clear loser was moot was a Hail Mary pass that may have saved New York from the ire of Michael Bloomberg, who was considering a run for the White House at the time, but it speaks to the lack of calculation of future consequences. The intriguing question is, is New York making a similar mistake here?
This is puzzling because it is not like Letitia James is unaware that the NRA has been undergoing internal realignments of governance for decades. I’m old enough to remember the charter separation between the NRA and it’s 501(c4) lobbying arm, the Institute of Legislative Action (ILA) in the mid-1980’s. The most recent iteration of NRA’s boisterous version of Sarbanes-Oxley for non-profits was a very public airing of differences in 2019 arising out of a dispute between then NRA President Oliver North and CEO/EVP Wayne LaPierre. While that battle ended with LaPierre’s faction the victor, no sane observer would believe that the process of reform and adaptation is not ongoing. There is nothing new here. That is just how organizations evolve over time.
So why act now? What’s the real agenda?
Irrational Fears of Outsiders
It seems to me that the Attorney General’s office is seeking to interfere with the ability of the NRA to play a role in the 2020 election. There is a natural fear that a perceived foe will come to the aid of one’s political foes. The presidential campaign of US President Donald J. Trump is certainly wooing the Second Amendment support base to vote Republican in the presidential and down ballot races. By all accounts, the Trump message does resonate very positively. It’s clearly an all hands on deck do anything you can to be part of the “resistance” moment of truth for the Democratic Party.
But is the NRA really THE driving force of the 2020 election as James seems to fear?
I’ve written that “The Central Question of the 2020 Election” is really a battle between the Outsiders and the Establishment. And that this point, that Establishment is controlled largely by the Democratic Party. In this context, why is the NRA all that relevant to this fall’s firefight?
I think it is not, certainly not as pivotal as James seems to believe. If one looks at the Second Amendment associated activism phenomenon of 2020 across the United States, whether it is specific protests in the Commonwealth of Virginia over gun laws or peripherally relevant as in the Black Rights Matter movement in which both sides now claiming Second Amendment rights to be equally armed and defended, the NRA itself has been somewhere between subdued and unwanted.
It seems the Second Amendment calls to Americans across the spectrum equally. I personally wonder when these diverse factions will at some point discover that they have more in common as Outsiders against the Establishment than they do against each other.
Perhaps this is what Letitia James fears most. I mean if you remove the “popular” people from Black Lives Matter, you are kind of left with traditionally disfavored outsiders that look a lot more like disfavored NRA members than they do like Instagram influencers and Twitter keyboard warriors. Let’s be real here. Even the demonstrators are beginning to figure out they do not like the largely Democrat Establishment in the cities they are protesting in.
Could this vastly swelled grass roots army of disparate cells all with an interest in the Second Amendment be the thing that Ms. James fears? Is a cleaned up NRA that begins to use that 5.25% of annual wastage to recruit and organize new members across a broader political, cultural and racial spectrum be the real reason that the New York Attorney General is seeking a total shutdown instead of a governance cleanup?
This is certainly the motive, method and opportunity question that comes to my mind as I ponder this bizarre turn of events.
The 2A vs. Gun Control War is Probably at a Crossroads
The battle for the control of the Second Amendment has been steadily shifting from a battle between grass roots causes to one between armies of lawyers and figureheads. There has evolved over time a symmetry of forces on both sides. The executive cadre of the NRA is pitted against a cadre of opposite talking heads, all of whom are financially supported by complex layer cakes of 501(c4)’s, registered lobbyists and PAC’s, and shadowy “victory fund” LLC’s. The lawyers operate in disaggregated cells not unlike the amorphous cells of other activist causes.
One of the things that distinguishes the two sides is the source of funding. The NRA draws its money from a vast grassroots network of donors that spans the entirety of American diversity. In contrast, well over 90% of the operating budget of Moms Demand Action (MDA) comes from one checkbook. Therein lies the governance asymmetry. MDA is a top down organization that answers to the agenda of its benefactor. The NRA relies on designees chosen from among its ranks to direct the uses of funds.
There are disagreements within the NRA and grumblings about its efficiency. But for the most part, the organization does live up to the expectations of its membership and it has succeeded in holding its gun control foes at bay across a vast battlefield of national, state, and local skirmishes. The fight over the Second Amendment remains at a stalemate.
But will this stay so?
Michael Bloomberg, the driven financier of gun control who banked his political dreams on the thought of being the leader of mayor of mayors that would raise the power of urban America to overwhelm the state and federal reluctance to “cancel culture” the Second Amendment, to use today’s street parlance. Instead Mr. Bloomberg found that his message did not resonate with the United States west of the Hudson River. It resulted in one of the most expensive political flops in recent history. He failed to convince Democrats that he was a better New Yorker with the more majestic pedigree than that construction business boy from Queens, Donald Trump.
That prize lost, I do understand that Mr. Bloomberg would want to continue his agenda, at least for now, using the only avenue of retribution he has at his disposal, inflicting gun control upon the non-believers in the provinces.
But are the dreams of one man so strong that they can withstand the decline of urban America unleashed by the microscopic SARS CoV2 organism that causes the disease COVID-19 that has overturned society and awakened all of America’s survival instincts? Objectively and realistically, I kind of think not. I think gun control is becoming overcome by events.
According to industry metrics, worried Americans have bought every gun and every round of ammunition being made. The firearms industry is sold out, producing at capacity, and has order commitments for months in advance.
Many of these firearms are going to first time buyers with a real need to learn how to use them safely, properly and legally. And guess which organization has the best in situ infrastructure to address this societal need? Never mind ILA, I won’t be surprised if the NRA’s educational and competition divisions are eventually designated to be Defense Act essential organizations.
The bottom line is new normal does not look anything like old normal.
Escape From New York
Many are asking what is so special about an 1871 New York State business charter anyway? Does the National Rifle Association really have to fight to keep it and butt heads with a state in which the legislature may very well become a permanent Democratic supermajority?
Prudential corporate sustainability management principles would suggest that the NRA may want to consider joining the people and businesses abandoning the state, re-charter in a new and friendlier jurisdiction, and carry on. I mean honestly, who needs the meddlesomeness, taxation and animus of a state that seems intent to becoming the very essence of what the NRA was created to resist?
Also, note that it has been a long time since 1871. The world has since see things like the Industrial Revolution, the rise and fall of Corporate America, and the Technology and Services revolutions There are other re-chartering and organization designs that could probably make the NRA just as, if not more, effective in its mission; and far better insulated from government interference by malicious officials that could be considered.
Letitia James may get what she is asking for, the departure of the NRA from the State of New York. And she may not like that consequence effect that will accompany it. If the State will attack organizations for political purposes, how is that different from any other dictatorial government? Why would anyone want to remain beholden to such an onerous and oppressive regime?
Whether the NRA prevails in a lawsuit vs. lawsuit cat fight or not is moot. What’s really of note here is that this may become a template for an entire range of disfavored and disgruntled businesses and organizations to leave and seek refuge elsewhere; with the how-to “Escape from New York” instructions courtesy of the State Attorney General’s office. Let’s give it a name. How about “NYexit”?
Then what becomes of the NRA and others that NYexit? After emigrating to greener pastures, New York’s power would only be limited to the foreign domicile component of the organization still physically in the state, typically smaller field offices. In the new normal where remote workforces dominate, maybe not even that. In the United States of America, almost all a state’s power evaporates at the border.
Something also tells me there would be a bidding war among other states looking to have the corporate charter of the National Rifle Association listed in the records of another, more inviting Secretary of State. They’ll welcome the other NYexit expats too.
Now we wait and see. Letitia James is ultimately a political operative. It remains to be seen what her overlords will say when they weigh this puncture in their balloon her brashness has created.