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July 5, 2011

The Outrageous Tax-Exempt AARP

Shawn Burns

AARP gets approximately $100 million of taxpayer money every year. Should they? AARP has assets valued at $2.2 billion. So, why would our government give AARP one penny of taxpayer money?


In March of this year the House of Representatives’ Ways and Means Committee released an investigative report titled, Behind the Veil: The AARP America Doesn’t Know. The report examined AARP regarding its for-profit businesses and its non-profit status. The report also examines whether or not AARP is fulfilling its mission to serve the 37 million seniors it supposedly represent. Or is AARP more concerned with making money?


This isn’t the first time AARP has been questioned and in trouble for its money-making schemes. Back in the mid-1990s AARP had to pay the IRS $135 million in fines for profits earned through insurance royalties; but AARP claimed the earnings under their non-profit status. Around the same time AARP was fined several million dollars by the U.S. Postal Service for using non-profit postal rates to mail millions of solicitations for insurance services.


AARP endorses just about every kind of insurance that exists, from car insurance, life, health insurance, prescription drug coverage to Medi-gap insurance.


In exchange for its endorsement and the use of the AARP logo, United Health Care’s (AARPs biggest insurance partner) royalty payments to AARP have grown from $284 million in 2007 to $427 million in 2009. Now there is absolutely nothing wrong with AARP making money. Except they are a non-profit organization, which means they are exempt from paying federal income taxes.


Of course, AARP has set up multiple organizations. Some are classified as for-profit while maintaining its non-profit status under its original parent organization. The problem is the way in which AARP earns money and then funnels it between its multiple organizations in an obvious effort to mask just how much money it is making while at the same time enjoying all of the benefits of being classified as a non-profit organization.


Is AARP truly a senior’s advocacy group? Or is AARP simply a business entity which has tricked us all?


One of the disturbing findings in the report regards AARP’s support of the federal healthcare bill. In the new law, Medi-gap insurance needs are projected to rise considerably. And guess who is estimated to earn $10 billion over the next 10 years? Did AARP support this legislation because it was in the best interest of the senior citizens it supposedly represents? Or did AARP support the healthcare bill because it is going to get filthy rich from it?


Even Marilyn Moon, a former AARP executive, demonstrated grave concerns when she said, “AARP will not be perceived as a truly independent advocate on Medicare if it’s making hefty profits by selling insurance products that provide Medicare coverage.”


Findings of the congressional report state that, “…despite the significant increase in revenues, AARP’s charitable affiliates do not appear to be benefiting from this windfall…”


Most AARP members and taxpayers in general probably don’t know that AARP is now endorsing racing teams.


As noted in the report: “…the AARP Foundation recently committed an estimated $14 million in each of the next three years to become the primary sponsor of NASCAR driver Jeff Gordon. Any other companies that want to place their logo on the car will have to purchase the space from AARP. It is unclear how the AARP Foundation’s new endeavor, acting as an advertising agency and multi-million dollar NASCAR sponsor, will ‘provide security, protection, and empowerment for older persons in need,’ or how it will ‘provide information, education, and services to ensure people over 50 lead lives of independence, dignity, and purpose.’


“Further, given that the AARP Foundation receives tens of millions of dollars in federal grants each year, this raises questions about whether scarce taxpayer dollars are being used to sponsor a NASCAR team.”


The CEO of AARP makes approximately $2 million annually. And according to AARP policy, the CEO and all other executives fly first class and regularly stay in luxury resorts. The president of Charity Navigator, Ken Berger, said: “Arguing that those working for the benefit of the neediest people in our society should make millions and multi-millions like corporate leaders defies common sense.”


In conclusion, the House Ways and Means Committee report states: “…one might question whether AARP is primarily operating to promote the common good and general welfare given the fact that AARP has become increasingly dependent on hundreds of millions of dollars in royalty revenue from insurance companies, which have increased substantially in recent years. Furthermore, to maximize revenue from its insurance business, AARP has repeatedly taken positions that, while benefitting AARP financially, run counter to the interests of millions of AARP members and arguably the community at large. Additionally, AARP’s structure, with overlapping board membership between its “for-profit” and non-profit entities raises questions as to whether AARP is truly organized as a non-profit, or if AARP is simply setting up shell affiliates to maintain tax-exempt status for the parent organization.”


Again, this report was released in March. Where was any coverage by the press? Where is any outrage?


AARP claims to represent senior citizens but repeatedly supports legislation and policies that provide AARP with enormous financial windfalls but offer little to seniors and in some cases appear to even hurt seniors.


The first thing that should be done immediately is that AARP should be banned from receiving any federal tax money in the form of grants or any other federal programs. It’s outrageous that this organization gets $100 million annually of taxpayer money.


The con-man and nut-job, L. Ron Hubbard, once said that one of the best ways to make money in this country is to start a religion. AARP has apparently found an even better way.


The Congressional report on AARP can be viewed at:


Yellow Cab
The Morning News Express with Bob Miller
The Covert Letter

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