Things I Learned About AARP
We recently spoke about AARP and an ad we found interesting at AgeTimes.com. The ad was created by American Commitment and posted on YouTube: https://www.youtube.com/watch?v=x1Wz8O108zM We also heared that it aired during the Today show last week.
There was nothing new in this ad for industry viewers. Yet, we were surprised by the number of AARP members that were not aware of this conflict. So, here is a bit of history.
Established in 1958, AARP started as a non-profit, taking grants and earning money from commercial activities. In the early 90’s, the IRS (yes, the same guys who sent Al Capone to prison for tax evasion) reached an agreement with AARP that it will pay a staggering $135 Million settlement.
The outcome was setting up AARP services and separating the “non-profit” from the “for-profit” services. However, under the settlement, the royalties that insurance companies, banks and others pay to use the association’s name and logo in marketing their services and products will remain tax exempt. Sweet deal indeed!
At the time of setting up AARP Services, its Chief Executive Officer Steve Zaleznick said to the NY Times ‘’We think this restructuring will allow us to be able to speak more clearly to our members,’’ he said, ‘’and make us an even more relevant organization to our members.’’
Clearly, this never happened.
As part of the separation of for from non-profit, AARP Foundation was set up so that government funding and donations can continue to flow.
How is AARP doing today? The last available consolidated data is from 2020. Unlike the AARP Foundation that issues an annual report, since 2015, AARP Services no longer issue annual reports to the public. Here are some headline figures:
$1.7 Billion in revenue
$1 Billion in income from insurance sales
$300 million in membership fees (this should be linked to the insurance commissions as you are obliged to buy a membership to get the AARP labeled insurance)
Most importantly, with more than $4 billion in cash and liquid financial holdings AARP continues to be very profitable. However, the settlement might be due for a revisit.
