AARP Funding: How the Organization Generates Revenue & Support

The AARP is funded by members, donations and through the commercial operations of its business arm, AARP Financial, which provides both retirement planning, investment and insurance services to AARP members at discounted rates. The AARP receives substantial additional funding from the federal government. It is not affiliated with any religious organization.

History

The AARP was founded in 1958 as an outgrowth of the National Retired Teachers Association. From almost the start, despite its nonprofit status, it marketed insurance packages and other financial products to its members. The primary income of the organization in the first several decades of its operation came from selling these packages. As the size and revenues of the AARP increased, so did the breadth of the services that it offered.

Significance

In 1999, the AARP opened a new subsidiary company, AARP Services. This organization dedicates itself to providing insurance policies, financial planning, investment vehicles and other services. This is a for-profit entity that is kept partly separate from the rest of the organization, although it does share the same brand name and overall mission, which is to provide the best services possible to its broad membership of retired persons.

Features

Many of the insurance products that carry the AARP name are not actually operated by AARP Financial. Instead, they are operated by other companies that pay the AARP to license its name. The payments are quite substantial, in part because the AARP has a proven successful track record in selling insurance policies and other retirement-focused investments to its substantial membership of seniors.

Considerations

The AARP does have a significant political advocacy arm that spends tens of millions of dollars every year lobbying the government on issues of interest to its membership. In addition, the AARP receives millions per year from the federal government in subsidies for its work to provide education to seniors on issues related to health care, financial planning and retirement. The AARP is technically a nonpartisan advocacy group, and has lobbied legislators of both major parties.

Potential

As a larger portion of Americans enter retirement age, the profits and size of the AARP are only likely to grow and diversify. The organization has changed substantially in the past decade alone. The baby boomers entering retirement will likely lead it to take on additional roles, but it's not certain what those might be. If anything, they are likely to increase their charitable actions, most notably their grant support for medical research and other such programs of potential benefit to seniors.