Consider this: If the American Association of Retired Persons was a public corporation, its estimated $10 billion annual cash flow would make it the largest company in the Washington metropolitan area.
Or this: With 28 million members, AARP is the nation's second-largest organization, behind only the Roman Catholic Church. And it's adding 14,000 members every working day.Or this: Nearly one out of every four registered voters belongs to AARP, a number that will only increase as the population continues to age.
And if all goes according to plan at its Detroit convention next month, AARP will take the first step toward becoming one of the largest financial institutions in America.
AARP today is a far cry from the living-room operation started 30 years ago by retired school teacher Ethel Andrus, who simply wanted to make health insurance available for retirees. Today, from its downtown Washington headquarters, the AARP has begun to flex its muscles both economically and politically on behalf of the fastest-growing segment of the population.
While AARP's insurance, health services, publishing, travel and financial services operations have made it one of the nation's most powerful special-interest associations, it is its awakening political activism that has been attracting the most attention of late.
"Up until four or five years ago," said AARP executive director Horace Deets, "the analogy we often heard was that politically AARP was a sleeping giant, a paper tiger."
But now, thanks to the creation two years ago of AARP-Vote, the association's political arm, AARP has become a highly visible political force in this year's presidential election campaigns.
AARP's muscle will only get bigger with time. "The demographics are on our side," Deets said. "We are getting a growing percent of the available population."
AARP members currently represent 44 percent of the nation's population that is 50 and older; the average age of the membership is just under 65. And AARP's size has increased dramatically in the past five years, since it lowered its minimum membership age to 50 from 55.
And Deets says he is somewhat concerned about the changing image of AARP as an awakening political force that can get what it wants simply by flexing its muscle.
"I don't want to deny our size and I don't want to deny our political activity. I think it's important, it's the American way," he said. "What I would not want to do is focus on political activity to the exclusion of all our other activities."
It is AARP's "other activities" that are the backbone of the organization the retail merchandising operations that serve as a membership magnet. AARP business operations range from the largest single private health insurance program and the nation's biggest mail order drug business to a multibillion-dollar mutual fund operation and an auto insurance program designed to meet the needs of the elderly.
At its annual convention next month, the association will announce the start of the AARP Credit Union, expected to be the largest in the nation within a year and among the 50 largest financial institutions within five years, according to officials familiar with the plan.
The credit union, which will be operated by the Chicago investment firm of Scudder, Stevens and Clark and Ohio's BancOne Corp., will be a mail-order operation that will make loans on the basis of both assets and income, as well as issue credit cards to its members.
The growth projections for the new credit union reflect the enormous economy of scale AARP can bring to any retail merchandising operation a scale that so far almost guarantees that much of what the association touches turns to gold.
The AARP investment program is a classic example. In the early 1980s, after a good deal of market research, AARP decided to create a mutual fund that would allow its members to invest as little as $500 in relatively safe securities. The association set a goal of $400,000 as the measure of the fund's success but in less than two years AARP members had invested more than $4 billion in the mutual fund. The association now offers seven different funds through Scudder, Stevens and Clark.
Because it is a private, non-profit organization, AARP is not required to list a detailed financial statement spelling out the revenue of its various operations.
One of the few outsiders who has seen AARP's books is Jack Carlson, who was forced out as AARP executive director last January after only 15 weeks on the job, and who has been critical of the way the organization is managed.
A former chief economist at the Office of Management and Budget in the Nixon administration, Carlson parted company with the association after what AARP officials describe as philosophical differences over the way AARP runs its business operations. AARP officials were particularly critical of the way Carlson wanted to restructure the association's business operations so that each activity paid for itself.
Carlson remains a fan of the AARP and its programs. But in looking at the association's books, he said, "you find these pots of money" from the various AARP enterprises. "My impression is that it is mostly waste," he said. "It's probably the most mismanaged place I've ever seen."
AARP has declined to elaborate on Carlson's departure, other than to say it was because of philosophical differences.
In the one financial statement it does make public, AARP reported an operating budget of $188.3 million for 1986, the latest year for which a statement is available.
The financial statement for 1987 will not be made public until the convention next month, although Deets said the operating budget would be about $200 million for the year.
The association's biggest source of income is its $5-a-year dues, which account for about 35 percent of total operating revenue, according to Deets. The second-largest source is the administrative fees that AARP receives from managing its group health program, he said.
In 1986, the revenue from the administrative fees was $51.6 million, and the medical plan brought in an additional $19.2 million in interest on the "float," or money collected from members by the association's insurance trust and then paid in monthly premiums to Prudential Insurance Co., which operates the plan for AARP.
The health insurance program is the crown jewel of the AARP operation. Not only is it the association's biggest money maker, it also is AARP's most progressive program. Unlike most of AARP's other retail operations to which AARP lends its name, helps shape the program and collects a royalty, the health insurance program is owned directly by the association.
But for all of its products and services, the AARP activity that is generating the most public attention in this election year is in the political arena, where no other group comes close in size or organization.
The genesis of AARP's heightened political presence was a 1984 membership survey. "We found out that our members would like us to be more involved," said Deets, who was serving as the association's legislative director at the time.
Enter AARP-Vote. Created two years ago as a "voter education program" to help AARP members understand the issues in the election campaigns, the new political operation plunged into its first presidential election this year armed with a budget of nearly $7 million and thousands of volunteers throughout the nation.
"We have made a conscious effort to be an effective representative of our members," Deets said.
AARP officials estimate that in the Iowa presidential caucuses they had more than 2,000 volunteers involved in telephone banks and "educational" mailings and 3,000 volunteers at the caucus meetings on election night. In this year's New Hampshire primary, a survey of voters by pollster Richard Wirthlin showed that more than 80 percent of those contacted were aware of AARP's involvement in the primary.
But AARP does not endorse candidates and never will, a fact that will always temper its political clout.
"I think we're seen as a moderate voice on the (Capitol) Hill," Deets said. "I don't think we're seen as extremely liberal or extremely conservative, and there's a reason for that. Our members are not a voting bloc. Probably 40 percent are Republican and an equal number are Democrats, and 20 percent are Independent or undecided or apathetic."
And in spite of its rapid growth and increasing political visibility, Deets insists that "AARP basically has not changed its philosophy or its mission in 30 years. We are a needs-driven organization.
"When a need is identified, whether it's income security, health insurance, nursing home care, credit, generic drugs, the AARP does a lot of analysis of that need. We want to know if it's a genuine need of a lot of people, what's being done about it and if it's consistent with our purposes and our mission as a nonprofit, social welfare, education organization."