Management: Growing Younger

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Indeed, AARP wouldn't be the powerhouse it is today without those services. Royalties alone account for $379 million in revenue. That's more than annual membership dues, which bring in $229 million. In total, 40% of AARP's $878 million in 2004 revenue came from royalties and service fees. AARP increased its revenues last year about 10.3%, to $938 million, and spent about a third of that on getting current members or courting potential new ones.

That growing economic power gives AARP options it never had before. For years, it backed investment funds through a traditional financial-services company but increasingly grew frustrated with the performance and goals. Last year, after being turned down by more than two dozen investment firms, it created its own no-load investment funds. They have a clearly written prospectus and small minimum investment of $100. The funds' advisers are rare in the business in that they are paid salaries, not commissions. The funds have attracted $36 million so far, outpacing the $24 million average of other new funds. "It is a good example of our triple bottom line, says Dawn Sweeney, head of AARP Services: "improve member value, drive social change and bring revenue back into the organization."

AARP's torrid growth hasn't come without controversy. Critics have long argued that the organization stretches the concept of nonprofit; an IRS probe in the '80s resulted in the creation of AARP Services--and a $135 million fine.

It's true that AARP has seen a windfall, becoming the nation's largest Medigap insurer (providing drug coverage in circumstances that Medicare doesn't cover). In 2004 AARP earned $197 million in insurance-related royalties and an additional $23 million from investment insurance premiums, in both cases mostly from Medigap.

As for influencing public policy, Novelli isn't worried, even with gridlock looming in Washington. "What our members care about is the country and their kids. They want to leave a better place. It will be a lot of work, but we are a bunch of optimists."