The Klan operated on a multi-level marketing
principle, much like Amway does.

Birth of a Corporation (The Atlantic)

During its heyday, in the mid-1920s, was the Ku Klux Klan more like a marketing firm than a terrorist organization? A new paper co-authored by Steven Levitt, the University of Chicago economist who scrutinized the Klan in the best-selling Freakonomics, argues that the group was far more successful at raising money than at achieving its professed goals of passing racist legislation and intimidating black or foreign-born Americans. The authors, who compiled data on more than 60,000 Klansmen from several states, found that even at the height of its power—in the mid-1920s, membership may have been as high as 4 million—the Klan was politically ineffective. There’s “little evidence” that its activity prompted African Americans to leave their communities, and though significant numbers of Klan-backed politicians were elected to local and national office, they don’t seem to have pushed through very much legislation. But the Klan did have an “uncanny ability to raise revenue.” New-member initiation cost $10 and annual dues $5, and members were required to buy an official Klan robe and encouraged to purchase other Klan paraphernalia, such as swords or helmets. Klan members typically spent about $275 (in today’s dollars) in their first year and about $80 in subsequent years. Recruiters received a 40 percent commission for bringing in new members. Using similar incentives up the chain of command, the Klan operated on a “multi-level marketing principle, much like modern companies such as Amway and Avon” do. The higher-ups reaped huge profits: the authors calculate that D. C. Stephenson, the “grand dragon” of Indiana, took in more than $2 million annually from state operations.

—“Hatred and Profits: Getting Under the Hood of the Ku Klux Klan,” Roland G. Fryer Jr. and Steven D. Levitt, NBER