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THE FIRST CASUALTY:
A REPORT ADDRESSING THE
ALLEGATIONS MADE AGAINST THE
WOUNDED WARRIOR PROJECT
IN JANUARY 2016
“It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.”
Mark Twain
1
SEPTEMBER 6, 2016
DOUG WHITE
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TABLE OF CONTENTS
Introduction 3
Summary of Principal Thoughts 4
Section I The Crisis 6
Section II Wounded Warrior Project 9
Section III The Media Allegations 12
Section IV Reporting: Transparency and Perception 35
Section V Impact 54
Section VI Why Now? 63
Section VII The Board of Directors 68
Acknowledgements 75
Author Biography 75
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INTRODUCTION
The story about alleged financial and other organizational abuses at Wounded Warrior Project
(WWP) first came to my attention a few hours after millions of other people heard it on Tuesday,
January 26, 2016 on the CBS Evening News. When I watched that story and those to follow on
CBS the next day, Wednesday, as well as when I read about the same allegations in The New
York Times that same Wednesday, I could not help but note what seemed to be the sensational
and one-sided approach employed by both news organizations; regardless of what one might
think of the substance of the issues, the stories, from a journalistic perspective, seemed deficient,
to say nothing of what seemed like either a coincidence or a collusion of timing between two
media giants. This, of course, didn’t mean that the allegations weren’t true, but – and this was the
bothersome preoccupation for me – the information presented in two highly regarded major
media outlets did not appear to support the conclusions presented to the public.
I have worked in and for the nonprofit world for over 30 years (and before that, a little time in
journalism) and have observed how individual charities perform and, more broadly, what the
nonprofit sector is doing. My own work – teaching, advising and writing, with a long-standing
and growing interest in ethical decision-making in the sector – has added up to a body of criticism
of the nonprofit world. This is not because I think the nonprofit world is essentially corrupt, but,
actually, because I think it is essentially good. I so honor the role charities play that I am
offended – and think everyone else should be, too – when heads of charities play fast and loose
with their mission or their money, both of which are important components of the public trust.
(There are many examples of misbehavior at charities; I used to tell students in my board
governance classes that sometime during the semester, something would be reported in the news
that would be relevant to our studies – and I was not once, in over 15 years of teaching at New
York University and Columbia University, disappointed.) Because of that unique and special
place we confer on charities, even though there is an ethics deficit in all three sectors of our
society – government, for-profit organizations, and nonprofits – I feel that leaders in the nonprofit
sector need to be more diligent, not less, than business or government leaders.
Everyone has the right – obligation, even – to question how charities use their money, and the
responses should be forthright and transparent. This report is not about protecting charity activity
from criticism – it’s the opposite, actually – but to be effective, criticism needs to be fair and
accurate, and it must be relevant to the issues attracting the criticism. Otherwise it is broad and
cynical, and can’t stand up to the weight of discussion and analysis. That is why I wanted to look
at what happened at Wounded Warrior Project. I have tried to employ maturity, judgment and
gravitas in this examination, relying on my experiences with hundreds of organizations over the
decades, where I learned much of fundraising, management, and board governance. (A more
complete biography, with links to my website and LinkedIn page can be found at the end of this
report.) For me, then, this was a quest. The narrative on the street was, and continues to be, the
money being wasted at Wounded Warrior Project and how poorly its executives ran the place –
which is no surprise when you take in only what CBS and the New York Times delivered.
I researched and wrote this report without agency and without compensation to support this
effort. That doesn’t mean fault can’t be found in the research or the conclusions, but it is an
honest effort to learn from perspectives and evidence not employed in the media reports.
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SUMMARY OF PRINCIPAL THOUGHTS
1. Many of the allegations made in the CBS News and The New York Times reports were either
wrong or misleading. Both news organizations relied too heavily on too few on the record to
generate reports that would have such a damning impact on a charitable organization and
those it serves. CBS News and The New York Times should have better vetted Erick
Millette, their primary source of allegations, for bias and accuracy, and included the views of
others – and there are many – who would have countered the prevailing sentiment the public
was offered. Each organization should run an apology story.
2. A group of disgruntled former employees established a Facebook page, which was initially
designed to maintain a sense of connectedness but which was transformed into a vindictive
collusion whose aims, in part, were to take down the charity. The Facebook page was closed
to the public and the anonymity helped the members create its own singular narrative, which
was relied upon in the media reports. When Dave Philipps of the New York Times refers to
being contacted in “June of 2015 by a small group of employees and former employees who
felt like the leadership at WWP was going in the wrong direction,” although he did not know
it at the time, he was being used in a well-thought out and deliberately planned attack on
Wounded Warrior Project.
3. Chief Executive Officer Steve Nardizzi and Chief Operations Officer Al Giordano, Wounded
Warrior Project’s two top executives before they were fired after a financial review was
conducted in response to the media allegations – a review that stunningly did not result in a
written report – were overseeing a modern, national charity. Each, by any standard, result, or
metric, performed well. The finances were sound and WWP’s impact was strong. In terms
of helping veterans, their families, and their caregivers, there was a constant and growing
level of success. The ex-employees who complained were naïve to think that any single
expenditure meant the organization was wasting money. The complaints were not based on
an overall understanding of how the organization worked or how charitable organizations
generally work.
4. Unconditional adherence to spending ratios is the enemy of a nonprofit. Charity Navigator
and Charity Watch both use algorithms that are not relevant to realistically evaluating the
work charities perform. Both CBS News and The New York Times relied on Charity
Navigator for at least one serious allegation – relating to the reporting of joint cost allocation
– to show alleged inefficiencies at Wounded Warrior Project, even though, according to an
accounting process required by GAAP (Generally Accepted Accounting Principles) and the
IRS, no such inefficiencies were actually evident. Even though the public is best served by
being made aware of a charity’s impact, the current charity rating system is unable to
measure impact. As they are currently constructed, charity watchdogs do more harm than
good. Any critical comment about a charity’s worthiness from the watchdogs is meaningless.
Still, even so, within the limited parameters of Charity Navigator and Charity Watch, and
even though it has not been properly reported, Wounded Warrior Project does well.
5. The Wounded Warrior Project crisis shines a light on a problem facing all charities:
measuring impact. While the current evaluation system is inadequate, charities must do far
more to demonstrate the good they do – its impact – on their communities. In that sense, the
conversation must change. It must change significantly and it must change soon, as the work
of charities is too vital to society to leave this issue unaddressed. Within this issue, however,
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Wounded Warrior project does exceedingly well, as it authenticates almost all of its work to
show the effect it has on wounded warriors and their families.
6. The board acted inadequately in several respects. Immediately after the allegations, the board
did not permit either Nardizzi or Giordano to respond. The board also did not respond. This
left the impression that no one was in charge and that there may have been merit to the
allegations. The board made the situation worse, after a review was conducted in the
aftermath of the news accounts, by simultaneously announcing that “certain allegations raised
in media reports were inaccurate” and that, while giving no concrete reason, Nardizzi and
Giordano were fired: “the Board determined the organization would benefit from new
leadership.” Confidence in the organization, from a fundraising perspective, waned only after
that announcement. Quality governance leadership was absent at a most vital time. As a
result, the board should engage in a transition strategy to replace itself.
7. Richard Jones, one of the six Wounded Warrior Project board members, also a senior
executive at CBS Corporation and the chair of WWP’s board Audit Committee, had a serious
conflict of interest as the crisis developed. As he was actively involved in overseeing
WWP’s response to the CBS News investigation – an investigation that would address
criticisms of the way WWP reported its audited numbers – Jones should have recused himself
from discussions the board conducted concerning the issue.
8. Nardizzi acted brashly in drawing attention to himself at some of the WWP’s meetings, and
both he and the organization would have been wise to take into account the public perception
of that behavior. His confidence in his leadership abilities may have blinded him to the optics
of the way he ran the organization. While Nardizzi led WWP as a modern, national charity,
he overlooked a crucial, if cosmetic, aspect of any modern-day organizations: how things
look have a bearing on how things are. In a recent news account Nardizzi acknowledged that
some of his flamboyant actions while chief executive were problematic, and created optics
issues that opened the door to criticism.
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I. THE CRISIS
In a period of little more than two days in January 2016, the outlook and public impression of the
Wounded Warrior Project (WWP), one of the nation’s most venerable charities, was transformed
from substantially positive to substantially negative. During those two days – January 26 and 27,
2016 – CBS News and The New York Times aired and published reports that heavily criticized
the way WWP conducted itself. A month later – after the New York-based law firm Simpson
Thacher & Bartlett, acting as external legal counsel, and FTI Consulting, forensic accounting
consultants, who were hired by the board – completed their independent review of the allegations.
In a news release on March 10, 2016, the WWP board said,
“Based on this independent review, the WWP Board found that WWP continues to
advance its mission of providing substantial services for the nation’s wounded warriors,
and that certain allegations raised in media reports were inaccurate.”
The release addressed allegations of financial misconduct, as well as others, to substantiate its
statement. The impression one gets is that not much was wrong at WWP.
The board acknowledged, however that some things needed more effort:
“The review also found that some policies, procedures and controls at WWP have not
kept pace with the organization’s rapid growth in recent years and are in need of
strengthening.”
“WWP has already begun to strengthen its employee travel policies to more explicitly
limit domestic air travel to economy class absent an exception for health or disability
reasons. In addition, the Board has committed to other measures, including strengthening
policies related to employee and director expenses, enhancing employee training on
existing and new policies and procedures, and continuing to have its financial statements
independently audited and available on the organization’s Website. The Board will
conduct an objective assessment of WWP’s progress towards implementing these and
other enhanced measures.”
2
In itself, even taking into account the examples where there was room for improvement – such as
air travel, expenses, training, and financial transparency – the acknowledgment that things could
be better is not startling. The same could be said of any one of the more than 1.7 million
nonprofits in the United States, and perhaps of that of every one of the millions of for-profits, as
well; it’s within the nature of running any organization that improvement opportunities are
abundant. While a further review of the criticisms is in order – the review provided in March
2016 was, curiously, delivered only orally, behind closed doors; no written report was produced
– the allegations were apparently sufficient, even though the board itself said that “certain” ones
were inaccurate, to draw the board’s attention to the news reports and what lay underneath them.
The word “certain,” it seems after my own investigation, was employed to try to grant the board
to have it both ways. “Certain,” in the way it is used here, implies “a few” or “specific,” as if
others were accurate, while at the same time defends what happened on the operational level at
WWP. But the news release itself is specific only about the allegations that were not accurate; a
careful reader will note that the improvement-opportunity section of the release is not connected
to any of the allegations. Given the scope of what WWP decided to address, one can only
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conclude that all of the allegations, or at least the important ones – not just “certain” allegations –
were for the most part untrue. (A detailed look at what CBS News and The New York Times
conveyed can be found in Section III of this report.)
Still, something was in the air and the board clearly felt the need to do something. Thus, the
headline-maker, the firing of WWP’s top two executives:
“To best effectuate these changes and help restore trust in the organization among all of
the constituencies WWP serves, the Board determined the organization would benefit
from new leadership, and WWP CEO Steve Nardizzi and COO Al Giordano are no
longer with the organization.”
3
If WWP’s board thought that filling the bulk of its release with how the organization had not been
behaving badly would blunt the effect of announcing toward the end that its two top and long-
serving executives had been fired (although the release did not use the word “fired”; just that the
two men were “no longer with the organization”), they were wrong. This headline from Fox
News – “Wounded Warrior Project's Top Execs Fired Amid Lavish Spending Scandal”
4
– was
representative of how the media responded to the news release.
In the immediate aftermath of the firings – the period between late March 2016 and the beginning
of September 2016 (when this review concluded) – support for the organization fell dramatically.
And it looks like that will continue. Current knowledgeable estimates are that fundraising will
drop dramatically – possibly 50 percent – in this coming fiscal year (October 1, 2016 through
September 30, 2017), and maybe more, compared to this past year’s results. This past year
(October 1, 2015 through September 30, 2016), during most of which the controversy was
playing out, fundraising dropped by 25 percent from the previous year.
The morale of the employees of the organization is at an all-time low, and it might decrease
further as many have been dismissed. The Military Times wrote on August 31, 2016, “Wounded
Warrior Project officials are firing half of their executives, closing nine offices and redirecting
millions in spending to mental health care programs and partnerships as part of an organization
overhaul in the wake of spending scandals earlier this year.” This means programs will – and in
fact have already begun to – suffer.
Even though the long-term effects are yet to be felt, there is no doubt that Wounded Warrior
Project is experiencing a crisis.
So far, the tenor of the post-allegation and post-firing news reports smacks of how things under
Nardizzi and Giordano went terribly wrong, how it’s time to clean things up and become more
efficient, and how to make WWP the charity it is supposed to be. Michael Linnington, the newly
appointed chief executive officer, said the moves aren’t an indictment of past practices at the
charity but a recognition of changes needed to keep the group relevant and providing the best
resources possible to veterans. “This is a case where the negative publicity have caused us to take
an internal look at how to do things better,” he said. “Where Wounded Warrior Project came from
to where we are now is a success story. We have 90,000 post-9/11 veterans we’re helping.”
5
A nice narrative if you can get away with it. The problem is that it’s untrue and, worse,
cowardly. As the reader will see, the problem wasn’t the senior management, or even the board –
at least not until the allegations came about – but the stature of two venerable news organizations
that developed reports that were essentially incorrect and based on biased and incomplete
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perspectives of former WWP employees, many of whom had been fired, who took it upon
themselves to blow a whistle that, in the end, was far more the screech of uninformed whining
than a signal of any merit. The tradition and reputation of the idea of “whistleblower” were badly
tarnished.
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II. WOUNDED WARRIOR PROJECT
Wounded Warrior Project should not exist. That men and women are sent to defend the United
States and further its interests abroad may be a necessary evil, but the nation that sends them into
harm’s way ought to have the decency to care for those who return wounded. The mission of the
Department of Veterans Affairs pays homage to Abraham Lincoln: “To care for him who shall
have borne the battle, and for his widow, and his orphan’ by serving and honoring the men and
women who are America’s Veterans.” But the country pays only lip service to the ideal. Ask
almost anyone; in reality that’s not the way it works. Between the inhuman delays for many of
those who need urgent and important medical care and the indecency of scandals involving fraud
and embezzlement, the Veterans Administration has earned the skepticism of its clients and that
of the larger public. The question is: In the absence of an earnest national commitment, how can
our veterans actually best be served and honored?
Many charitable organizations have sprung up in the United States over the decades, and the
Wounded Warrior Project is one of them. Incorporated on February 23, 2005 and with its
headquarters in Jacksonville, Florida, WWP serves veterans wounded in battle after 9/11, and is
today the most recognized of all nonprofit veterans’ service organizations. Indeed, it is one of the
most recognized charities among all sectors of the nonprofit world. Furthermore, because of its
size and impact, and because of its work in an important area of public policy, WWP is also one
of the nation’s most important charities.
• Its mission: to honor and empower wounded warriors
• Its vision: to foster the most successful, well-adjusted generation of wounded service
members in our nation's history;
• Its purpose: to raise awareness and enlist the public's aid for the needs of injured service
members, and to help injured service members aid and assist each other, to provide
unique, direct programs and services to meet the needs of injured service members
• Its motto: The greatest casualty is being forgotten.
As of March 2016, WWP employed more than 660 people and had posted advertised openings for
a further 135 positions. The organization serves over 85,000 wounded warrior alumni and serves
almost 15,000 wounded warrior family members. It partners with several other charities – large
and small – that serve veterans, such as the well known groups American Red Cross and
Operation Homefront, as well as smaller and less well known organizations, such as Resounding
Joy, a music therapy group in California.
WWP works mainly in four areas: 1) mental health and wellness, 2) physical health and wellness,
3) engagement, and 4) economic empowerment. WWP is the largest nonprofit provider of direct
services to veterans; it is also the largest nonprofit funder benefitting other veterans’
organizations.
Yet, as WWP has grown, it has attracted criticism. Most of it has been centered on aggressive
fundraising and the public perception of how its leadership promoted the brand. An article in The
Daily Beast, written over a year before the CBS and The New York Times stories were reported,
captures the mindset of much of the media:
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“It’s a broad but closely held sentiment within the veterans’ advocacy community:
grumbling and critiques about the fundraising behemoth WWP has become, and whether
it has been as effective as it could be.
“In interviews, critical veterans’ advocates and veterans charged that the Wounded
Warrior Project cares more about its image than it does about helping veterans; that it
makes public splashes by taking vets on dramatic skydiving trips but doesn’t do enough
to help the long-term wellbeing of those injured in combat.
“These criticisms come from a broad cross-section of veterans and their advocates, the
vast majority of whom refused to speak on the record due to the sway the Wounded
Warrior Project carries.
“They are such a big name within the veterans’ community. I don’t need to start a war in
my backyard,” a double-amputee veteran who served in Iraq told The Daily Beast.
But granted anonymity, the vet gave voice to what is at the very least a perception
problem for the WWP: “They’re more worried about putting their label on everything
than getting down to brass tacks. It’s really frustrating.”
6
In addition, WWP has taken a handful of legal actions against other charities. For example,
WWP filed a lawsuit in October 2014 against Keystone Wounded Warriors in Pennsylvania,
claiming confusing similarities between Keystone's and WWP's logos. The Nonprofit Quarterly
wrote an article in May 2015 with this headline: “Is Wounded Warrior Project a ‘Neighborhood
Bully’ Among Veterans’ Groups?”
7
Earlier that year, WWP sued Vietnam veteran Gordon
Graham in federal court, alleging that Graham, a former airman, had “defamed” WWP “in
articles he posted to several websites.”
8
And there is this, as related by Steve Nardizzi.
“If you were to look up the words “wounded warrior” on Charity Navigator’s website
you would find my organization, Wounded Warrior Project, and another organization
called Wounded Warriors Family Support. Both organizations receive a three-star rating,
which would suggest to potential donors that the two organizations are equally effective.”
But they were not equally effective. A jury decided WWFS was a sham. In a court proceeding, a
forensic accountant examined the financial records of WWFS and determined that some of the
donations it received were explicitly payable to "Wounded Warriors Project," and others
referenced recent work by WWP in the letters accompanying the donation. Further, the
accountant examined the amount of donations WWFS received both immediately before it began
using the woundedwarriors.org website, and after they closed it down, with the donations it
received while that website was live.
The results were astounding. Before the new website was created, WWFS averaged $1,337 per
month in donations. After the creation of the new website, donations spiked to almost $88,000 per
month. Nardizzi says, “The reality is that in 2007 Wounded Warrior Project sued Wounded
Warriors Family Support to prevent that organization from deceiving the public and damaging the
goodwill of our organization.”
Once the website was taken down, WWFS donations dropped by more than 56 percent (and
WWP donations increased by 29 percent). At the conclusion of the trial in 2009, the jury found
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that the confusion between WWFS and WWP was intentional, and that WWFS engaged in
deceptive trade practices and violated the consumer protection act. It awarded WWP $1.7 million
in damages, including over $1.2 million in misdirected funds donors intended for WWP.
9
(WWFS appealed, and lost again.)
1
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As WWP has grown it has faced many contentious situations and allegations. It is no stranger to
controversy. Therefore, it is in that context we must view the most recent – and most disruptive –
crisis that the organization is facing.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1
The jury determined the $500,000 awarded in punitive damages by assuming that half of Nardizzi’s time for two
years was wasted on fighting WWFS’s shenanigans; thus, a little more than a year of Nardizzi’s salary.
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III. THE MEDIA ALLEGATIONS
Many WWP supporters, and others, have raised questions as to the veracity of the reporting by
CBS News and The New York Times, and their sources. Attempting to address them has led to
other questions and, as well, has shed light on the management at and oversight of Wounded
Warrior Project. The following is the result of asking and addressing some of those questions.
1. CBS NEWS AND THE NEW YORK TIMES
As of 2014, the average viewership of the CBS Evening News was 6.9 million. The viewership
of the CBS Morning News is just under 3.4 million.
10
The New York Times has a daily
readership of just over 1.6 million physical and online readers.
11
In addition to attracting high
numbers of viewers and readers, both news outlets enjoy high levels of credibility. It is fair to say
not only that many people heard or read the stories about Wounded Warrior Project, they were
also influenced by their content. Certainly the WWP board of directors was.
After carefully reviewing the reports, however, I found a number of statements to be inaccurate or
misleading in ways that are at odds with the commonly understood journalistic standards of each
organization. All of the “accuracy and context” comments below are supported by information
on WWP’s IRS information returns (the 990 is not a tax return), audited financial statements, the
WWP Teammate Handbook, WWP’s written strategic plan, the WWP policy manual, various
relevant pages of the WWP website, emails and other written correspondence among various
parties, written board-of-director assignments, screen shots of several Facebook pages, the pages
on standards at the Better Business Bureau Wise Giving Alliance website, and on the “Standards
of Accountability” section on the website of Charity Navigator, a nonprofit organization that
collects information reported on charities’ 990s to determine certain efficiencies to generate its
ratings.
While it is typical for news organizations, in both broadcast and written reports, to describe issues
at charitable organizations in mostly superficial terms, these allegations are, because of their
apparent substance, worthy of examination. CBS News ran several reports about Wounded
Warrior Project between Tuesday, January 26, 2016 and September 2016. The following analysis
looks at four broadcasts: 1) The CBS Evening News on Tuesday, January 26, 2016; 2) CBS This
Morning on Wednesday, January 27, 2016; 3) The CBS Evening News on Wednesday, January
27, 2016; and 4) The CBS Evening News on March 10, 2016. The analysis also examines The
New York Times story on Wednesday, January 27, 2016.
The reader of this report, both in this section and the others, should bear in mind an important
question: Are my criticisms and conclusions valid? While the concept of “valid” is highly
subjective, in this short report, while not dealing with every aspect of the programs at the WWP, I
have attempted to combine a sense of objectivity with what I have learned, taught, and written
about regarding the nonprofit world over the last 30 years, for the continued sustainability of a
highly worthy charity, to say nothing of the reputations of its former leaders, is at stake.
The main allegations in the CBS News reports included:
• A conference at the high-end Broadmoor Hotel in Colorado cost $3 million.
• Wounded Warrior Project spent money on alcohol at that conference.
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• “Warriors Speak,” a program designed to help veterans, is nothing more than a
fundraising machine.
• Wounded Warrior Project lacks comprehensive programs for the treatment needed by
wounded veterans.
• Wounded Warrior Project’s 990, the form filed annually with the IRS, does not include
the number of people the organization assists each year.
• Wounded Warrior Project is sitting on a large surplus of cash that could be better used to
provide services.
• The amount spent on overhead is too high and the amount spent on programs is
insufficient.
The main story in The New York Times appeared on Wednesday, January 27, 2016, which, in its
physical edition, was positioned on page one above the fold. The main allegations in there, other
than those also cited by CBS News, included:
• Many individual donations are small and come mainly from people who are 65 years old
and older.
• Wounded Warrior Project spent $7.5 million on travel and bought first-class and
business-class seats to regularly travel around the country for minor meetings.
• Wounded Warrior Project spent hundreds of thousands of dollars on public relations and
lobbying campaigns to deflect criticism of its spending and to fight legislative efforts to
restrict how much nonprofits spend on overhead; WWP hired the global public relations
firm Edelman, which has represented Starbucks, Wal-Mart, Shell and Philip Morris, to
improve WWP’s public perception, especially as it relates to spending on overhead.
• Many people were fired unjustly.
• Wounded Warrior Project spends too much money on fundraising.
• Former employees and charity watchdogs say the charity inflates its number by using
practices such as counting some marketing materials as educational.
• Charity Watch, an independent monitoring group, gave Wounded Warrior Project a “D”
rating in 2011 and has not given it a grade higher than C since.
• Wounded Warrior Project donated $150,000 to the Charity Defense Council, and Steve
Nardizzi joined its advisory board. Charity Defense Council’s mission includes defending
charity spending on overhead and executive salaries.
• Executives quadrupled the number of job placements the program was expected to make
each year, reducing the amount of time specialists had to find good programs.
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• Wounded Warrior Project spent too much money on activities that did not further its
mission.
• Wounded Warrior Project’s leadership fostered an environment of fear and mistrust.
Were some of the allegations false or misleading?
1)
CBS NEWS
Dates: 01.26.2016 and 01.27.2016
What Was Reported:
“But according to public records reported by Charity Navigator, the Wounded Warrior Project spends 60
percent on vets.” (Scott Pelley, CBS Anchor)
“Wounded Warrior Project says 80 of their money is spent on programs for veterans. That’s because they
include some promotional items, direct-response advertising, and shipping and postage costs. Take that
out, and the figures look more like what charity watchdogs say – that only 54 to 60 percent of donations go
to help wounded service members.” (Chip Reid, CBS Reporter)
____________________
THE NEW YORK TIMES
Date: 01.27.2016
What Was Reported:
“The Wounded Warrior Project asserts that it spends 80 percent of donations on programs, but former
employees and charity watchdogs say the charity inflates its number by using practices such as counting
some marketing materials as educational.” (Dave Philipps, The New York Times Reporter)
“About 40 percent of the organization’s donations in 2014 were spent on its overhead, or about $124
million, according to the charity-rating group Charity Navigator.” (Dave Philipps)
____________________
Accuracy and Context:
Accurately accounting for jointly allocated expenses, as shown in its audited financial statements, a total of
80.6 percent of Wounded Warrior Project’s expenses were allocated to provide programs and services for
veterans. WWP follows the mandates outlined in the Generally Accepted Accounting Principles (GAAP),
established by the accounting profession, as well as those put forth by the Internal Revenue Service, when
calculating the percentage of programs and services it provides to veterans. The Better Business Bureau
Wise Giving Alliance says charities should “accurately report the charity's expenses, including any joint
cost allocations, in its financial statements.” Charity Navigator does not follow these guidelines and has
instead created its own. Comparisons with other large veterans’ organizations (which appear below in the
“Reporting, Transparency and Perception” section of this report) show that WWP’s percentage of spending
on joint program and fundraising costs is relatively low.
Note: There is more about joint allocation policies, Charity Navigator, and other so-called charity
watchdogs in Section IV: “Reporting, Transparency and Perception.”
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2)
CBS NEWS
Date: 01.26.2016
What Was Reported:
“Their mission is to honor and empower wounded warriors, but what the public doesn’t see is how they
spend their money.” (Erick Millette, former Wounded Warrior Project employee)
Accuracy and Context:
More than most other charities in the United States, the Wounded Warrior Project strives for transparency.
The public at all times can see how WWP spends its money. All WWP form 990s from 2006 to 2014 are
easily reached at WWP’s website. Most charities don’t have a link to their 990s and so members of the
public must access them from other sources; the most common online site for 990s is GuideStar. Also, the
law requires that only the three most recent 990s must be made public; WWP makes all of them available.
WWP’s financial statements are audited by a major accounting firm. The most recent audit was conducted
by Grant Thornton, the same accounting firm used by the Department of Defense, the Department of
Treasury, the Federal Reserve System, the United States House of Representatives, and many major
corporations and other nonprofits in the United States. As with the 990s, all of WWP’s financial statements
and annual reports from 2005 to 2014 are publically available on the WWP website.
Wounded Warrior Project has a finance and accounting executive vice president who is responsible for
leading the accounting, financial planning and analysis, internal audit, and purchasing teams. Furthermore,
WWP’s budgeting and process is overseen by the board of directors. That process is managed and
overseen by Richard M. Jones, the chair of the board’s audit committee. Jones, as it happens, is also the
Executive Vice President, General Tax Counsel and Chief Veteran Officer for the CBS Corporation.
Note: There is more about Erick Millette in Section IV: “Reporting: Transparency and Perception.”
3)
CBS NEWS
Date: 01.26.2016
What Was Reported:
“You’re using our injuries, our darkest days, our hardships, to make money, so you can have these big
parties.” Also, “Let’s get a Mexican mariachi band in there. Let’s get maracas made with the WWP logo,
put them on every staff member’s desk. Let’s get it catered. Let’s have a big old party.” (Erick Millette,
former Wounded Warrior Project employee, on describing what he categorized as lavish spending on staff)
Accuracy and Context:
The Wounded Warrior Project hosts a small number of interoffice parties for the staff on various holidays
and days of importance. For example, at the end of the last fiscal year, WWP brought in food from a local
Mexican restaurant and had a local mariachi band play for 30 minutes. This was not an unusually modest
affair; they are almost all like that.
WWP has two programs. One, the National Campaign Team, involves unpaid, volunteer veterans telling
their stories. It is a group of about three-dozen warriors and family members who tell stories used in
fundraising and television advertising. A vetting process for accuracy ensures that all participants approve
of the messaging. Erick Millette was not part of this group. The other, The Warriors Speak program,
where employee warriors tell their story to in-person audiences to raise awareness, does not solicit money.
Erick Millette was hired as a part of the Warriors Speak program. One of the explicit requirements for
those chosen to take part in Warriors Speak is that they must always be truthful.
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4)
CBS NEWS
Dates: 01.26.2016
What Was Reported:
“CBS News spoke to more than 40 former employees who described a charity where spending was out of
control.” (Scott Pelley, CBS News Anchor)
Accuracy and Context:
Neither Steve Nardizzi nor Al Giordano ever received a complaint from an employee regarding how money
was spent. Erick Millette, the public face of the ex-employees upon whom both CBS News and The New
York Times heavily relied to conclude that the “All Hands” conference was “lavish” and that it was little
more than a “party,” claims he resigned from WWP because of the extravagance. Yet he wrote favorably
of the conference on his Facebook page. Contrary to the allegations, the “All Hands” conference was a key
time for strategic planning. For example, WWP brought in the Table Group - a consulting firm that, as its
website says, “provides consulting services for leaders and teams who want to make their organizations
healthier,”
12
to work on building a healthy organization aligned around annual strategies and goals.
Bringing in outside consultants to help define goals is common at both nonprofit and for-profit
organizations.
5)
CBS NEWS
Date: 01.26.2016
What Was Reported:
“It was extremely extravagant. Dinners and alcohol, and just total excess,” one employee explained. He
continued, saying that for a charitable organization that’s serving veterans, the spending on resorts and
alcohol is “what the military calls fraud, waste and abuse.” (One of two former employees, referenced in
the CBS report, who, as CBS reported, “were so fearful of retaliation they asked that their faces not to be
shown on camera.”)
___________________
Accuracy and Context:
WWP’s alcohol policy is: no alcohol is provided at program events, staff at program events are not
permitted to drink, and no alcohol is paid for by WWP at All Hands events. Alcohol is paid for by WWP
in limited situations, such as galas, fundraising events, and board meetings.
Furthermore, every expenditure at WWP is reviewed by an employee’s manager and by the accounting
department. Any improper purchases, such as the unauthorized purchase of alcohol, would be noted in a
staff member’s Performance Improvement Plan and could lead to termination, depending on the severity of
the infraction.
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6)
CBS NEWS
Dates: 01.26.2016
What Was Reported:
“According to the charity’s tax forms, spending on conferences and meetings went from $1.7 million in
2010 to $26 million in 2014, about the same amount the group spends on combat stress recovery – its top
program.” (Chip Reid, CBS Reporter)
Accuracy and Context:
WWP’s spending on conferences and meetings for all programs:
• 2009-2010: $1,742,491
• 2010-2011: $5,467, 878
• 2013-2014: $26,054,363
Most of the money in the “conference” category, however, was spent on programs. In 2013-2014, for
example, 94 percent of the $26 million conference budget went to program expenses, which included more
than $3.3 million spent on the Combat Stress Recovery (CSR) program. Total expenses for the CSR
program in that year were $40 million, not $26 million.
7)
CBS NEWS
Date: 01.26.2016
What Was Reported:
“About 500 staff members attended the four-day conference in Colorado. The price tag? About $3
million.” (Chip Reid, CBS Reporter)
Accuracy and Context:
The cost for this conference was $970,000 – not $3 million. This section of the CBS report makes it seem
that CEO Steve Nardizzi acted unilaterally on spending decisions, when the board was aware of the cost of
this conference. Its members also know the percentages for all categories of spending at WWP.
Furthermore, perhaps because the All Hands Huddle (AHH) is about raising morale, Justin Constantine, a
board member in attendance at the conference (held at the Broadmoor in Colorado), praised the conference
on Facebook. At least one board member has attended every AHH event and three of the current six board
members have attended at least one AHH event. Almost every charitable organization spends money on
conferences to raise awareness of its mission.
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8)
CBS NEWS
Dates: 01.26.2016
What Was Reported:
“Former employees say spending has skyrocketed since Steven Nardizzi took over as CEO in 2009.” (Chip
Reid, CBS reporter)
____________________
THE NEW YORK TIMES
Date: 01.27.2016
What Was Reported:
“Mr. Nardizzi doubled his spending on fund-raising and has increased it an average of 66 percent every
year since. The Wounded Warrior Project spent more than $34 million on fund-raising in 2014, according
to tax records.” (Dave Philipps, The New York Times Reporter)
____________________
Accuracy and Context:
This is isolated and inaccurate information. WWP’s 990s from 2008-2009 to 2013-2014 show that
revenues increased by 66 percent annually, fundraising costs increased by 47 percent annually (not 66
percent), and programming expenses increased by 64 percent annually – but administrative costs, as a
percentage of the budget, remained relatively flat.
9)
CBS NEWS
Date: 01.26.2016
What Was Reported:
“Donors don’t want you to have a $2,500 bar tab. Donors don’t want you to fly every staff member once a
year to some five-star resort and whoop it up and call it team-building.” “I’m sorry, but I’ll be damned if
you’re gonna take hard-working Americans’ money and drink it and waste it.” (Erick Millette, former
Wounded Warrior Project employee)
Accuracy and Context:
Wounded Warrior Project did not pay for alcohol at the All Hands conference referenced in the CBS story.
Of the $139,000 charged to WWP credit cards at the All Hands Huddles in 2014, and the $112,000 charged
to WWP credit cards at the All Hands Huddles in 2015 for meals, transportation and other expenses, a total
of two alcoholic beverages were purchased and charged to WWP by employees. This would account for
approximately $20 of $251,000.
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10)
CBS NEWS
Date: 01.27.2016 (morning)
What Was Reported:
“But Millette quit last year.” Millette said, “Warriors Speak is less like a program to help veterans and
more like a fundraising vehicle.” (Chip Reid, CBS Reporter)
“They will tell you it’s not. But it is. I began to see how an organization that rakes in hundreds of millions
of dollars a year is not helping my brothers and my sisters. Or at least not all of them.” (Erick Millette,
former Wounded Warrior Project employee)
Accuracy and Context:
Although Warriors Speak was initially designed as a public awareness and fundraising vehicle, after one
year WWP made the strategic decision to eliminate the fundraising aspect, and includes that fact in its
training regarding Warrior Speak. Erick Millette attended this training. As to Millette’s claim that the
program is “not helping my brothers and sisters,” metrics analyses show that 90 percent of the alumni are
satisfied with all of WWP’s programs and services, including Warriors Speak.
11)
CBS NEWS
Date: 01.27.2016 (morning)
What Was Reported:
“CBS News has interviewed more than three dozen former employees of the Wounded Warrior Project and
nearly all of them told us they’re concerned that the organization has become more focused on raising
money than on serving wounded veterans.” (Chip Reid, CBS reporter)
“A lot of the warriors I saw needed mental health treatment. They don’t get that from Wounded Warrior
Project.” (Chip Reid, quoting an unidentified former employee)
Accuracy and Context:
WWP says its first strategic objective is to make sure wounded warriors are well adjusted in mind and spirit
and that it recognizes that mental health and emotional health are critical components to the overall well-
being of wounded warriors and their families. Multiple WWP programs are specifically focused on mental
health interventions, including the Combat Stress Recovery Program, Project odyssey, WWP Talk, and the
Independence Program. Every employee is schooled with suicide-prevention training. WWP pays for
mental health counselors, such as through organizations such as Centerstone and Give and Hour. WWP
spends over $1 million per month, for example, through the Independence Program to serve the most
severely wounded warriors, and their family members, in their homes.
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12)
CBS NEWS
Date: 01.27.2016 (morning)
What Was Reported:
“I think they want to show warriors a good time. I think they get these warriors to events, but where’s the
follow-up? (Chip Reid, CBS Reporter, quoting an unidentified former employee)
“What happens when you make a suggestion that there’s a better way to serve veterans?” (Chip Reid)
“If you use your brain and come up with an idea, within a matter of time, you’re off the bus.
They don’t need you. It’s their way or the highway. (Unidentified former employee)
“I would raise issues. Why aren’t we going to follow up? Why don’t we have any case management?
(Erick Millette, former Wounded Warrior Project employee)
“How would they respond?” (Chip Reid)
“We don’t call warriors. Warriors call us. Again, as a disabled veteran, it just makes me sick.” (Erick
Millette)
Accuracy and Context:
Wounded Warrior Project regularly contacts veterans and their families. In 2015, staff members conducted
almost 77,000 documented outbound wellness checks and outreach calls to veterans and their caregivers.
From 2013 to 2015, WWP employees made more than 150,000 outreach calls and sent more than 114,000
outreach emails to wounded warriors.
Erick Millette was personally involved with Operation Outreach, a program that WWP uses to call
wounded warriors. In addition, Millette was so enthusiastic that he inquired about being involved in it in
advance the following year. Millette also inquired about the Operation Outreach Coordinator position in
December 2014. He ultimately did not apply, however, because he felt he was not qualified. WWP has a
picture of Millette speaking on the phone during Operation Outreach.
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13)
CBS NEWS
Dates: 01.27.2016 (morning)
What Was Reported:
“Marc Owens is a former director of tax-exempt organizations at the IRS.” And, “What was your biggest
concern in reading these forms?” (Chip Reid, CBS reporter, asking Owens after showing him some of
WWP’s 990s)
“That I couldn’t tell the number of people that were assisted. I thought that was truly unusual.” (Marcus
Owens)
“They do put some of those numbers on the website.” (Chip Reid)
“Yes they do.” (Marc Owens)
“But what’s the difference?” (Chip Reid)
“Form 990 is signed under the penalties of perjury.” (Marcus Owens)
Accuracy and Context:
IRS Form 990 does not have a place for a tax-exempt organization to report the number of people served by
the organization. Such information can be contained in a supplemental narrative, but it is not “highly
unusual” – in fact, it almost never is – that the number of people an organization serves (as opposed to
employs or has as volunteers) is recorded on a 990 form. Also, WWP publishes detailed program
participation numbers, from program metrics and alumni surveys, on its website.
14)
CBS NEWS
Date: 01.27.2016 (evening)
What Was Reported:
“But charity watchdog Daniel Borochoff says his biggest concern is that the group is sitting on a $248
million surplus, and not enough of it is being spent on veterans.” (Chip Reid, CBS Reporter, referring to
Daniel Borochoff, founder of CharityWatch, a charity watchdog)
"It would be helpful if these hundreds of millions of dollars were being spent to help veterans in the shorter
term in a year or two rather than being held for a longer term," (Daniel Borochoff, founder of
CharityWatch)
“But it could be years before most of that money makes an impact on the lives of wounded service
members.” (Chip Reid)
Accuracy and Context:
This comment ignores a fundamental reality in the nonprofit world. The $248 million represents reserves
set aside for one year of operations. As reserves allow for long-range planning, it is standard practice for
responsible organizations to set aside both restricted and unrestricted funds. Each year the WWP board
determines the amount to be set aside. Reserves allow WWP to enter into multi- year commitments such as
Warrior Care Network, which is approximately $70 million over three years. Charity Watch claims that
anything under three years of reserves is reasonable. Both Charity Watch and Charity Navigator have,
according to their 2014 990s, an excess of one year in reserves. In addition, because of WWP’s growth, an
appropriate number goal for reserves is a moving target.
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15)
THE NEW YORK TIMES
Date: 01.27.2016
What Was Reported:
“Former workers recounted buying business-class seat and regularly jetting around the country for minor
meetings, or staying in $500-per-night hotel rooms.” (Dave Philipps, The New York Times reporter)
Accuracy and Context:
The policy, as is stated in WWP’s 990, has been that, with some exceptions, no first class travel is
authorized from the WWP budget. The vast majority of paid air travel has been in economy class. The
independent review conducted after The New York Times and CBS stories were reported found that less
than one percent was booked for employee travel in business or first class. A further review shows that of
approximately 25,000 flights over the past several years, 232 were either business-class or first-class seats.
Over half of those were the result of free upgrades. Neither Nardizzi nor Giordano traveled first-class. The
only exceptions were business class seats, on certain occasions, for staff, warriors and board members – all,
by the way, only to overseas locations.
16)
THE NEW YORK TIMES
Date: 01.27.2016
What Was Reported:
“Eighteen former employees – many of them wounded veterans themselves – said they had been fired for
seemingly minor missteps or perceived insubordination. At least half a dozen former employees said they
were let go after raising questions about ineffective programs or spending.” (Dave Philipps, The New York
Times reporter)
Accuracy and Context:
No employee has ever been fired for making a complaint about programs or spending. None of the former
staff that spoke to the media sued WWP for wrongful termination, and there were no successful EEOC
findings for them. Communications Executive Vice President Ayla Tezel said that some employees
interviewed by the New York Times, some of whom were quoted, were fired for poor performance or
ethical breaches. In fact, WWP acted quickly and publicly when it learned of a theft of funds. Melissa
Cain, a line staffer in the accounting department, received a public award (FILIS) for blowing the whistle
on the issue of stealing by Neil Abramson, the Director of Major Gifts, and of a cover-up of the thefts by
Len Stachitis, the former Executive Vice President of Strategic Giving. WWP’s investigation also led to
the discovery of an abuse of funds on the part of Theresa Nichols, the Manager of Major Gifts. All three
were employed in positions that required sensitivity and integrity with money. After Stachitis and Nichols
were fired for misuse of donor dollars, they joined the ex-employee Facebook group, one of whose
purposes was to take down WWP. In fact, Erick Millette explicitly expressed this sentiment.
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17)
THE NEW YORK TIMES
Date: March 10, 2016
What Was Reported:
“In February, the group’s board hired the New York law firm Simpson Thacher & Bartlett to perform an
independent review;” and “The review confirmed many of the findings by The Times and CBS, according
to a news release from the public relations firm, and the board has instituted changes to limit first-class
travel, track changes and increase accountability.” (Dave Philipps, The New York Times Reporter)
Accuracy and Context:
The board has never agreed with the allegations made in CBS News and The New York Times report. The
board has not made any policy changes regarding travel since March 10, 2016; there has always been a ban
on first-class travel. The Better Business Bureau Wise Giving Alliance reviews the WWP policies every
two years and has been satisfied.
18)
THE NEW YORK TIMES
Date: March 11, 2016
What Was Reported:
“That moment in February was part of the building pressure by donors, veterans and supporters of the
organization that culminated Thursday night in the abrupt firing of Mr. Nardizzi and his second in
command, Al Giordano, who together earned nearly $1 million per year. By the time the board met
Thursday to dismiss the two men, contributions were down and it had in hand an internal investigation that
convinced it that the top leadership had to go.” (Dave Philipps, The New York Times Reporter)
Accuracy and Context:
Contributions were still up compared to the same time (as of March 10, 2016) in 2015. In addition,
Nardizzi and Giordano were not told that they were fired because of the findings in the internal
investigation. Fred Kane was the only donor to bring pressure. (His donation to WWP was not made
personally, but directed through another nonprofit.)
2. WHAT WAS NOT INCLUDED
News is newly received and noteworthy information, and it often conveys controversy, which is
often why it’s noteworthy. That’s why competent media don’t use only a person’s or an
organization’s press releases when preparing a story. The news is what’s wrong, and only
sometimes what’s right. Still, in examining what’s wrong, good journalism demands a sense of
fairness. So, while Chip Reid, the reporter for the CBS News story, reported that the organization
had spoken to “more than 40 former employees” (this, even though CBS This Morning co-host
Norah O’Donnell on a later date said over 100 current and former employees had been
interviewed), not one word of anything specific and positive was reported. And there was plenty
that was positive; plenty that, if included, was relevant to the degree that it would have shredded
the intended negative premise of the stories.
Ryan Kules, the Director of Combat Stress Recovery and a recipient of services from WWP, was
interviewed for the CBS story, and to poor effect. He denied there was excessive spending on
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conferences. “It’s the best use of donor dollars to be sure we provide programs and services to
our warriors and their families, and at the highest quality.”
When Chip Reid asked why Wounded Warrior Project went to a five-star resort in Colorado
when the conference could have been held in Jacksonville at a local, cheaper hotel, saving money
that could be used for wounded warriors, Kules essentially said the same thing. At that point (and
after what seemed to be an edited-out back-and-forth that went nowhere), Reid said, “So you’re
just going to keep saying that, no matter what question I ask about the All Hands conferences.”
CBS caught a lingering and unfortunate shot on Kules’s apparent inability to respond coherently.
By all accounts, Kules is a good and honorable man, but he was not fully prepared to be
interviewed by a major media outlet. CBS took advantage of the situation in the way a wolf
would a henhouse. Nardizzi chose Kules to speak on behalf of the organization, a decision he
regrets. “Ryan Kules is one of the brightest and most articulate young men I know,” says
Nardizzi. “I apologized to him and his wife. What the public saw –what CBS News chose to air
– does not represent who Kules is. In fact, he is a great leader at WWP.”
13
But here’s the interesting thing: Perhaps sensing an agenda on the part of CBS News, or perhaps
it was just a desire to keep its own records, WWP also taped the interview. In WWP’s video, at
the end, after the CBS cameras had stopped rolling, here is what Chip Reid said:
“I’d much rather be doing a happy story about vets. But, I do love doing these stories
when they’re great. In fact, I have a whole file full of stories – Wounded Warrior Project
stories that I have been pitching over time. And I haven’t gotten . . . But, anyway.
Anyway, I gotta job and you gotta a job.”
14
WWP also recorded the words of several people interviewed by Dave Philipps of The New York
Times. One of them was Meghan Wagner, the Manager of Physical Health and Wellness at
WWP who works on Soldier Ride, one of WWP’s signature programs. She told Philipps:
“I see huge impact. Warriors are . . .we’re changing lives. You see it over the course of
four days. It doesn’t happen instantly, but warriors are coming to us with interest in this
program. They’re coming for a variety of reasons, whether it’s emotional, physical,
mental. They seek out that camaraderie from other warriors, so having 50 warriors there,
like-minded individuals for them to connect and realize, ‘I’m not alone. Someone else is
going through the same thing I’m going through.’ They build friendship and by the end,
they’re sharing contact information, creating Facebook pages, crying . . .. But they’re also
being shown a new activity in an adaptive way that maybe they never had before, so it’s
empowering in that physical health sense as well.”
Then there was Jon Sullivan, the Vice President for Engagement. He told Philipps this about
wounded warriors:
“They may first hear about us in their communities, but for a large part of the warriors
that we serve, we’re not necessarily going to meet them in the hospital. DOD [the
Department of Defense] doesn’t hand us a list and say, ‘These are the warriors that were
injured this month.’ So we really on primarily other warriors helping us get the word out
to their fellow injured or wounded service members. We get a lot of people that reach
out directly to our website. And I think the more awareness you have of the organization,
the more visibility you have of the organization, the more traffic you generate, the more
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inbound traffic you generate for the people that you service . . . We’re not just looking for
anyone that can give us money. We’re looking for people that can help us accomplish
those three things: raise money, spread awareness, and then have a direct impact on
warrior programs.”
15
These are not isolated sentiments. Several other employees discussed their roles with as much
energy and enthusiasm. Not one word of these interviews ended up in the published story.
But Al Giordano, WWP’s former and fired Chief Operations Officer, confesses, “We don't have
any records of who he [Philipps] spoke with outside of the WWP staff. The naysayers thoughts
appeared in print while those with a countervailing opinion ended up on ‘the cutting room
floor.’”
16
One person Dave Philipps spoke with about WWP – someone who does not work at WWP and so
whose remarks were not recorded and transcribed – was me.
2
While I did not record my
comments (he may have), I, too, recall having a relatively upbeat discussion. Something –
although I don’t know what – seems to have changed in the few weeks between my discussion
with Philipps and when the story was printed. No one else to whom I spoke seems to know,
either. One person characterized the article as “useless.” He said there was no basis for pretty
much anything, that it was “all speculative and hearsay.”
There is much more that was not part of the news stories, some of which is addressed in this
report.
3. ANTHONY ODIERNO ON THE O’REILLY FACTOR
On March 14, 2016, the week after WWP’s CEO and COO were fired, Anthony Odierno, the
board chair, was a guest on the Fox commentary show The O’Reilly Factor. He told Bill
O’Reilly that the report, conducted after the stories were aired in January, concluded they were
wrong. The report – delivered only orally, not in a written format – confirmed that “80 percent
[not the 60 percent that was alleged] of our spending did go to programs.” Also, of the “$26
million that went to staff conferences, the audit showed that about 94 percent of that - $24.5
million – went to direct program expenses.” As for the issue of expensive travel, he said, “Over
99 percent of the plane tickets were in accordance with . . .” At this point O’Reilly interrupted
him. But Odierno, if he was going to reference the actual financial accounting of expenses at
WWP, was about to reveal that only one percent of travel was at the first-class level, and that half
of that was the result of using upgrade coupons that did not cost anything to WWP.
When he interrupted, O’Reilly asked, “Then why were the two top guys fired?” Odierno then
meandered, saying the review was thorough, that it encompassed policies and cultural issues, and
that after looking at the “totality” of things, “the board felt that a change was necessary.”
O’Reilly, after saying it seemed liked Nardizzi and Giordano were doing a good job, tried to drill
down on that for specifics. “Why? You say the culture. What was the culture there?” Again,
Odierno began to wander, beginning to speak of “conversations” with advisors. But O’Reilly
again interrupted him. “Tell me why, Captain.” The reference to captain was apparently to say
that although Odierno had been a military leader, what O’Reilly was hearing did not sound
decisive. “Let’s cut to the chase,” said O’Reilly. “What were they doing – these two individuals
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
2
I am often called by media outlets for comment and analysis on issues affecting the nonprofit community and
philanthropists.
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who you fired – that disturbed you?” Still, more meandering: “We reviewed judgment decisions
that were made, the cultural aspects . . . these were all part of the briefings . . .” O’Reilly: “But I
don’t know what ‘cultural’ things are. Give me an example.” After Odierno said he would not
provide specifics, O’Reilly asked if the donors weren’t owed an explanation. Still, other than
something along the lines of how great an organization WWP is, nothing specific. O’Reilly
asked one more time. After being told there were millions of viewers, including many WWP
donors, tuned in, Odierno said, “The Board is acting in the best interests of the organization, and
this is what we felt, that a change was necessary to get the focus back on programs and serving
and doing what we do.”
That frustrating comment ended the interview.
17
4. THE EFFECT OF THE STORIES
The immediate effect of the news stories seems to have had little effect on WWP’s fundraising
results. In February 2015, donations totaled slightly more than $25 million. In February 2016,
the month following the news stories – but before the board fired Nardizzi and Giordano –
donations total slightly less than $25 million. Although a $1 million swing may seem like a big
difference, it represents only four percent, which is not unusual when taking into account year-by-
year comparisons of monthly fluctuations at a charity.
While the news stories themselves did not have an immediate effect on WWP’s fundraising, the
board’s decision to fire Nardizzi and Giordano did. The graph below begins in January 2016,
when the CBS and The New York Times stories came out. Notice that in April, the month after
the firings, donations began to suffer.
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5. ERICK MILLETTE
Despite the fact that both CBS News and The New York Times, as well as WJAX, the local CBS
affiliate in Jacksonville, Florida, relied heavily on the comments of Erick Millette, an Army Iraq
veteran, to criticize Wounded Warrior Project, there is reason to question his allegations.
Millette told CBS’s Chip Reid, “We don’t call warriors. They call us.” This is untrue, according
to written records, former senior leaders, and others, including those employed at and volunteers
for WWP.
In The New York Times report of January 27, 2016, Millette said he quit after growing
disillusioned about his work with a program called Warrior Speak. “I wasn’t speaking anywhere
unless I was collecting a check,” he said. “They wanted me to say WWP saved my life. Well,
they didn’t. They just took me to a Red Sox game and on a weekend retreat.”
18
This conflicts with what he told WBZ TV, the CBS affiliate in Boston, a little more than two
years earlier, when he said, “We change lives. We save lives every single day. I don’t think I’d
be sitting here having this conversation or be able to present my story, my troubles or how I
overcame them without the Wounded Warrior Project.”
19
The apparent change of heart might generously be explained by Millette never having had good
feelings about the Wounded Warrior Project, that he lied to WBZ and, presumably, in an act of
honest desperation, came clean to The New York Times. That is, Millette could have been the
shill he essentially claimed to be. (That possibility, of course, would raise questions about
Millette’s integrity and honor, the values most associated with those who have served in the
military).
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But, in that line of thinking – if he “wasn’t speaking anywhere” without “collecting a check” –
then we must ask why, being neither paid nor prodded, he wrote this note on his Facebook page
on April 26, 2014:
“A few months ago I received a phone call from a warrior in hysterics . . . another
Warrior who was on a bridge ready to . . . become one of 22 veterans a day that take
their own life. With the help of . . . Wounded Warrior Project. We were able to talk him
off that bridge.”
Here is the screen shot of the entire message:
Millette expressed outrage in the media over the cost of the Broadmoor event in 2014 and the
nature of the activities, claiming that it was the “breaking point that led him to become a
whistleblower.” However, his statements on Facebook during the event contradict what he said
to the media. “That’s how you start All Hands!” he wrote. “Love my teammates!!!”
In another post, Millette said that a staff member was almost totally responsible for “the reason I
am here today.” By that, he meant that WWP played a crucial role in helping him not to end his
life, as is the case with many veterans.
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Millette’s outrage also must have come as a surprise to board member Justin Constantine, who
attended the Broadmoor conference. Constantine posted this on his Facebook page right after the
meeting:
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Also, despite Millette’s claims that the event led him to become a whistleblower, he remained
employed at WWP for another year, and even pursued other positions within the organization. In
an email on August 13, 2014, Millette wrote to Maryanne Scales, the Process and Personnel
Manager at WWP, “I wanted to reach out to you to see if we were doing Operation Outreach
again this year? If we are I would like to volunteer my time with it. I have a few ideas I would
love to share with you to try and get the staff more involved.”
While we don’t know why he made false and contradictory statements, his express purpose seems
to have been to harm the organization. “I cannot wait for the day that WWP fails,” he wrote on
Facebook on January 15, 2016.
3
__________
As Millette played such a central role in changing people’s perceptions of Wounded Warrior
Project, I wanted to get his side of the story. When I contacted him on July 19, 2016, Millette
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
3
I am in possession of the Facebook screen shots that contain the quoted material and the names of the people who are
quoted; the screen shots were publicly available even though they may have since been removed.
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said he wanted to speak no more of the issue. This is the Facebook conversation he and I had on
July 19, 2016:
July 19, 2016
2:05 pm
Doug White
Erick,
My name is Doug White. I'm doing research on the WWP and the late-January 2016 reports on CBS News
and The New York Times. I'd like to speak with you. My email is [email protected]; my cell is
[deleted]. Please let me know if you will agree to talk. Many thanks.
Doug
July 19, 2016
2:23pm
Erick Millette:
In regards to what?
July 19, 2016
2:57 pm
Doug White:
I'm looking into the allegations cited by the reports. WWP is an important organization and the publicity, I
have been told, has hurt its fundraising and maybe its overall stature. I'm hoping, by speaking with several
people, to get a better sense of things. My background is in nonprofits and I think you could add something
to the mix. Although I hope my findings will be of interest, I have been asked by no one to do this report -
I'm doing it on my own and at my own expense.
July 19, 2016
5:49 pm
Erick Millette:
I'm not discussing WWP.
In a way, I could understand that. Even though his responses to my questions, which would have
been driven by more of an understanding of the nonprofit world than what media outlets
generally illustrate, would have been useful, Millette clearly had volunteered much of his time
and many thoughts to what must have been a difficult story. Perhaps enough was enough.
Yet, a little more than two weeks later, on August 4, 2016, WJAX, the CBS affiliate in
Jacksonville, Florida, in a story in which Michael Linnington, the recently appointed executive
director, was interviewed, Erick Millette again discussed Wounded Warrior Project. The station
reported that fired employees described “a culture of fear that existed under the previous
management team. Erick Millette was the only former employee to go public with allegations of
lavish spending on staff and not on their clients and helped blow the doors open on the
organization's practices.”
The station reported that it played Linnington's entire interview for Millette. "It's very promising
to listen to the interview,” Millette said, “and see where he's coming from, and he's focused on
mission and values and putting them back in line. Because when this started, this wasn't an attack
on WWP, it was an attack on their frivolous spending and their culture."
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Millette said he was encouraged that the organization is now led by a man with a distinguished
military background. "He has seen combat. I especially like he brought up the invisible wounds
of war, because WWP in the past targeted such a small population with marketing and advertising
of those that are severely wounded," Millette said.
20
So much for “not discussing WWP any longer.”
6. FACEBOOK COORDINATION
Several former disgruntled WWP employees, including Len Stachitis, Executive Vice President
for Strategic Giving, and Teresa Nichols, the Manager of Major Gifts, formed a closed Facebook
group in March 2015. The initial intent seemed to be to provide support for one another, but it
became a forum to criticize WWP leadership. The majority of the employees had been
terminated for cause, including theft and other misuse of funds. As mentioned above (in Box 16
of the media allegations), Stachitis was terminated for covering up the theft of donor dollars from
a number of his direct reports, including Nichols. In one case, a theft amounted to over $30,000
over time and resulted in the arrest of Neil Abramson on grand theft charges. The court ordered
him to pay restitution of $32,000.
Members of the group fabricated controversial issues for the purpose of harming WWP’s
leadership: drastically inflating the cost of an annual all-staff conference, indicating that the CEO
determined his own salary, and alleging that WWP provided (paid for) an apartment for the CEO
in New York City.
WWP offers an anonymous hotline for employee complaints, but none of the members of the
Facebook group used that hotline to express dissatisfaction while employed at WWP. In fact, a
number of them made statements during their tenure at WWP that were inconsistent with what
they maintained afterward. An example: Amy Frelly complained about the costs associated with
the costs of the All Hands training conference in Colorado. But, while employed, she said, “Trip
was good but exhausting. We didn’t have any downtime. Some teambuilding competition (we
did some strategic planning exercises and went to a dude ranch and did some activities) with team
members we didn’t know so that was good . . . Especially when we have so many regional offices
and, more importantly, we have such an important job ahead of us. We’re not selling cookies to
kids . . . and we’re trying to save wounded vets from ending their lives . . . Upper management
didn’t go near the drinks.”
4
On January 23, 2016, Ralph Ibson, a former WWP employee and a member of the Facebook
page, included in his post an email message from the Times’s Dave Philipps, who at the time was
completing the story before it was published a few days later:
“Hi, Ralph. I gave Wounded Warrior Project a list of names of people included in the
article who were fired and why they said they were fired. Here is Wounded Warrior’s
response. Essentially they are calling you guys all liars which is not surprising, and
providing no details to back it up. However if anybody feels they were not honest with
me about why they were fired they should probably tell me now. We are getting down to
the wire.”
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
4
Again, I am in possession of the Facebook screen shots that contain the quoted material and the names of the people
who are quoted; the screen shots were publicly available even though they may have since been removed.
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It’s that next-to-last sentence that might be interesting. Journalists don’t typically ask their
sources if they were dishonest and if they might want to say something different from what was
already said.
Connie Chapman, the former employee who started the Facebook group, said on her page, "I
personally know my quotes are opinion; they are based on my experience but still are opinion. So,
I want to discuss with him rephrasing my comments in ways that can be considered facts or
inspire them to provide facts vs. opinion." In addition, the aforementioned Amy Frelly, who
expressed high regard for WWP before registering blistering complaints, addressed this matter on
her Facebook page on January 23, 2016: "I know [someone] talked to him tonight and wanted to
change some of her comments, and he was very willing to do so."
21
That the Facebook group existed, and perhaps still does, is not an issue in itself. But, it is
plausible to think that the 40 or so people with whom CBS News spoke were essentially in an
echo chamber. Becky Melvin, a member of the group, wrote on November 12, 2015, “Strength in
numbers by everyone saying the same thing about WWP!” Also, in an email written to WWP on
January 22, 2016, CBS News producer Jennifer Janisch said, “CBS News has spoken with
numerous former employees, at several levels of seniority, who have had strikingly similar stories
to share about WWP.”
7. A COMMENT ON THE MEDIA
The public is used to the media getting it wrong. Most of the time, however, it’s not that the facts
are reported incorrectly but that the way a story is written or placed, or even that it is, in the eyes
of the editors, a story at all, is what rankles the critics. This is a battle that journalists and
reporters cannot win. At best, when it comes to making their decisions, they have to bring to
their journalism the best of their experience, discipline and judgment. It’s a subjective process.
But sometimes the media do get the facts wrong. A notable example is when, on March 30, 1981,
at 5:10 p.m., a little more than two and a half hours after John Hinckley tried to assassinate
President Ronald Regan, CBS’s Evening News anchor Dan Rather told the nation that James
Brady, Reagan’s press secretary, had died. Brady had been shot in the head and severely
wounded, but he did not die.
5
CBS attributed ''Congressional sources.'' Both Rather, and Frank
Reynolds, the ABC anchor, delivered obituaries. Less than half an hour later, Larry Speakes, a
White House spokesman, said that Mr. Brady was in ''serious condition'' but that he had not
died.
22
Contrast that with what Walter Cronkite put himself through before reporting that President John
Kennedy had died. Cronkite’s, as well as the wire services’, guiding principle was: “Get it first,
but get it right.” It took more than 90 minutes of grueling, chaotic back-and-forth with people on
the ground to get the announcement of Kennedy’s death on the air. Even when Dan Rather, who
was in Dallas at the time, reported that a doctor and a priest had confirmed Kennedy’s death –
and even when CBS Radio reported Kennedy’s death, on the basis of what two reporters in Dallas
had said – despite what must have been an agonizing temptation, it was not enough for Walter
Cronkite. He would not report Kennedy’s death until there was official confirmation from the
White House. When Cronkite got that, and not before, he reported it on the air
23
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
5
James Brady died on August 4, 2014 at the age of 73. No cause was specified, although District of Columbia police
told CNN that his death was ruled a homicide, the result of the shooting 33 years earlier.
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The Wounded Warrior Project story is not about anything as dramatic as a presidential
assassination attempt. But still. As a general rule, we should hope that journalistic integrity still
demands getting the facts straight and the context right. Chip Reid could have done better than to
rely on a group of disgruntled employees, speaking primarily through a man who was clearly
upset. Think about that. This is what drove this story: regarding the way WWP was operated,
among those who had worked there only one self-admittedly angry person could be found to go
on the record, as well as a few more who spoke but did not go on the record because, as CBS
News said, they feared “retaliation” by WWP (a peculiar assertion as they were already former
employees); that, and a one-sided, questionable critique of how the numbers were calculated
when WWP generated reports that must adhere to established accounting principles and the IRS’s
position on the matter.
The public thinks that when a news organization identifies a story as an “investigation,” it has
conducted an extensive and thorough review of all the relevant facts, reviewed them, and
generated a story the news organization understands is fit for public consumption, with all the
weight of judgment that obligation implies. In my view – substantiated in this section, as well in
the remainder of this report – in its treatment of the Wounded Warrior Project allegations, CBS
News and The New York Times lost the battle for a thorough and just accounting of what was
important – the principal and complex portion of which, in this story, is the way charitable
organizations are and should be operated, as well as what the public should expect of them. This
is no small matter because nonprofits and donors are playing an increasingly important and public
role in society’s quest to improve itself. CBS News and The New York Times did the public no
favors with its inadequate and unnecessarily damaging journalism.
In this era, however, another battle is being lost. The difficulty for viewers and readers is not just
one of interpreting the words of reporters filled with integrity trying to get the right balance in a
story, but the perceived need on their part, and on that of their producers, to generate information
as fast as possible. It’s the “get it first, but get it right” philosophy, but without one of the two
equally important ingredients. This is a problem not only at CBS News; all news organizations
are today subject to this temptation. Apparently, CBS News felt some pressure to get the story
out quickly, even though there was no tangible hook – other than perhaps an attempt to beat the
Times – that required immediacy.
Perhaps 60 Minutes should have kept the assignment.
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IV. REPORTING: TRANSPARENCY AND PERCEPTION
The January 2016 allegations began this way on CBS News:
“A CBS News investigation into a charity for wounded veterans, the Wounded Warrior
Project, looks into how the charity spends its donation money. What caught our attention
is how the Wounded Warrior Project spends donations compared to other long-respected
charities. For example, Disabled American Veterans Charitable Service Trust spends 96
percent of its budget on vets. Fisher House devotes 91 percent. But according to public
records reported by Charity Navigator, the Wounded Warrior Project spends 60 percent
on vets. Where is the money is going?”
24
A fair question. To address it, we begin with the self-proclaimed charity watchdog Charity
Navigator.
1. CHARITY NAVIGATOR
Although Charity Navigator calls itself “your guide to intelligent giving,” it is nothing of the sort.
To quote from an editorial I wrote for the Chronicle of Philanthropy in January 2016, just after,
although not motivated by, the allegations against WWP were reported:
“Charity Navigator dumbs down the conversation about the real impact charities have, or
should have, on our society. As a result, the news media, donors, and the rest of the
public too often needlessly focus on irrelevant information, such as the share of budget
spent on salaries or overhead. The site is full of meaningless statistics, disguised – or
promoted – as relevant data under the illusion of helping donors support solutions to the
world’s persistent challenges.”
25
In the first days of 2001, I was the first person to work for the organization that became Charity
Navigator and know the philosophy of the founder and, even though many metrics have been
revised over the years, most of the equations. I knew then that using only information from a
charity’s 990 would never be enough to evaluate a charity’s worthiness.
But I am not the only critic. There are many. For example, the highly regarded Stanford Social
Innovation Review (SSIR) said this about Charity Navigator (and the few other charity
watchdogs) in 2005:
“We conducted a detailed study of the agencies to determine how useful a service they
provide. The results were sobering: Our review of their methodologies indicates that
these sites individually and collectively fall well short of providing meaningful guidance
for donors who want to support more efficient and effective nonprofits.
“Based on our study, the major weaknesses of the ratings agencies are threefold: They
rely too heavily on simple analysis and ratios derived from poor-quality financial data;
they overemphasize financial efficiency while ignoring the question of program
effectiveness; and they generally do a poor job of conducting analysis in important
qualitative areas such as management strength, governance quality, or organizational
transparency. To be fair, these are early days for the ratings business; all of the sites are
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less than six years old and each is still working on improving its methodology, growing
its user base, and developing a sustainable business model for its services.”
26
The headline of an article in the Chronicle of Philanthropy once asked, “Is Charity Navigator the
'National Enquirer' of Watchdog Groups?” The article quoted Michael Soper, a nonprofit
consultant, who said, “In my view, Charity Navigator, its ratings, and its top ten lists are nothing
more than great merchandising of a weak underlying product.”
Specifically, “the watchdog’s methods are flawed,” according to Soper, “because:
• It only examines the financial health of a charity, not how effective it is at meeting its
mission.
• It relies too heavily on the Internal Revenue Service’s 990 informational tax return,
which charities often interpret differently.
• Its ratings could be skewed depending on a charity’s mission or the year Charity
Navigator began examining a group. For example, Mr. Soper writes that if Charity
Navigator were to begin looking at a nonprofit group at a time it is in capital campaign,
“Future ratings and rankings could show the nonprofit in decline as a result of the
decreasing revenue.”
27
Although SSIR acknowledged that its review was conducted in the early days of rating charities,
not much has changed. This is true even though Charity Navigator, the Better Business Bureau
Wise Giving Alliance and GuideStar
6
wrote a much-publicized letter attempting to “correct a
misconception about what matters when deciding which charity to support.” The letter says:
“The percent of charity expenses that go to administrative and fundraising costs –
commonly referred to as “overhead” – is a poor measure of a charity’s performance. We
ask you to pay attention to other factors of nonprofit performance: transparency,
governance, leadership, and results. For years, each of our organizations has been
working to increase the depth and breadth of the information we provide to donors in
these areas so as to provide a much fuller picture of a charity’s performance.”
28
The biggest problem with the letter, despite its accuracy, is the omission of an acknowledgment
of the role the ratings agencies themselves played to bring about the problem in the first place. In
that sense, despite its message, it can justly be considered hypocritical.
The weaknesses of Charity Navigator are clear and obvious. For the media to use it – or any
other similarly built “watchdog” group” – for the purpose evaluating any one charity is
irresponsible and lazy.
The need to change the conversation about how the public, including the news media, should
view charities – a central component in the analysis of the allegations against Wounded Warrior
Project – will be addressed later in this report. For now, we concentrate on addressing the
allegations on the terms Charity Navigator sets forth, terms on which both CBS News and The
New York Times heavily relied.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
6
Although GuideStar provides 990s on almost all of the nation’s 1.7 million nonprofits, it does not rate charities.
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The claim is made that WWP spends 60 percent of its budget on vets and that other similar
organizations do much better. When putting this statement into context, it is helpful to look at
the history of WWP’s revenue growth and spending on programs.
2. EVALUATION ISSUES RELATED TO THE MEDIA REPORTS
In its report on January 26, 2016, CBS News compared WWP with two other charities: The
Disabled American Veterans (DAV) Charitable Services Trust and Fisher House Foundation,
both of which, as does WWP, serve the veterans community. Scott Pelley, the anchor for the
broadcast, said, “The Disabled American Veterans Charitable Services Trust spends 96 percent of
its budgets on vets. Fisher House devotes 91 percent.” CBS News said it obtained this
information from Charity Navigator.
But a legitimate ratings system would be more complex than comparing what might seem to the
untrained eye certain categories of expenses.
The DAV Charitable Services Trust is interesting because it reports out only $77,909 for
fundraising-related expenses, while obtaining, as it did in 2014, almost $5.6 million in
philanthropic support, which translates to a fundraising expense of an unrealistic 99 percent
efficiency rate. In addition, the charity reports zero expenses for salaries – this for an organization
whose budget was $6.7 million.
29
Its website explains nothing about those curious numbers, but it does inform the public that
Bridgette Schaffer, in her role as the administrator of trust and foundation administration,
oversees the day-to-day operations of three charities. In neither of the other two, the DAV
National Service Foundation and the Disabled Veterans Life Memorial Foundation, are any
salaries noted. The 990 for the Disabled Veterans Life Memorial Foundation does show,
however, that its CEO, Fredric Fenstermacher, earned $434,866 while overseeing an organization
that raised $12,424 and had expenses in excess of revenues by more than $9.6 million. It is not
within the scope of this report to track the source of how Ms. Schaffer is paid at the DAV
Charitable Services Trust or how the three charities are actually intertwined, but it is fair to
conclude that simple comparisons of what might seem like relevant data often tell the public very
little.
Actually, it’s like comparing apples and oranges. On his website at CharityWatch, Daniel
Boroschoff, explains,
“A charity’s reported program percentage can sometimes vary greatly from the portion of
donor funds that actually end up being used directly for charitable services, and that is
very much the case with Disabled American Veterans Charitable Service Trust (the
Trust). CBS News referenced that the Trust “spends 96 percent of its budget on vets”
when it was comparing some veterans charity program ratios as part of its coverage in
early 2016 concerning accusations that the popular Wounded Warrior Project (WWP)
was wasting donations on lavish spending. The Trust did in fact spend 96% of its budget
on grants to veterans organizations, according to its 2014 IRS Form 990 filing, but
comparing the Trust’s program spending to that of WWP (which was 54% in fiscal 2014,
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based on CharityWatch’s calculations)
7
was rather unfair given that WWP operates its
own veterans service programs and the Trust does not.
“Even for charities in the same category, charitable program services can be substantially
different depending on each charity’s individualized mission. Essentially all of the
Trust’s program spending goes towards grant-making to other charitable organizations. In
contrast, WWP runs a variety of its own programs for veterans, including an “alumni
association” that offers educational sessions and social events; a combat stress recovery
program; and many “physical health and wellness” activities and events, while less than
15% of WWP’s cash-based program spending went to grant-making in its 2014 fiscal
year. When a charity does not conduct its own programs but instead makes grants for
other organizations to conduct programs, a high program percentage should be expected.
That is why when evaluating charities such as the Trust, where grant-making is the
primary charitable program, it is important for donors to look more closely at the grantee
organizations to assess how they are actually using the donor funds that have essentially
been passed-on to them in the form of charitable grants.”
30
As for Fisher House, the other charity CBS News mentioned favorably, it too reports an
unrealistically high fundraising efficiency – 98 percent – and, although CBS news quoted
criticisms of Steve Nardizzi’s salary of $496,415, running an organization with $248 million in
expenses, the report did not note the $478,988 salary of the top executive at Fisher House, an
organization with $41 million in expenses.
3. WWP’S REVENUE AND PROGRAM EXPENDITURE GROWTH
Since 2008, Wounded Warrior Project’s revenue has grown at a rate of 66 percent year over year
from just under $19 million to over $300 million in 2014. Budgeted revenue for fiscal year 2015
totaled $403 million.
Program expenditures grew by 64 percent annually, from $12 million to $176 million. Budgeted
program expenditures for fiscal year 2015 totaled $271 million.
8
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
7
The calculations conducted by Charity Watch, as are those at Charity Navigator, are problematic for reasons
explained both earlier and later in the text. While I don’t agree with Mr. Boroschoff’s number here (54 percent of
WWP’s budget devoted to programming), his explanation regarding Disabled American Veterans and the Disabled
American Veterans Charitable Service Trust is both accurate and illuminating.
8
The 2015 numbers shown in these two graphs represent WWP’s budgeted projections; actual numbers reported on the
organization’s consolidated audited financial statements are slightly different.
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4. RELATIVELY SPEAKING
But what does this mean? Nothing, until the numbers are put into a context. Based on WWP’s
Form 990 for 2014 – and that of comparable organizations for the same time period – the chart
below compares ratios that are important to charity watchdogs.
31
TOTAL
FUNDRAISING
COSTS/
PROGRAM
EXPENSES/
AMOUNT TO
EXPENSES
TOTAL EXPENSES
TOTAL EXPENSES
PROGRAMS
ORGANIZATION
($)
(%)
(%)
($)
Paralyzed Veterans of America
$108,779,786
32.8%
62.2%
$67,655,602
Tempe, AZ
Most Recent 990: 2015
Veterans of Foreign Wars of the
US
$89,099,521
29.2%
65.8%
$58,648,575
Kansas City, MO
Most Recent 990: 2015
Disabled American Veterans
$139,767,655
26%
67.9%
$94,945,045
Cold Spring, KY
Most Recent 990: 2014
United Service Organizations
(USO)
$128,475,989
18.5%
68.8%
$88,499,562
Arlington, VA
Most Recent 990: 2014
Wounded Warrior Project
$248,005,439
17.5%
76.4%
$189,558,100
Jacksonville, FL
Most Recent 990: 2014
The following two organizations were mentioned on the CBS report criticizing WWP that aired on 01.26.2016:
Fisher House Foundation
$41,193,218
2.4%
91.0%
$37,496,704
Rockville, MD
Most Recent 990: 2014
DAV Charitable Services Trust
$6,717,469
1.2%
96.5%
$6,483,560
Cold Spring, KY
Most Recent 990: 2014
Some other organizations, not shown here, report a higher percentage devoted to programs than
WWP does. The organizations shown above were chosen because of the operational similarities
they have with WWP (see above for an explanation of that issue as it relates to Disabled
American Veterans). Using the 990 information provided, all numbers are categorically
comparable, which is why the chart shows, feigned allegations (described elsewhere in this
report) to the contrary notwithstanding, that WWP devoted 76.4 – not 60 – percent of its budget
to programs. Others, in addition to those not included in the chart, report a lower percentage than
WWP.
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The following two charts show comparisons between Wounded Warrior Project and other
organizations that either directly or indirectly support veterans: 1) the amount spent on programs
as a percentage of the budget; and 2) the CEO’s compensation as a percentage of revenue. Note
that in no area is Wounded Warrior Project an outlier.
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5. OVERALL FUNDRAISING AND PROGRAM SPENDING RATIOS
An analysis of WWP’s 990s shows that the portion spent on fundraising and the portion spent on
programming are each in a healthy state.
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Although, the trend line for fundraising costs as a percent of budget goes slightly upward, it is
around 22 percent and looks to stay that way. The programming efficiency is also going in the
right direction. Both trend lines are affected by the earlier years, and, as one can see, in recent
years the direction is more dramatically positive than the trend lines would imply. Nardizzi
began his tenure as CEO of WWP in 2009, which is when the charts indicate the beginning of
growing efficiencies.
6. CONFERENCE SPENDING
Erick Millette, through CBS News and The New York Times, made much of what he thought
were expensive, over-the-top conferences: “Donors don’t want you to have a $2,500 bar tab.
Donors don’t want you to fly every staff member once a year to some five-star resort and whoop
it up and call it team-building.” Also, “I’m sorry, but I’ll be damned if you’re gonna take hard-
working Americans’ money and drink it and waste it.”
On air, CBS news displayed a graphic revealing that a total of $26, 054,363 was spent on
conferences and meetings in fiscal year 2015. “According to the charity's tax forms, “Chip Reid
reported, “spending on conferences and meetings went from $1.7 million in 2010, to $26 million
in 2014. That's about the same amount the group spends on combat stress recovery – its top
program.”
Actually, according to the charity’s information returns, there appears a clear and easily seen
number – one that CBS News chose not to show – right next to the one showing $26 million
spent on meetings. That number is $24,392,338, and it represents the portion representing the
programming costs incurred during the meetings. (That number comes from the 2014 990; the
graph below includes information from the recently released 2015 990.
9
) That means 94 percent
was spent on programming activities that took place at the meetings that year. In fact, pursuing
WWP’s mission through programs was the primary purpose of the meetings. The numbers also
show that, over the years, the portion devoted to programs, relative to the total cost of
conferences, has increased over the years. Examples of programs at events include adaptive
sporting events and mental health retreats. WWP’s 990s show the increase of the cost of
conferences from fiscal years 2009 to 2015.
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9
Wounded Warrior Project released its 2015 990 on Monday, August 17, 2016.
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The percentage of programming activity at conferences between 2009 and 2015 rose from 38
percent, in 2009 when the total conference budget was $1.1 million percent to 94 percent, when
the total conference budget was $32 million. Even staff conferences, as distinct from program
events, were not all fun and games; despite Erick Millette’s assertions, almost nothing was spent
on alcohol, and very little donor money, and even that would be subjectively ascertained, has
been wasted.
7. JOINT COST ALLOCATION
Charities, along with publicly held companies, are required by the Internal Revenue Service to
follow generally accepted accounting principles (GAAP) and the guidelines set forth by the
Financial Accounting Standards Board. Charities over a certain size undergo strict reviews by
independent auditors operating under guidelines put forth by the American Institute of Certified
Public Accountants audit. The Wounded Warrior Project is subject to and has abided by those
guidelines.
Part of the dispute about efficiency at WWP boils down to an accusation – not stated overtly, but
implied nonetheless – that WWP’s 990s are inaccurately, or perhaps even dishonestly, compiled.
If we go down that road (not the charge of dishonesty but that of accuracy), we have to
understand a few things that bedevil almost all charities with multifaceted finances when they
complete their 990s. In addition to the fact that 990s are available only after a notoriously long
time after what has happened, is the issue of subjectivity in allocating expenses. Many people
think that anything related to accounting is part of an exact science, but that is not the case. There
is much gray area to traverse when completing financial documents. That’s why we need
professionals in accounting firms who not only can competently use a calculator, but who blend a
sense of balance and fairness with their experience and understanding of the complexities in the
nonprofit world.
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One issue that arises is something identified as “joint cost allocation,” and the dispute related to
that directly affects the way a significant portion of the narrative behind the allegations against
WWP has developed.
When GAAP or the IRS comes into play on this topic at a charity, it has no choice: It must jointly
allocate costs as prescribed by these rules. Why? Because, otherwise, its financial statements
would be misleading and incorrect.
While the actual allocation process can be complex, the concept is fairly simple: Apply expenses
to the correct categories of activity. Imagine that a charity – say, Mothers Against Drunk Driving
– sends out tens of thousands of letters telling people about the dangers of drinking and driving,
and explains the steps people can take to prevent drunk driving. What if, to help pay for those
letters, they also ask for money? The rules require that MADD jointly allocate the costs of those
letters both to its programs and to fundraising. Charities often fall under these rules, for
example, when they ask potential donors to help prevent breast cancer by conducting a breast
self-examination.
Or when Wounded Warrior Project asks donors to help identify wounded war veterans and to
refer them to the charity’s programs for assistance.
Most of the discussion on this topic comes from the content found within the IRS’s SOP 98-2,
whose preface says, “This Statement of Position should be used,” or accountants “should be
prepared to justify a conclusion that another treatment better presents the substance of the
transaction in the circumstances.” Not allocating costs violates both the letter and the spirit of the
regulations.
Charity Navigator ignores these clear rules applicable to all charities operating in the United
States and unilaterally eliminates them in its analyses. When asked recently, the immediate
former CEO of Charity Navigator, Ken Berger, justified this erroneous reporting on the grounds
that the public doesn't understand the rule. This is akin to public auditors saying they won't report
oil depletion allowance numbers according to GAAP because the public doesn't understand the
complexities of the tax code.
Suppose a charity’s CEO spends 50 percent of her time administering the charity and ensuring
legal compliance, as well as other administrative duties, and the other 50 percent of her time
raising funds. We would expect to see the CEO’s salary allocated 50 percent to administration
and 50 percent to fundraising. So too, the public communications that support and fulfill the
mission of a charity must be jointly allocated according to what is being said. You might ask
about Charity Navigator, as one accounting firm, Carr, Riggs & Ingram, has, if “many nonprofits
are wondering if the new formula is mad science.” The firm recommends, “It’s smart to keep an
eye on fundraising costs, but nonprofit organization executives shouldn’t spend too much time
worrying about the algorithms watchdog groups use to rate charities.”
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When it is reported that a charity says that it spends one amount on its programs, yet the media
references Charity Navigator as saying the organization spends less, the media might be
accurately quoting but the information they convey might also be both false and misleading.
Over the years, many accountants who specialize in nonprofits have told me that Charity
Navigator causes confusion because it employs unacknowledged accounting procedures.
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Then, there is the question of just how much is jointly allocated, and, even if it is properly
recorded, if the amount is too much. While “too much” is both a relative and subjective idea, one
way to get a sense of the landscape is to look at other, similar organizations.
The five largest military and veteran charities, by revenue and budget size, are WWP, USO,
Disabled American Veterans, Veterans of Foreign Wars, and Paralyzed Veterans of America.
All of these organizations recognize the importance of public-awareness activity for the veterans
they serve and all appropriately allocate joint costs into program expenses.
A review of their 990s shows that WWP’s jointly allocated costs are relatively low:
8. MARCUS OWENS (FORMER HEAD OF THE TAX-EXEMPT DIVISION AT THE
IRS)
Recall the statement above where Marcus Owens, the former IRS employee, was asked by CBS’s
Chip Reid about his biggest concern in reading WWP’s 990s. Owens said his biggest concern
was, “I couldn’t tell the number of people that were assisted. I thought that was truly unusual.”
Actually, it’s not at all unusual as the Form 990 doesn’t ask the question. It’s hard to imagine
why it should be news that an unasked question goes unanswered. (That would be a little like
someone, in addition to showing her income, describing on her tax return how wonderful a
mother her children thought she was.) Such information can be contained, although it almost
never is, in a voluntary and supplemental narrative.
Putting that aside, however, it’s important to remember that Reid asked Owens about his “biggest
concern.” What was lost in what seemed to be feigned exasperation is that a formerly high-
ranking IRS official – for ten years Owens was the director of the IRS’s Exempt Organizations
Division and works today at Loeb & Loeb, a Washington, DC law firm – could come up with
nothing other than the absence of information relating to a question that is not asked on the 990.
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Nothing, apparently, was wrong with the information provided in response to the questions that
are asked.
Note that Owens didn’t mention joint cost allocation. Note, too, that he didn’t mention the
amount spent on conferences.
9. THE SENATE FINANCE COMMITTEE
U.S. Senator Charles Grassley, a Republican from Iowa, sent two inquiry letters (March 18, 2016
and May 16, 2016) to Wounded Warrior Project asking about the organization’s finances.
10
As
the overseer of the Internal Revenue Service and of how public money is used, Congress has an
interest in how charities behave, particularly as the behavior relates to spending.
11
Grassley was
interested in:
• Donated media and advertising of $80 million classified as program service
• Joint allocation costs of $41 million
• Some $37 million transferred to WWP’s Long-Term Support Trust and classified as
program expenses.
• How much donor money was spent, as opposed to in-kind donations, for tickets to
sporting events, which were the “vast majority” of the 90 percent of program services to
veterans.
The Nonprofit Times noted, “Grassley previously had sent inquiries” to WWP “after the
organization dismissed its top two executives – CEO Steven Nardizzi and COO Al Giordano –
amid media reports about ‘lavish’ spending. The Charity Defense Council, which last year
received a $150,000 grant from WWP, has come out criticizing the accuracy of the reports by The
New York Times and CBS News.” It also said, “An independent review of spending practices by
outside audit and legal firms hired by the board confirmed the 80.6 percent figure spent on
program and found no irregularities. The review did note that some policies, procedures and
controls did not keep pace with the organization’s rapid growth in recent years, reporting revenue
of $342 million in 2014 compared with $70 million just five years ago. Among other things, the
senator also requested a copy of that review.”
33
The May (second) letter also highlighted WWP’s claim of spending a little over 80 percent of its
budget on programming. “It appears that WWP’s claim is based upon its Consolidated Financial
Statements, not its Form 990s. According to WWP’s 2013 Form 990, which runs during FY
2014, it appears $248,005,439 was spent on total expenses, of which $189,558,100 was spent on
program expenses – approximately 76.4% and less than 80.6%. In FY2014, according to WWP’s
Consolidated Financial Statements, it spent $300,279,601 on total expenses, of which
$242,145,985 was for program expenses – approximately 80.6%.”
Grassley then criticizes how WWP accounts for free media. “The Consolidated Financial
Statement for FY 2014 includes $80,710,673 in donated media which cannot be included on the
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
10
Interestingly, Senator Grassley sent his letters on Judiciary Committee stationery, of which he is the chairman, and
not that of the Finance Committee, of which he is a former chairman and on which he sits, but not as chairman, today;
the Finance Committee exercises more oversight of charity finances than does the Judiciary Committee.
11
States actually have more authority than Congress when it comes to many activities, such as board governance and
the fraudulent misuse of money.
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Form 990.” He then noted that excluding donated media would drop the program expense
number to 66.6 percent.
34
The Nonprofit Times, however, quoted Jill Gerber, a Grassley spokesperson, who seemed to
acknowledge that the difference could be a legitimate difference of opinion. “Senator Grassley
isn’t rendering judgment at this point on whether the Wounded Warrior Project should use the
figures reported on the 990 rather than the consolidated financial statements, just pointing out that
the different forms can shed light on how WWP’s spending practices are potentially justified by
the organization.”
35
This is an example of how accounting is not a black-or-white science. Grassley’s staff is
acknowledging that the senator is asserting an opinion, and WWP’s accountants, who clearly
compiled a comprehensive and otherwise indubitable report, did not approach this methodology
lightly. At the very least, we know that the organization was not purposefully manipulating the
numbers.
Grassley then borrowed what he takes as claims by Charity Navigator and other organizations
that evaluate charities. “It is not clear to what extent these solicitations provide any benefit to
veterans or provide direct support to WWP’s mission. Further, most charity watchdog
organizations do not count this type of spending as a program expense because it generally does
not provide any benefit in support of a charity’s mission other than fundraising. As such, claiming
this nearly $41 million as program services for veterans is questionable. And if no benefit is
really derived for veterans, WWP’s program service percentage falls further below 80.6
percent.”
36
Grassley was referring not only to free media, but he was condemning jointly
allocating costs.
I spoke with Ken Berger, who was Charity Navigator’s president and chief executive officer for
seven years before he left in 2015, about jointly allocating costs. “I think that the weakness or
challenge with Charity Navigator is available resources. Charity Navigator’s default is to zero
out the joint cost allocation when doing its ratings, and the only way to get it corrected – if in fact
it is done correctly – is if an organization reaches out to show evidence that it is doing this
appropriately, and it’s not just a ruse for hiding fundraising costs. If Wounded Warrior, which
has historically had an adversarial relationship with Charity Navigator, had reached out to us and
asked us to review the reports to see that this is not just a way to hide fundraising costs, but it
really is valid programmatic expenditures, there is a likelihood at we would have, as we did with
some other agencies, adjusted the calculations accordingly.” Berger admits that Charity
Navigator defaults to its position because of resources, not because there is proof that no benefit
exists.
10. NARDIZZI AND GIORDANO ON THE GRASSLEY INQUIRY
Although Steve Nardizzi and Al Giordano, as they are no longer employed at WWP, were not
able to directly answer Senator Grassley’s several questions, they wrote a response (all factual
assertions contained in the response have been independently confirmed, and, bear in mind, no
one, other than a few disgruntled employees, has alleged any wrongdoing by either person):
“On May 16, 2016 Senator Charles Grassley, chairman of the Senate Finance Committee,
sent a letter to the Wounded Warrior Project (WWP) board of directors requesting
additional information about the services WWP provides and seeking further clarification
of the organization’s 2014 audited financial statements reporting that 80.6% of spending
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went towards program expenses. The organization’s response to specific questions about
its program delivery should only serve to confirm the great and measurable impact WWP
makes. During our tenure at WWP the organization was a leader in impact measurement
and reporting. It had a team dedicated to evaluating program effectiveness, set
measurable goals for both outputs (such as number of veterans served) and outcomes
(such as increased resiliency and economic impact from employment) and transparently
reported results to the public.
“Senator Grassley asks a number of questions about WWP’s program spending, centered
around the inclusion of public awareness and outreach activity as a program expense. As
the senator correctly acknowledges, WWP’s inclusion of such activities as program
expenditures complies with the requirements of generally accepted accounting principles
(GAAP), including a Financial Accounting Standards Board rule (SOP 98-2) requiring
nonprofits to report as program expenses public awareness and outreach activity
conducted in combination with fundraising activity (commonly referred to as “joint
costs”). Moreover, WWP’s inclusion of public awareness and outreach activity as a
program expense, including joint costs, has been consistently validated through internal
and external reviews by the WWP Board, independent auditors, a charity watchdog
group, and a forensic accounting firm:
• WWP’s annual budgets, audited financial statements and IRS Form 990s are
approved by its independent board of directors. WWP’s board is comprised of
individuals with extensive business backgrounds, such as Robert Nardelli, former
CEO of Home Depot and Chrysler, and Richard Jones, a CPA and Tax attorney who
serves as the General Tax counsel of CBS and chairs WWP’s audit committee. The
board has had numerous discussions on the importance of public awareness activity
and the inclusion of joint cost program expenditures and has consistently authorized
the practice.
• WWP’s financial statements are independently audited each year. The auditors,
including leading firms such as BDO and Grant Thornton, have reviewed WWP’s
reported program expenditures, including public awareness and outreach activity
such as PSAs and joint costs. These firms have consistently opined that WWP’s
financial statements fairly present the financial position of the organization in
accordance with generally accepted accounting principles.
• WWP’s joint cost public awareness and outreach activity was reviewed and validated
as meeting the Better Business Bureau’s Wise Giving Alliance rigorous standards.
• In response to recent media reports critical of WWP’s independently audited
financials, the board of directors engaged a forensic accounting firm, FTI Consulting,
to investigate the allegations. At the conclusion of that investigation the WWP board
issued an official statement confirming the 80.6% program-spending ratio for 2014, a
spending ratio that includes public awareness and outreach activity such as PSAs and
joint costs.
“At this point it is beyond reasonable debate that WWP accurately reported on its 2014
audited financial statements, consistent with the requirements of generally accepted
accounting principles, that 80.6% of its spending went towards program expenses.”
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Terence Cook, a consultant who advises nonprofits on fiscal management and a former adjunct
teacher at Columbia University’s master’s program in nonprofit management where he taught
nonprofit accounting, says, “Wounded Warrior did everything right. It has had good growth.”
But were there some management issues at WWP that could have negatively affected its
reporting? “No. The group exhibited good management techniques and is a model for a
successful organization.” Cook then noted surveys that show a “satisfaction rate of 90 percent
among its constituents” – which is almost unheard of.
38
A large part of the problem is that we have gotten used to the false algorithms devised at
organizations that promote themselves as watchdogs of charities and claim to evaluate their
worthiness, when in fact those organizations, staffed almost completely by people who have
never worked at a charity, and who certainly have not had to make the sophisticated accounting,
budget and program allocation decisions that complex charities must routinely make, have done
an immeasurable disservice to the nonprofit world and to the public. Why immeasurable?
Because the whole point - the only point – of a charity is to help society in ways that government
can’t and the for-profit sector won’t. Senator Grassley is right when he expresses concern that
money should be used to further a charity’s mission. He – and the rest of us, however – has been
forced to use the wrong tools; not just tools that do a poor job but tools that don’t do the job at all.
Still, for the record, as the results of the analyses here verify – even using the faulty yardsticks put
forth by those who are inexperienced in real charitable work but who profess to measure it –
Wounded Warrior Project does well.
11. THE RATINGS VS. THE RESULTS
Over the years, the media and the public have became too focused on fundraising costs. This is
the result of the “watchdogs,” which have the following to say about financial ratios:
• According to Charity Navigator:
“Data shows that 7 out of 10 charities we've evaluated spend at least 75% of their budget
on the programs and services they exist to provide. And 9 out of 10 spend at least 65%.
We believe that those spending less than a third of their budget on program expenses are
simply not living up to their missions. Charities demonstrating such gross inefficiency
receive a 0-star rating for their Financial Health”
• According to the Better Business Bureau:
A nonprofit should “Spend no more than 35% of related contributions on fund raising.”
• According to CharityWatch:
“Sixty percent or greater is reasonable for most charities (to spend on program costs).
The remaining percentage is spent on fundraising and general administration . . .. Most
highly efficient charities are able to spend 75% or more on programs.”
In a speech before fundraisers and other nonprofit leaders in 2014, Nardizzi said,
“When a discussion takes place about costs, it’s usually not with a positive tone; it’s in
the context of the conversation framed by the rating groups. In fact the conversation
often arises with an express mention of the rating groups. In the benign sense, the
message is: if only you could have been a more efficient charity; if only you could work a
little harder to reduce your overhead costs, your administrative costs and your fundraising
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costs. In the unfavorable sense, the message is this: you are a horrible human being, and
you should spend less on fundraising. Many charity leaders have been subject to those
conversations at one time or another.”
Steve Nardizzi’s response to that problem, however, is this:
“We get that rating because we choose to. Let me say that again. I get a three-star rating
on Charity Navigator, I get a C plus rating by Charity Watch because I choose to. If I
wanted to get a four-star rating, or an A rating, or a higher rating from any of these
groups I could. But the reality is when my team and I looked at their rating systems we
realized that if we followed them we would make less of an impact – not more. So we
chose to ignore them.”
And remember Wounded Warriors Family Support, the group WWP sued in 2007, and was
ultimately found liable for deceptive practices? Nardizzi says, “Unfortunately, Charity Navigator
fails to even note the past deceptive practices of that organization when assigning it the same
evaluation as WWP. I find that more than ineffective and misleading, I find that patently
offensive.”
39
This is not to say that expense ratios at charities are unimportant. They are. How public dollars
are spent should always be of interest to the individuals and the media and should be of ongoing
and acute concern to those responsible for good management. Congress has created a unique and
protected place in society for 501(c)(3) organizations; because they pay no taxes on their net
income or investment gains, and because donors are permitted to deduct their charitable gifts to
those organizations, everyone should be diligent about how money is used. The quest for finding
or evaluating the good charity requires balancing the good the charity does for society (its impact)
with how efficiently it spends its money, all the while taking into account the realities of the
increasing costs of just about everything.
It is far wiser to manage the mission, not the ratings. Impact is the most important measurement
of any charitable endeavor.
12. NOTE
A person researching any of my past public comments will see that I have often criticized
charities for bad behavior and excessive spending on the wrong activities. In March 2015, for
example, the Washington Post reported that International Relief and Development (IRD) spent
lavishly on conferences. I was quoted as saying that the amount spent was “reprehensible.” I
said, "I can't imagine that an organization that holds itself out as helping poor people in foreign
lands would spend money this way."
40
Some may ask what the difference is between my
observations about what IRD was doing and what WWP was doing. The answer it two-tiered:
• WWP, with revenues of over $370 million, all of it philanthropic support, received no money
from the government, while IRD, with revenues of $259 million of support, received $152
million – 59 percent – from the government. An organization so heavily dependent on
government grants must employ a far different mindset from other charities. This is not to
say that WWP’s spending was too lavish, but its business decisions – internal to the
organization and not regular fodder for oversight agencies and watchdogs – can incorporate a
more robust and long-term strategic mindset. Furthermore, IRD’s 990 for 2014 shows a mere
$25,047 spent on fundraising. Even removing the amount shown for government support,
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that number is unrealistic – and calls into question the veracity of its reported numbers – as it
claims that such a feeble amount resulted in over $100 million of support.
• The other response is that the charitable world is complex beyond any description that could
be put forth in this report. Many other factors, well past the numbers reported in a charity’s
990, are in play when a real evaluation is conducted. The totality of organizational behavior,
revenues and expenses, and impact show that IRD criticisms were deserved, while WWP’s
were not. That said, it is also interesting to note that while Nardizzi’s salary, a source of
criticism for some people in the CBS News and New York Times reports, was $430,766
when WWP’s expenses were $351 million, while the chief executive of IRD earned pretty
much the same amount, $430,970, when IRD’s expenses were $247 million – over half of
that granted by the government.
13. FINAL POINTS:
1) Both Charity Watch and Charity Navigator have criticized the WWP surplus, but, as a
percentage of budget, both of those organizations had more of a surplus.
2) Marcus Owens (formerly of the IRS) correctly noted that the 990 is signed under penalty
of perjury. If WWP, indeed all charities, complete the 990 the way Charity Navigator
wants, the charity would be liable of perjury.
3) John Melia, the founder, former executive director and, most recently, a vocal critic of
Nardizzi and Giordano, said that when he was at the organization, he vowed to never
make more than $199,000 a year in the job.
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Yet, according to WWP’s 990s, in fiscal
year 2009 Melia earned $200,588, and 2010 he earned $230,000, when WWP was
smaller.
4) Donors are getting – and sending – the message about impact. In a recent survey, about
one in three affluent donors said they could have given more last year but they didn’t, in
part because they wanted more information on what their gifts would achieve.
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V. IMPACT
The allegations brought against the Wounded Warrior Project are a canary in the coal mine for
the nonprofit community. Charities often come under heavy fire regarding the way their finances
are managed, and for good reason. A priority on transparency is an essential component to
establishing and maintaining trust among donors, volunteers, and the community at large. This is
why national leaders in philanthropy utilize best practices to ensure a responsible amount of funds
are allocated to the right programs in various nonprofits.
As nonprofits put a focus on being outcome-driven institutions our methods of holding them
accountable must be equally outcome driven. There are organizations that do have lower
fundraising costs, or administration costs, but there are few organizations that can match the
difference WWP project makes in their communities and the lives they change with their
programming; this is the quintessential item to keep in mind. There is, and must be, a necessity to
prioritize allocation of funds to services; but there must be an equally equitable means of
balancing that with the capacity to enact such services. Using irresponsible reporting methods and
un-vetted sources to make wild accusations of charities will only damage the relationship
nonprofits have with the public and diminish the capacity the nonprofit sector has to create
meaningful, lasting change in the lives of those who deserve it most.
1. INFRASTRUCTURE
The first step is to understand the vital role of a charity’s infrastructure,
In a thoughtful article in Nonprofit Quarterly, Curtis Klotz, who oversees the finances and
operations of Nonprofits Assistance Fund, a Community Development Financial Institution in
Minneapolis, makes a strong case that the public, and in particular funders, need to throw away
the old pie chart that shows only program, administration and fundraising expenses – the pie chart
constantly being force-fed to the public – and think in terms of infrastructure and how it affects
programs. He says core mission support functions – 1) strong, strategic finance and accounting,
2) progressive human resources practices, 3) capable, responsive board governance, and 4)
talented and engaged development staff – are necessary, vital, and integral.
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“When funders support only direct expenses,” Klotz writes, “they deny funding for Core Mission
Support. This leaves a Gap at the center of our organization. Not only is one program affected,
but the health of the entire organization is at risk.”
“Investing in our infrastructure,” Klotz concludes, “is savvy, prudent, and absolutely necessary.
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Once we understand the role of a healthy infrastructure at a charity, the net is to use it to identify
impact. Dan Corry, the chief executive of New Philanthropy Capital, a charity think tank based
in London, has written about Impact. “Achieving good is about outcomes – the changes or
benefits that result from what a charity or project provides. It means really making a difference.
It's not just about the number of signatures on a petition or lives touched or mentoring sessions
delivered, but the effect a service has on people's lives. And these effects have to be additional to
what might have happened otherwise.
“This is surely what drives us as a sector. And if we don't try to get a handle on it we cannot
know if we are really making a difference or work out how to improve what we do – instead
relying on anecdote and stories, and potentially misallocating precious resources.”
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It’s obvious and it’s important because the idea of impact speaks existentially to the nonprofit
sector. While the so-called charity watchdogs give lip service to the importance of impact, none
of their algorithms are built to take it into account. And, despite the growing conversation, very
few United States charities have done much to measure the impact they have on their
communities, which, for Wounded Warrior Project, includes wounded veterans, their families,
and their caretakers.
If Wounded Warrior Project’s goal is to “foster the most successful, well-adjusted generation of
wounded service members in our nation’s history,” then the issue is whether the organization has
established ways to make sure that is happening and is able to report it to the public? After
speaking to several current and former employees – another disappointing irony in the success of
Erick Millette’s public comments – it is clear that WWP has taken steps to not only create impact,
but also to measure it.
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Here are two representative examples of what grant makers who know WWP’s programs told me:
“WWP is doing more for veterans than any other organization in America, short of the VA.”
Also, this: “There’s a lot of good intentions out there but not a lot of execution. WWP has great
programmatic execution.”
I spoke with a handful of people at foundations, and all of them said – emphasized – that they
look for programmatic outcomes. Foundations, as distinct from individual donors or their family
foundations are less susceptible to the entreaties of emotional appeals. While WWP has had no
shortage of emotional appeals, they have been targeted, successfully as their fundraising numbers
have shown, to individuals, but WWP has also been sure to measure its impact with its
constituency – wounded warriors and their families – as well.
2. PROGRAMS AND THEIR IMPACT
Although much comes from WWP’s most recently filed 990, I have independently confirmed the
following information with Steve Nardizzi and Al Giordano, who were running WWP during the
time that 990 covers (through September 2015), as well as with other current and former
employees.
As of September 30, 2015, 78,639 warriors, and 13,730 family members had registered with
Wounded Warrior Project. The mission of the organization is to honor and empower wounded
warriors. The purpose of WWP is to provide vital programs and services to wounded service
members and veterans in order to support their transition to civilian life as well-adjusted citizens,
both physically and mentally.
The list of the following programs includes a description of impact as well as a numerically based
impact summary.
• Independence Program: The Independence Program helps warriors live life to the
fullest, and on their own terms. It is designed for the most severely wounded warriors
who rely on their families and/or caregivers because of moderate to severe brain injury,
spinal-cord injury, or other neurological conditions. In addition, the warrior's cognitive or
physical challenges limit their opportunities to access resources and activities in their
own community.
The program also grants funds to the WWP Long-Term Support Trust, which WWP
established to provide the economic means to assist with long term care in the event of
the warrior’s separation from his or her current caregiver, by reason of the caregiver's
death, disability, or other reasons.
The program is a team effort, bringing together the warrior and his or her full support
team while creating an individualized plan for each warrior, focusing on goals that
provide a future with purpose at no cost to the warrior and his or her support team. It's
designed as a comprehensive long-term partnership intended to adapt to the warrior's
ever-changing needs.
The program provides support and training for involvement in meaningful activities,
including social and recreational, wellness, volunteer work, education, and other life
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skills. Services provided include case management, life skills training, home care,
transportation, and residential options.
The Independence Program served 493 alumni, and 347 caregivers. Seventy-seven point
three (77.3) percent of respondents reported their quality of life has improved since
entering the independence program. By the end of fiscal year 2015, there were 164
alumni enrolled in the Long-Term Support Trust.
• Alumni Association: The alumni program provides long-term support and camaraderie
for wounded warriors through communication, events and networking. The alumni
program offers a wide range of activities including educational sessions, personal and
professional development summits, sporting events and recreational events that provide
individuals a chance to engage with other wounded warriors. The alumni program also
identifies, trains, and challenges leaders within the wounded warrior population to
support their peers in their continued path toward physical health and well-being.
The alumni program had 78,639 warriors and 13,730 family members registered as of
September 30, 2015, with a satisfaction rating of 93 percent for those who participated in
alumni program activities. During fiscal year 2015, there were 50,603 in-bound contacts
to the WWP resource center. In addition, WWP staff members conducted approximately
77,000 outbound outreach calls to warriors and caregivers.
• Combat Stress Recovery: The combat stress recovery program (CSRP) addresses the
mental health and cognitive needs of returning service members and those who have
already made the transition back to civilian life. The CSRP responds to the mental health
needs of our warriors by addressing several key issues linked to combat stress, including
post traumatic stress disorder (PTSD), the stigma attached to mental health, access to
care, and interpersonal relationship challenges. CSRP services include Project Odyssey®,
Continued Care and the Warrior Care Network™.
WWP challenges warriors to think about goal-setting and understanding their "new
normal." Many warriors begin their journey with Project Odyssey®, an outdoor,
rehabilitative retreat that promotes peer connection, challenging outdoor experiences, and
healing with other combat veterans. WWP provides licensed mental health counselors at
all Project Odyssey events.
The CSRP also provides continued care services to improve warrior resiliency and
psychological well-being. This is accomplished through the establishment of goals and
the identification and use of community-based resources. In addition, in order to enhance
access and provide PTSD and Traumatic Brain Injury (TBI) treatment through an
integrated care model, WWP has established the Warrior Care Network™. Warrior Care
Network consists of four national leading academic medical Centers (AMCs) that will
connect warriors and their families with world-class, evidence-based mental health care.
These AMCs will provide warriors with multi-week, intensive outpatient programs and
Individualized care. WWP has committed to provide institutional and financial support
to the AMCs.
WWP distributed $21,400,000 in grants to the academic medical centers during the year
ending on September 30, 2015. There were 2,668 participants in project odyssey, and
2,879 served through CSRP continued-care during fiscal year 2015. Ninety (90) percent
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of Project Odyssey participants reported they learned useful or very useful PTSD coping
skills. Eighty-nine (89) percent of continued care participants have sought or are
receiving mental health support 90 days after program participation.
• Soldier Ride®: Soldier Ride® is a unique three- to five-day cycling opportunity for
wounded services members to use cycling and the bonds of service to overcome physical,
mental or emotional wounds. Warriors of all ability levels can cycle on adaptive hand
cycles, trikes and bicycles. In addition to the physical benefit, soldier ride helps raise
public awareness of the challenges warriors face today through events held throughout
the ride. Warriors take part in annual events, which challenge them physically and
mentally. The events take place from the south lawn of the White House to local
communities across the nation.
The soldier ride program served 1,845 participants in fiscal year 2015. Ninety-five (95)
percent of participants said soldier ride made them feel more confident that they can
meet their physical fitness goals. Total soldier ride expenses were $19,467,915 for the
year.
• Physical Health & Wellness: Physical health & wellness (PH&W) programs are
designed to reduce stress, combat depression, and promote an overall healthy and active
lifestyle by encouraging participation in fun, educational activities. PH&W has
something to offer warriors in every stage of recovery. Four focus areas are inclusive:
sports, fitness, nutrition, and wellness.
In fiscal year 2015, there were 18,052 participants in WWP’s PH&W programs. Ninety-
six (96) percent of respondents stated that as a result of their experience in a WWP
PH&W event, they will seek out other sports or recreational activities within their
community. Total PH&W expenses were $18,815,707, including grants of $1,124,981,
for the year.
• Warriors to Work®: Warriors to Work is one of the cornerstones of WWP’s efforts to
achieve its strategic goal of economically empowering wounded warriors. This program
assists wounded warriors with their transition to the workforce. It offers a complete
package of employment assistance services including resume assistance, interviewing
skills, networking, job training, and job placement. The program staff provides continued
individual counseling and personal support to all program participants as they strive to
build a career in the civilian workforce.
In fiscal year 2015, 8,698 warriors and family members participated in the Warriors to
Work program, with 2,555 participants placed in part-time or full-time employment, and
an economic impact of $87.7 million from employment compensation. Total Warriors to
Work expenses were $10,637,714, including grants of $635,000, for the year.
• Benefits Service: To help warriors make the most of their benefits and successfully
transition to life after injury, WWP provides the tools they need to become financially
secure. A key part of the benefits service program is support and education for warriors,
as well as their family members and caregivers. WWP has a team of highly trained
personnel that are accredited by the Department of Veteran Affairs to represent warriors
and advocate on their behalf. WWP personnel represent warriors in their filing of claims
for benefits with the Department of Veteran Affairs and Department of Defense.
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In fiscal year 2015, there were 4,863 served through benefits service, with an economic
impact of $70.9 million in benefit awards. Total benefits Service expenses were
$9,148,826 for the year.
• Transition Training Academy: Transition Training Academy (TTA) provides warriors,
family members and caregivers with an opportunity to achieve certifications in the
information technology field. TTA classes are taught in a modified classroom setting
with flexible class schedules to accommodate participants' medical and duty
requirements.
WWP served 2,768 participants through TTA, with 90 percent of respondents reporting
that the TTA course helped them feel more confident about their transition to the civilian
workforce. Total transition training academy expenses were $7,864,720, including
grants of $90,000, for the fiscal year ending September 30, 2015.
• Track: Track is the first education center in the nation specifically for wounded warriors.
Track is focused on providing college and employment access to wounded warriors
through its intensive and holistic training experience for the mind, body, and spirit. The
12-month program, which includes financial assistance for lodging and other living
expenses, provides wounded warriors a jump-start on meeting their educational goals,
while also supporting goals around personal health and wellness, mental health and
career development.
Track served 110 participants in fiscal year 2015. Ninety-six (96) percent of track
participants were immediately enrolled in school or employed after track graduation.
Total Track expenses were $7,219,126, including grants of $994,391, for the year.
• Peer Support: Peer Support is the programmatic embodiment of WWP's logo, fostering
relationships that enable one warrior to help another through the recovery process. The
WWP peer support program mentors serve as listeners, role models, and motivators who
can share their understanding and perspective with fellow warriors. WWP's goal for Peer
Support is for the warrior being mentored to eventually mentor a fellow warrior –
embodying the wounded warrior project mission and logo.
The peer support program trained and certified 420 new peer mentors, and 694 new
mentor/mentee relationships were formed in fiscal year 2015. Total Peer Support
expenses were $5,376,840, including grants of $90,000, for the year.
• International Support: Landstuhl Regional Medical Center is one of the first locations
warriors are transported to when they are injured. Most of the time during transport, their
belongings are not transported with them. WWP provides comfort items such as jackets,
sweatpants, t-shirts, and blankets to warriors before they are flown back to the United
States. WWP's goal is to make their stay and travel back to the states as comfortable as
possible. For warriors stationed at the warrior transition units in Europe, WWP has
multiple programs in place, including benefits counseling, transition training academy,
soldier ride and combat stress recovery.
Total international support expenses were $4,491,090, including grants of $1,938,835,
for the fiscal year ending September 30, 2015.
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• WWP Talk: WWP Talk provides telephonic, emotional support to Wounded Warrior
Project alumni and helps bridge the gap that may prevent participation in other programs.
This helpline was created for wounded service members living with PTSD, depression,
combat stress, or other mental health conditions. Together, the warrior and WWP talk
teammates develop coping strategies to help the warrior overcome challenges and learn to
thrive again despite invisible wounds.
In fiscal year 2015, WWP served 784 participants in the Talk Program. Ninety-nine (99)
percent talk participants would recommend the program. Total WWP Talk expenses
were $2,609,915 for the year.
• Education Services: The Education Services program prepares warriors for success by
helping them achieve their educational goals. Education Services guides warriors
through their options with secondary education, provides customized plans for success,
and educates warriors about campus resources available to them. Wounded warriors
have different needs from those of typical students because of the institutional and social
obstacles they might face due to combat stress, accessibility to learning models, and
social instability.
There were 1,000 participants in Education Services in fiscal year 2015, with 96 percent
of the respondents reporting they feel more confident and prepared for their educational
future. Total Education Services expenses were $2,642,657, including grants of $86,602,
for the year.
• WWP Packs: WWP backpacks contain essential care and comfort items including
clothing, toiletries, playing cards, and more - all designed to make a warrior's hospital
stay more comfortable. Backpacks are provided to wounded service members arriving at
military trauma centers across the United Sates. Injured warriors overseas who are
evacuated from field hospitals to larger military treatment facilities stateside or abroad
receive a smaller version of the WWP backpack, known as the transitional care pack, for
immediate comfort.
The WWP Packs program delivered 717 backpacks and 1,031 transitional care packs to
wounded warriors in fiscal year 2015. Since WWP's inception, 18,737 backpacks and
44,204 transitional care packs have been delivered to wounded warriors. Total WWP
Packs expenses were $2,410,334 for the year.
• Warriors Speak: The Warriors Speak program is a group of wounded warriors and
caregivers who have been selected to share their personal, inspirational stories of courage
and integrity with the public. The speakers also describe how WWP has aided them in the
recovery process and helped them transition back to civilian life. Participants are trained
to become effective spokespersons through the warriors speak course, which includes
tools to help them organize thoughts, compose presentations, and communicate
successfully. The training provides important life skills that help warriors succeed
socially, at their workplace, and as community leaders.
In fiscal year 2015, Warriors Speak representatives spoke at 389 events raising
awareness about warrior challenges and WWP programs to 243,601 people in
attendance. Total Warriors Speak expenses were $1,902,997 for the year.
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There can be no doubt that, while some might point to flaws or only-yet-to-be-realized dreams,
Wounded Warrior Project cannot be accused of a lack of effort, success, or transparency
connected to its work to create an impact on its community. Media accounts, evaluators, and
critics – such as Erick Millette or Charity Navigator – do not have the authority to complain or
criticize without first understanding the complexities of running a modern charity or, at WWP,
the programs that help tens of thousands of wounded veterans, their families, and their caregivers.
THE VOICES OF WOUNDED WARRIORS
“I don’t know what injured veterans would do without Wounded Warrior Project.” “Wounded
Warrior Project saved my marriage.” “Wounded Warrior Project saved my life.” Those - and,
yes, I spoke with almost two dozen people to research this report – who said that WWP saved
their lives were not embellishing anything – they were being literal and serious. Other comments
about the worthiness of Wounded Warrior Project were as literal and serious, as well.
Two common themes emerged from the discussions I had with wounded warriors: 1) Wounded
Warrior project is a very good organization, and 2) the media got it wrong. Many of the people
were unwilling to speak on the record, however. There is an irony in this. Both The New York
Times and CBS News spoke with anonymous individuals because they feared the possibility of
retaliation (according to the reports), even though all of them were former employees. The
people I spoke with, other than current employees, were mostly concerned about how a public
condemnation of the board’s response to the stories would look. That response, after all, was my
main concern with those closely associated with the organization.
Charlie Battaglia, a former WWP board member, is gently critical of the board’s response. “The
organization had 25 staff in 2006, and it grew fast,” he said. “It grew fast and did well, and so it
attracted the ire of outsiders.” About the disparaging allegations in the news stories, he wrote in
August 2016, “The reports were alarming, and while in the end many of the allegations were
proven to be untrue, the concern they sparked left many donors confused and unsure about
whether to continue their support. That is incredibly frightening, because the people that will be
hurt the most are the ones most in need of our support.” He also heard the same comments, over
a far longer period of time, that I heard. The “constant refrain of wounded veterans was: “’WWP
saved my marriage,’ ‘WWP saved my job,’ or most pointedly, ‘WWP saved my life.’” This
“convinced me of how incredibly important the life-changing programs run by the organization
and the money that funded them were.”
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This is not unimportant. It is not mere posturing or public relations. The central idea, put forth
by almost everyone – other than the 40 or so anonymous disgruntled former employees, except
for Erick Millette, who has complained publicly – is that Wounded Warrior Project is a good and
important charitable organization. Battaglia also wonders if those close to but critical of WWP
fully understand the whole picture. “Did the whistle blowers have any access to all the
financials? Were they just extrapolating things without realizing costs were not what they
thought?”
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This is an essential issue. Every nonprofit organization must adhere to two important aspects of
the Sarbanes Oxley Act.
12
One of them is whistle-blower protection, where organizations must
“develop, adopt, and disclose a formal process to deal with complaints and prevent retaliation.
Nonprofits are required to investigate employee complaints and correct any problems or explain
why corrections are not necessary.”
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Both Nardizzi and Giordano told me that they take this
matter seriously. WWP welcomed whistle-blower comments. But as with any allegation, what a
whistle-blower says must be vetted. That is, just because a person holds himself out to be a truth-
teller, the accuracy of the proclaimed truth must be shown. Almost no one I spoke to saw any
truth – when it came to putting their comments into context – in what the media or Millette said.
As the former board member Charlie wrote, “There is the adage that one's perception is one's
reality. There is also the adage that one is permitted to have his own views, but not his own facts.
WWP may recover its funding support over time, but it will be the wounded veterans it is serving
with excellent programs who will suffer in the interim.”
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!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
12
The Sarbanes-Oxley Act of 2002 (SOX) is an act passed by U.S. Congress in 2002 to protect investors from the
possibility of fraudulent accounting activities by corporations. The SOX Act mandated strict reforms to improve
financial disclosures from corporations and prevent accounting fraud.
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VI. WHY NOW?
While it was easy to get caught up in the “what” of the story, the “why” has been overlooked.
That is: Why did the story break when it did? What happened? Usually, an event – a hurricane, a
death, or the discovery of misdeeds – triggers a news story. In this one, although misdeeds were
alleged, nothing specific happened, nothing new was discovered. Dave Philipps of The New
York Times said it was not so much a “scoop” as a “deep survey.” But something must have
happened that turned this issue into a news story that was prominently placed and aired by two of
the most venerable news organizations in the United States.
Perhaps the most obvious answer is that, once CBS News got wind of the Times story, it rushed
to get its own on the air. But could there have been other pressures in the mix? Here, it must be
noted, I move from verifiable facts and known context, which alone almost wholly refute the
allegations, to an extrapolation. In doing this, I admittedly use the information gathered from
talking with several people who, while they do not want to be identified, seem credible because of
their experience, knowledge of Wounded Warrior Project’s programs, staff and board members,
and their current positions.
While it appears that The New York Times and CBS News coordinated the timing of their stories,
Dave Philipps, the reporter who wrote the Times story, says that was not the case. In response to
my question asking him about that, he responded:
“I was contacted in . . . June of 2015 by a small group of employees and former
employees who felt like the leadership at WWP was going in the wrong direction. Their
main concern was that good employees were getting fired for no reason. I was working
on another big project at the time, so I slowly called around in [my] spare time, talking to
members of the group as well as dozens of people I found on my own. It was important to
me given the gravity of the story to reach out to all kinds of current and former
employees, not just a small group that would be accused of being disgruntled.
“The type of reporting I was doing wasn't a ‘scoop’ but a deep survey of what was going
on, so I wasn't worried about any competition. There just aren't that many reporters that
do that kind of work. I finished the story in December but, because of its length,
complexity, and vacation time for staff, it did not get read for a few weeks, and then, was
waiting in line behind other more timely enterprise stories to run.
“Sometime in December both the Wall Street Journal and 60 Minutes got onto the story.
I was notified by sources who had been contacted by them, but I don't know why they
decided to start the story when they did -- maybe it was a tipster, maybe it was zeitgeist.
My feeling was that I was so far in front of them that it wouldn't really matter. They
weren't going to get dozens of interviews before we printed.
“The WSJ had the same thought, and canned their reporting. 60 Minutes did something
different. They rushed their story, figuring if they could do a scaled-down version, they
could beat us. Turns out they were right. I knew from sources that the story was coming
in a day or two. The looming TV story pushed our editors to get our piece in the paper,
but not until 14 hours after the first TV story.
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“I know to the news consumer it likely seemed like a coordinated one-two punch, but it
was anything but.”
As a follow-up, I asked if he meant the CBS Evening news and not “60 Minutes:
“Thanks. It was a 60 minutes reporter and the project was initially envisioned for 60
minutes until they realized they would have to hustle or get beaten, then they switched it
to the evening news.”
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The feelings against WWP had apparently been growing. The people I spoke with said that it is
widely known that WWP has received a harsh assessment from other veterans’ organizations.
The writer of a Daily Beast article in 2015 opined that WWP was a “bully,” and quoted David
Brog, the executive director of the Air Warrior Courage Foundation, as saying that WWP is “not
looked upon very highly by [the veterans community].”
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But criticism also came from the highest ranks of the military; namely Admiral Michael Mullen,
the former chairman of the Joint Chiefs of Staff. “It is no secret,” I was told, “that Mullen, and
even Donald Rumsfeld, hate WWP.” But, weaving together dozens of interviews, it begins to
appear that Mullen is only one piece of the puzzle. And it’s difficult to deconstruct things to put
order to the reason, to explain why one of America’s most venerated and well run charities, along
with the authors of its success, have been so vilified without reason.
One piece of the puzzle involves the success of Wounded Warrior Project – not only in terms of
its fundraising but in terms of its program accomplishments. While some people feel that WWP
raises money too aggressively, others feel a sense of rivalry, which has led to jealousy. And the
only way to deal with jealousy, we mistakenly think and feel, is to take down the object of that
jealousy.
In 2010, a white paper entitled “The Sea of Goodwill,” which outlined the support America
provides its wounded warriors, was published.
“The highest levels of government are so committed to this support that warrior and
family support efforts are now incorporated into the national security decision making
process during monthly Interagency Policy Committee and routinely held Deputy and
Principal Committee meetings. Today, unlike any generation in history, citizens across
the country are supportive in word and deed of the American Active Duty, Reserve, and
National Guard Soldier, Sailor, Airman, Marine, and Coast Guardsman. Our nation is so
full of support for our Service members it is difficult to illustrate all the organizations and
individuals trying to do their part to support our veterans. Admiral Michael Mullen, the
Chairman of the Joint Chiefs of Staff, calls this a “Sea of Goodwill” of American
support. He notes, “The challenge...is how do you connect that sea of goodwill to the
need?”
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The paper, authored by Major John Copeland and Colonel David Sutherland, was sponsored by
the office of the Chairman of the Joint Chiefs of Staff. At the time, that position was held by
Mullen. Not one person I spoke with provided anything other than this sentiment: Mullen
dislikes Wounded Warrior Project. No one could put a finger on why, but the prevailing opinion
was that WWP’s advertisements, which depicted catastrophically wounded veterans, resulted in
fewer applications by potential volunteers to join the military.
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On April 24, 2013, Steve Nardizzi, after he kept hearing negative comments about WWP
attributed to other veterans organizations and military personnel, reached out to invite David
Sutherland, who took credit for authoring “Sea of Goodwill,” to the WWP headquarters in
Jacksonville, Florida. Steve and other senior members of the staff provided a full briefing for
Sutherland, outlining the program and the metrics used to gauge the effectiveness of those
programs. According to Nardizzi, “Sutherland was unmoved. He came away from all that with
the impression that we were good only at fundraising, and that we were using all the wrong
metrics.”
In the nonprofit world, using the right metrics and measuring impact are two of the biggest
questions nonprofit leaders are asking, but even though much attention has been paid to them
over the past few years, no one has been able to identify or define the most answers. Nardizzi
told Sutherland that if he can provide better metrics, then he would be interested in learning what
they are. Sutherland did not respond – either that day or afterward.
Nardizzi then set up a meeting with Michael Mullen because he heard that Mullen too was
criticizing WWP. That meeting took place in Mullen’s office at the Naval Academy in
Annapolis, Maryland, a month or so after Nardizzi’s meeting with Sutherland at WWP’s
headquarters. The purpose of the meeting was for Nardizzi to hear Mullen’s criticisms and learn
how WWP could change for the better.
The meeting did not go well. The first odd thing was that Sutherland was at the meeting, even
though Mullen made no mention of this beforehand. It was as if Mullen wanted to strengthen his
forces. After being asked his concerns – and before Nardizzi was able to review WWP’s work,
spending, metrics and impact – “Mullen went on a rampage,” according to Nardizzi. “He said we
had no metrics, that we were not transparent, that our ads victimized warriors and that we
generally weren’t doing good work.”
Then, “When I asked if he’d visited our website, he said ‘no’ – to which I said that’s too bad
because it’s all there. We strive for the best in transparency, and all our work, all our metrics are
right there for anyone to see.” Mullen then said, according to Nardizzi, that he would defer to
Sutherland. “At that point there was total silence.”
Nardizzi remembers that Mullen said, after the tension abated, that the ads “victimized warriors.”
“He seemed to be saying the ads put military service in a bad light. Nardizzi countered by
pointing out that this is a population that most charities don’t serve well, and that it was important
to get the word so that the public could help support the catastrophically wounded. “These are
real warriors,” he said, “and I’m not going to silence their voices simply to satisfy the Department
of Defense.”
The meeting ended, Nardizzi thinks, with Mullen unconvinced that the WWP ads did any good.
In February 2015, WWP held a five-year strategic planning meeting in Washington, DC. A little
over a dozen people attended. Among them was René Bardoff, the Deputy Assistant Secretary of
Defense, Public Affairs, United States Department of Defense. In a discussion on force readiness
– the measure of the military’s ability to respond to national security needs – Bardoff said she
heard at the Pentagon that the ads were negatively affecting force readiness. The comment was
apparently meant with prejudice against the ads. Another participant, Pete Chiarelli, a highly
decorated retired four-star Army general, responded that he had not heard that, and strongly
disagreed. At a WWP advisory council meeting a few weeks later, Rick Tryon, a three-star
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Marine general and the former head of recruiting for the Marines, is reported to have said, “there
was no way the WWP ads had an impact on force readiness.”
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As for the need for WWP – and the need to advertise the realities of war – one wounded veteran
said in a WWP advertising video that had he known how the government would treat him, he
would not have joined. He wasn’t saying he would not have sacrificed, but that he was unaware
of how little the government cares and that WWP saved his life. Nardizzi conveys just how
uncomfortable the Department of Defense may have been when he tells how Anthony Odierno,
WWP’s chairman of the board – and son of General Raymond Odierno, who served as the 38
th
Chief of Staff of the United States Army – directed Nardizzi to pull that wounded warrior’s quote
from the video.
__________
When David Sutherland, who worked for Mullen, left government service, he began to heavily
criticize Wounded Warrior Project. Mullen, it was said, relied on Sutherland’s assessment. In
the years since, Mullen is reported to have met with several veterans’ charities, a group
collectively called “White Oak” – characterized as an “invitation-only cabal of nonprofits,” where
one participant said, “It was blood sport to bash Wounded Warrior Project.” One source told me
that subsequent to the media allegations, Mullen called a meeting with other veterans’
organization to ask them not to work with WWP.
Since 2012, Sutherland has served as the chairman and chief strategist for military and veterans’
services of the Dixon Center Dixon Center for Military and Veteran Services at Easter Seals.
Deborah Mullen, Michael Mullen’s spouse, is heavily involved with the Easter Seals chapter that
serves the District of Columbia, Virginia and Maryland, and served as the honorary chair for the
2013 Advocacy Awards Dinner. Because of Sutherland’s animosity, WWP wanted to be sure not
to work with organizations that also worked with the Dixon Center; in effect WWP would be
funding an organization that may do WWP harm.
Enter the Institute for Veterans and Military Families (IVMF), a program at Syracuse University.
In June of 2013, representatives met with the people at IVMF, who wanted WWP’s financial
support. At first, WWP agreed, but later discovered that IVMF had entered into a Memorandum
of Understanding with the Dixon Center, at which point WWP decided against working with
IVMF – again, not wanting to fund organizations that were likely to be antagonistic to its
purposes. At that point, both Dixon House and IVMF were marginalized by WWP. This was not
because WWP did not want other organizations in the space to help veterans, but because it didn’t
want to potentially fund its own demise. As a result, however, both Dixon House and IVMF
were, and continue to be, upset with WWP.
Enter Richard Jones, the board member of WWP and senior executive at CBS. Jones’s position
at CBS is the Executive Vice President, General Tax Counsel and Chief Veteran Officer. His role
as a board member at Wounded Warrior Project is chair of the audit committee. It seems odd that
the chair of the organization’s audit committee did not come to the rescue when the organization
was criticized for its accounting procedures. Jones did, after all, oversee the process, and his
training and experience makes him an expert – far more of one than any charity watchdog group
– in the area of financial accountability.
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In a letter to CBS disputing the allegations, WWP cited a lack of communication. CBS had
claimed that WWP denied repeated requests for comment from Nardizzi, but WWP said it tried to
“set the record straight” before the original report ran, and that CBS “willfully set aside”
important information provided by WWP and failed to contact the charity through readily
available channels.
“At a minimum,” the letter said, “prior to running the story, CBS could have contacted
one of its own senior executives, Richard M. Jones, CBS executive vice president,
general tax counsel and chief veteran officer, by calling him at extension 2978. You are
fully aware that Mr. Jones is a Wounded Warrior Project board member and Wounded
Warrior Project’s audit committee chair, and has the ability and insight to provide you
with accurate and truthful information regarding Wounded Warrior Project’s financial
documents.”
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But that did not happen.
As it happens, Jones is a board member of both Dixon Center and the Institute for Veterans and
Military Families. That is, in what surely seems a conflict of interest, Jones serves on the boards
of two organizations that very much dislike WWP, while at the same time serving on the board of
WWP. This raises the question of why Jones is on the WWP board. (Jones’s service on the
Dixon Center board began in January 2010 and his service on the IVMF board began in January
2011. His board service at WWP began in March 2013.) According to Nardizzi, Jones
approached him about becoming a board member. The only reason with possible substance that I
have been told regarding the timing of his appointment involves a quid-pro-quo: his board
assignment took place shortly after CBS ran a free public service announcement on behalf of
WWP during the Super Bowl in 2013.
There seems to exist a strange nexus – Mullen, the Dixon Center, IVMF, a rushed report by CBS
News, and Richard Jones, with Jones touching all the points.
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VII. THE BOARD OF DIRECTORS
Even though they are often silent and in the background while the executive director is the public
face of a nonprofit organization, the board of directors – the governing board – is the most
important group of people at any charitable organization. Each board member must adhere to
three duties:
• Duty of Care: Each board member must care for the organization by ensuring prudent use
of all assets, including facility, people, and good will; he or she must also provide
oversight for all activities that advance the nonprofit’s effectiveness and sustainability.
• Duty of Loyalty: Each board member must make decisions not in his or her self-interest,
but in the best interests of the organization.
• Duty of Obedience: Each board member must ensure that the nonprofit organization
obeys applicable laws and acts in accordance with ethical practices, that the nonprofit
adheres to its stated corporate purposes, and that its activities advance its mission.
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The board establishes the policies that the executive director and other senior staff are responsible
for executing. This fact is often overlooked because the most senior staff person (the executive
director, chief executive officer or president) is usually the one who generates the public attention
for the organization’s accomplishments – and failures.
I have found no evidence that, at least before the media allegations made public in January 2016
against WWP were being prepared, that the board acted in any way contrary to what could be
described as adhering to its legal obligations or to properly overseeing a healthy and growing
organization. But conflict often tests the board’s resolve and otherwise principled behavior. In
this case, it appears that the WWP board acted less diligently than was prudent to respond to the
crisis. In fact, after talking with several current and former WWP employees (post-crisis), the
broad sense is that there was (and this continues) a “climate of fear” at the organization, and
much of that, it is thought, emanates from the board.
Some employees criticized Nardizzi and Giordano for creating a toxic culture in which minor
offenses and disloyalty were punished, but that was not a staff-wide sentiment. In fact, for
several years in a row, the staff voted WWP as the number one nonprofit to work for, and in 2013
the Nonprofit Times conducted a survey in which WWP was the best nonprofit in the United
States to work for.
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While there has been no indication that the pre-crisis relationship between the board – or, more
specific and important, the board chair – and Steve Nardizzi
13
was wanting, the board’s actions in
the aftermath of the allegations would make it seem as if all was not well. After all, a nonprofit
board is generally not motivated to fire top staff people when they are doing a good job.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
13
One of the most important relationships at an organization is that between the board chair and the most senior staff
person.
!
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But as the evidence unearthed by the research conducted in this report has shown, both the
executive director and the chief operations director were doing an excellent job.
14
If the research
is not faulty and evidence to the contrary cannot be shown – as it has not been – then serious
questions arise relating to board governance. After all, the allegations, coupled with a lack of
clear response to them and the lack of support for the CEO and COO, created a crisis from which
WWP may not fully recover, at least not anytime soon. As mentioned earlier, fundraising is
projected to be down dramatically in WWP’s next fiscal year, and an announcement on
September 1, 2016, the organization announced that half its senior staff and an additional 100
positions were terminated.
While the narrative is being built that WWP’s new staff leadership will correct many wrongs, it
must be pointed out that any mass layoffs and any large drop-off in contributions are not the
result of what happened prior to January 2016. It’s what happened after. And what happened
after was wholly orchestrated by the board of directors.
Another, separate matter must also be singled out: Richard Jones, a Wounded Warrior Project
board member, also a senior executive at CBS Corporation – and add to that his duties as WWP’s
chair of the Audit Committee – had a serious conflict of interest as the crisis developed. As he
was actively involved in overseeing WWP’s response to the CBS News investigation – an
investigation that would address criticisms of the way WWP reported its audited numbers – Jones
should have recused himself from discussions the board conducted concerning the issue.
QUESTIONS
Several issues arose that prompted questions about the board’s behavior; as part of this review, I
sent the following questions to each board member.
1. When did the board learn that The New York Times was preparing a story on Wounded
Warrior Project?
2. How long after that did CBS launch its investigation?
3. In the aftermath of the initial CBS story (on January 26, 2016), Wounded Warrior Project
issued a demand to CBS to retract its false accusations. Why did WWP delete that request
from its website in the aftermath of the firings of the Steve Nardizzi and Al Giordano? Why,
since the oral review reportedly confirmed the falsehoods of the allegations, was this demand
rescinded?
4. Did any board members attend the All Hands conference in Colorado? If so, how many?
Did any board member, whether or not he attended, criticize anything about the conference?
If so what was the criticism and when was it made?
5. Did CBS stake out the house of board member Richard Jones, a WWP board member, in
addition to that of other board members, in the aftermath of the initial CBS report? If so, for
how long, and why did they leave without filming him? Why did they do this in light of the
fact that Richard Jones works at CBS?
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
14
That, of course, is a subjective assessment, but it is based on what I learned during the course of this investigation
and on what my decades of experience in the nonprofit world has taught me of management and governance.
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6. I understand that Richard Jones sat in on and conducted interviews with the Wounded
Warrior Project staff in the investigation into the allegations made by CBS and The New
York Times. Why was this allowed to happen, given that he is also a senior executive
employed at CBS? Jones is an individual of influence in this crisis and had (has) a clear-cut
conflict of interest. Why did Jones remain on the board during the investigation? Who
invited Jones onto the WWP board and why was he confirmed? During his WWP board
member vetting process, did Jones disclose his simultaneous board service at the Institute for
Veterans and Military Families and the Dixon Center – organizations whose leaders are
openly hostile to WWP? If he did disclose this, why was he brought on? If not, why did he
not disclose it?
7. Did someone on the board leak to CBS that Nardizzi and Giordano were fired? If not, how
did CBS get the story first? How did CBS get it before there was any announcement to the
employees of Wounded Warrior Project?
8. Were officials at the Department of Defense informed of the firings of Nardizzi and Giordano
before they were actually fired? When were they informed and why?
9. Why was there no written report released by Wounded Warrior Project about its investigation
into the allegations made in The New York Times and CBS stories? Did the accusations not
merit a written report?
10. Why, if the oral report exonerated Wounded Warrior Project’s financial statements (as the
board’s news release of March 10, 2016 strongly implied), did the board not articulate on
CBS that the network was wrong? Board chair and acting chief executive officer Anthony
Odierno said on CBS that the oral report did as much – but without pointing out that the
falsehoods came from CBS. Why was this not articulated?
11. Did the board negotiate a quid pro quo with CBS? To wit, Wounded Warrior Project gets to
issue a denial of the allegations while simultaneously firing its executives – the latter grabs
the headlines, which has the effect of seeming to validate the accusations, while the denial is
buried.
12. Why did the board not articulate a stronger rebuttal? Why did board members gag the staff?
13. Did the board decide to stop running the commercials depicting the catastrophically
wounded? If so, why did it stop running them?
14. Did Wounded Warrior Project make a $5 million contribution to the Invictus Games
sponsored by Fisher House? Was Ken Fisher, the head of Fisher House – another,
independent charity that performs similar work – put on the Board of Directors? If so, why?
No one from the board responded, other than one member who emailed me to say that he would
defer to the board chair regarding any response. But someone sent the questions to Tom Johnson,
the chief executive officer of Abernathy MacGregor, the firm the board hired to oversee the
firings of Nardizzi and Giordano. Johnson told me, “The board has no additional comments
beyond what they have said publicly.” Also, “The board feels that some of the questions should
be directed to CBS, and not to them.”
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That no board member responded, not even the chair, is
telling. Alas, other than by piecing together fragments of the story from third parties, the full task
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for which is well beyond the scope of this report, we may never know the answers to these
questions, and therefore the entire truth of the crisis.
__________
The new chief executive officer, Michael Linnington, is, by all accounts, a good and decent man.
Everyone I spoke with wishes him well in his new role. His background, as described on the
WWP webpage: “Prior to joining WWP, Michael was the first permanent Director of the Defense
POW/MIA Accounting Agency (DPAA), following his retirement as a Lieutenant General from
the U.S. Army. He served as the Military Deputy to the Under Secretary of Defense (Personnel
and Readiness) from 2013 to 2015 and as Commanding General, Military District of Washington
and Commander, Joint Force Headquarters-National Capital Region from 2011 to 2013.”
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Still,
the charity, at least until this past year, was a $400 million organization, serving tens of thousands
of wounded warriors and their families with almost twenty programs, a task rivaled only by the
Veterans Administration. It is a major charitable entity with a great deal of administrative
complexity.
Is Linnington’s background the right fit for WWP’s needs? Even in a calmer environment, a
large nonprofit is best served by management experience. Linnington “has never been outside the
Department of Defense,” one person observed, reflecting a concern of many others I spoke with.
“Is he prepared? The military prepares you to excel in leadership, focus and passion. The
nonprofit world is much different.”
While leadership, focus and passion are in demand at nonprofits, as well as in the military, the
military provides a well-defined structure; when a commander needs more money or personnel,
he or she simply asks for it. (It may not be provided, but that’s another issue.)
Furthermore, the military might not be the best place to find someone to oversee financial
activities. “The United States Army’s finances are so jumbled,” according to an August 2016
Reuters news story, “it had to make trillions of dollars of improper accounting adjustments to
create an illusion that its books are balanced. The Defense Department’s Inspector General, in a
June report, said the Army made $2.8 trillion in wrongful adjustments to accounting entries in
one quarter alone in 2015, and $6.5 trillion for the year. Yet the Army lacked receipts and
invoices to support those numbers or simply made them up.”
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This may or may not be endemic
to our entire defense structure, but it is consistent with many peoples’ concerns about the state of
the government’s budgeting process. In the nonprofit world, while pursuing a mission, leaders
must define their resources and actively pursue them to stay alive – fundraising needs determine
almost everything at a nonprofit.
Linnington’s tasks are formidable, especially as so much of his new role is both generally
uncharted territory for him and as Wounded Warrior Project is experiencing a uniquely tough
period in its history. But he has so far demonstrated a sense of awe for his new position and for
the organization’s mission. An intelligent open mind and a willingness to learn are quite possibly
far better characteristics of a leader than any particular skill set.
Since he was hired, however, Linnington’s narrative – most certainly driven by the board – seems
to be this: Now that we have our troubles behind us, we’re going to shape up and get leaner and
meaner, and properly honor wounded warriors in the way they deserve. In an interview with
WJAX in Jacksonville, Florida, Linnington said, “Perceptions are reality. I regret the perception
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being out there that we've not shepherded the resources we (were) given to the maximum impact,
and those reports are what's caused us to look at ourselves and what is focusing me to look at
ourselves for how we can do better."
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Going forward will not be easy. Linnington must essentially dance on the edge of a knife. On
the one hand, because much of the public currently takes the media reports at face value and
therefore thinks that WWP went disastrously wrong, he has to send the message that things will
get better. On the other hand, he surely understands that the media stories were highly suspect
and that the organization had by any measure been doing well – not poorly – and so can’t place
the blame for the organization’s current woes at the feet of the former top executives.
Even CBS picked up on possible board alarm after the firings. "[Board chair Anthony] Odierno
was appointed interim CEO, but CBS News has learned he works for a bank in New York, and is
not running the daily operations of the charity in Jacksonville,” Chip Reid reported in March
2016. “He canceled a planned meeting with [John] Melia after he threatened to make public the
phone calls he recorded with board members that he says show a board in disarray. " Melia, a co-
founder of WWP, had accused the board of not doing its job. “The same board that oversaw
these problems, who approved the budget, is the same board trying to fix the problem,” said
Melia. “Tony is a good and honorable servant of our country, but Tony was frankly asleep at the
wheel.”
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Melia, and others criticized the board for not providing proper oversight – while almost all of
those with whom I spoke criticized the board, not for a lack of proper oversight, but for not
supporting its top executives in the face of allegations that were known, as a result of the review
commissioned by the board, to be unfounded at the time of the firings. One former board member
(not Battaglia, although he may agree) provided a representative sentiment when he said that the
“board cut and run. They must have signed off on the larger strategic initiatives that Steve and Al
put forth. They were partners in all of this. They can’t criticize without criticizing themselves.
They were fired for optics? Yes, they were, weren’t they? They put them in the wind to dry.
That was not honorable.”
CONFUSION
The question going forth – the most important issue the board must face – centers on the financial
stability of Wounded Warrior Project. Although the programs in pursuit of its mission to honor
and empower wounded warriors are ultimately important, they will go nowhere without the
proper financing. In notes attached to the organization’s audited financial statement for fiscal
year 2015, which was released in August 2016, the reader will see the following: “Negative
media stories in January 2016 regarding the organization prompted inquiries and requests for
documents from Senator Grassley on behalf of the Committee on the Judiciary and from other
parties. The organization responded to these inquiries and requests, and management does not
believe they will have a material adverse effect on the organization’s financial position, results of
operations or cash flows.”
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Read that carefully. If the organization’s “management does not believe” that the negative media
stories, “will have a material adverse effect on the organization’s financial position, results of
operations or cash flows,” then why is the current estimate of financial support for the coming
year expected to be about $200 million less than before the crisis? This is no small matter. Such
a decrease might well represent, in both amount and impact, the most devastating loss of any
large nonprofit organization ever seen in the United States.
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Nardizzi has recently gone on the offensive. The Chronicle of Philanthropy reported on August
26, 2016, “Steven Nardizzi, who was fired in March as chief executive of the Wounded Warrior
Project is criticizing his former organization again, slamming its trustees for what he calls a lack
of honesty and openness concerning an allegedly dire financial situation. What’s more, he says
the group’s troubles have been compounded by the organization’s ineffective response to
negative news-media stories about the group’s spending policies while he was running the
charity.”
Nardizzi and Linnington spoke on the phone on July 6, 2016 – after Linnington was hired but
before he assumed his role as CEO – about the financial projections, and the two publicly
disagree about what was said. Nardizzi said that Linnington told him that revenues, most of
which would consist of donations, were expected to drop to $185 million for the next fiscal year,
which would result in a large number of layoffs, as well as a reduction of services to the wounded
warrior community the charity serves. But the Chronicle story reported that Linnington said
Nardizzi was wrong. When he was asked what the correct estimate was, however, Linnington
said “he’d need to get permission from the organization’s trustees to disclose such figures.” The
board did not respond to the newspaper’s inquiries on the matter.
In addition to claiming Nardizzi was wrong, WWP said in a statement that it “was still
developing its budget for fiscal year 2017, which starts in October [2016]. The nonprofit plans to
present its budget for next year to its trustees at the end of September.” But that is an odd
assertion – still developing the budget – because the budget for fiscal year 2017, which would
begin in a little over one month from when that statement was issued, would normally be
determined well in advance of that time, especially for an organization with hundreds of millions
of dollars of revenue and commitments.
Then, something even more odd: Linnington told the newspaper, “Wounded Warrior’s
fundraising could end up being much stronger than any such forecast. It could be $185 [million].
It could $155. It could be $355. I mean we haven’t even started advertising.” The account
continued, “Nardizzi countered that by saying that Wounded Warrior, at best, has outperformed
budget estimates by about 10 percent or 15 percent but has not done any better than that.
He said it’s possible that the projection has changed since Mr. Linnington provided it to him, but
in his experience as chief executive, such figures don’t fluctuate too much.”
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One can only be incredulous at what seems to be a blithe approach on the part of Linnington, and
quite possibly on the part of the board as well, to both budget forecasting and the impact
dramatically reduced revenues will have on programs. Linnington strongly implied that
advertising, as if it were an easily regulated spigot, will save the day. But it will not.
A literal reading of the note in the financial statement – “management does not believe they [the
media reports] will have a material adverse effect . . .” – may actually make sense: the biggest
culprit was not the media. Instead, the problem was the response by the board – the silence in the
immediate aftermath, the firings without explanation, and deficient board strength and
organizational leadership.
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FIRING THEMSELVES
In June 2016, the board of directors of the American Red Cross was confronted with blistering
attacks on its executive director, Gail McGovern, charges that were made after ProPublica and
National Public Radio conducted research involving the organization’s 990s, program
effectiveness and a withering report from the office of Senator Charles Grassley on the Red
Cross’s spending and openness. The Grassley report, born out of an 18-month inquiry about the
Red Cross response to the 2010 Haiti earthquake, accused Ms. McGovern of gutting the charity’s
in-house ethics and investigation unit and trying to snuff out a Congressional review of the
nonprofit’s practices. It doesn’t get much worse than that. Regardless of the accuracy of those
charges, they make those against Wounded Warrior Project look like not much more than an
insignificant irritant. Still, this is how the board chair, Bonnie McElveen-Hunter, reacted. "Gail
McGovern is respected, admired, and really has 100 percent confidence of the board. Frankly,
we think the nation should be casting laurels at her feet."
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The WWP board was faced mainly with out-of-context criticism from a small group of
anonymous, disgruntled former employees and with inadequate evaluations from self-described
“ratings agencies” that lack credibility. (Evaluating is one thing, but, to be taken seriously, those
doing the evaluations should possess some authority.) Yet Nardizzi and Giordano received no
such support. As one long-time donor, a combat-wounded, double-amputee Vietnam veteran,
stated when he canceled his monthly donation, “Some of them [your board members] might have
been heroes on the battlefield, but they are all cowards in the boardroom.”
After an examination of the sequence of events and the evidence, it seems likely that the self-
inflicted damage is more than the current board can handle. As a result, its members might well
consider a transition strategy to effectively replace itself. The honorable decision at this point
would be for the board – the six members who were there when the firings took place: Roger
Campbell, Justin Constantine, Richard Jones, Guy McMichael, Robert Nardelli, and Anthony
Odierno – to resign. This was not a senior staff problem. This was, and quite possibly still is, a
board problem.
A Report Addressing the Allegations Made Against Wounded Warrior Project in January 2016
September 6, 2016
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ACKNOWLEDGMENTS
David Berg, an attorney at Berg & Androphy in Houston and New York City, who provided and
organized extensive research on the media allegations
Zenobia Harris Bivens and Victoria Mery, also attorneys at Berg & Androphy, who conducted
much of the research provided by David Berg
John El-Maraghy, a student at Rutgers University and a volunteer for several causes, who
provided research on 990s for several organizations
Anthony Pulgram, a former student of mine at and graduate of the Masters in Nonprofit
Management program at Columbia University, who broadly assisted in the research of this report
__________
AUTHOR BIOGRAPHY
Doug White, a long-time leader in the nation's philanthropic community, is an author, teacher,
and an advisor to nonprofit organizations and philanthropists. He is the former Director of
Columbia University's Master of Science in Fundraising Management program, where he also
taught board governance, ethics and fundraising. He serves on the board of Tiny Spark, an
independent, nonprofit news program and podcast that reports on philanthropy, nonprofits,
international aid and social good initiatives. He also is a member of the Walter Cronkite
Committee at FoolProof, a nonprofit whose mission is to teach consumers the importance of
using caution, questioning sellers, and relying on independent research before spending money.
His most recent book, “Abusing Donor Intent,” chronicles the historic lawsuit brought against
Princeton University by the children of Charles and Marie Robertson, the couple who donated
$35 million in 1961 to endow the graduate program at the Woodrow Wilson School. His three
other books are: "The Nonprofit Challenge: Integrating Ethics into the Purpose and Promise of
Our Nation's Charities" (2010, Palgrave Macmillan), "Charity on Trial: What You Need to Know
Before You Give" (2007, Barricade Books), and "The Art of Planned Giving: Understanding
Donors and the Culture of Giving" (1996, John Wiley & Sons), which was awarded the 1996
Staley/Robeson/Ryan/St. Lawrence Prize for Research by the Association of Fundraising
Professionals.
Since 1979 Doug has advised hundreds of charities of all types and sizes. Today, he works
closely with select organizations on ethics decision-making, board governance, and fundraising,
as well as with individual philanthropists who want to see their gifts used most effectively.
A graduate of Dartmouth College, Doug has worked as the development director at Holderness
School (NH), and has served as a trustee at several charities. For almost two decades (1982 –
2000) he served on the Capital Giving Committee at Phillips Exeter Academy and as its national
chair for several years during that time. He has served in leading roles with two national planned
gift and endowment investment firms. As a long-term consultant to Blackbaud, Inc. in the 1980s
and 1990s, he developed one of the first planned giving software programs.
A Report Addressing the Allegations Made Against Wounded Warrior Project in January 2016
September 6, 2016
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In 1995 Doug testified before a Congressional committee in support of the Philanthropy
Protection Act, and served as an expert witness for the charitable defendants in a national lawsuit
- the "Texas Lawsuit" - that threatened the ability of charities to raise money.
Doug is a past member of the Board of Directors of the Partnership for Philanthropic Planning
(formerly the National Committee on Planned Giving). In 1996, while on the NCPG board, he
founded the national initiative of Leave A Legacy. He is also a past chair of the NCPG Ethics
Committee and the 1995 NCPG National Conference. He is a past president of the Planned
Giving Group of New England and a past president of the New Hampshire/Vermont chapter of
AFP. In 2002 the National Capital Gift Planning Council presented Doug with its Distinguished
Service Award.
A Report Addressing the Allegations Made Against Wounded Warrior Project in January 2016
September 6, 2016
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ENDNOTES
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1
Although the phrase is attributed to Mark Twain, there’s no evidence that he ever said or wrote those
words. The reader would be wise to keep this irony in mind while appraising the allegations addressed in
this report.
2
Wounded Warrior Project (March 10, 2016). Board of directors of wounded warrior project addresses
independent review. Retrieved August 10, 2016, from https://www.woundedwarriorproject.org/featured-
campaign/board-of-directors-of-wounded-warrior-project-addresses-independent-review
3
ibid.
4
FoxNews.com (2016, March 10). Wounded warrior project’s top execs fired amid lavish spending
scandal. Fox News. Retrieved from http://www.foxnews.com/us/2016/03/10/wounded-warrior-project-
reportedly-fires-top-executives-amid-spending-controversy.html
5
Shane, Leo (2016, August 31). Military Times. In the wake of scandal, wounded warrior project outlines.
Retrieved September 1, 2016, from http://www.militarytimes.com/articles/wwp-overhaul-programs-staff-
cuts
6
Mak, Tim. (2014, September 26). Wounded warrior project under fire. Retrieved August 26, 2016, from
us-news, http://www.thedailybeast.com/articles/2014/09/26/wounded-warriors-project-under-fire.html
7
McCambridge, Ruth (2015, May 5). Is wounded warrior project a “Neighborhood Bully” among
veterans’ groups? Retrieved August 30, 2016, from https://nonprofitquarterly.org/2015/05/05/is-wounded-
warrior-project-a-neighborhood-bully-among-veterans-groups/
8
Ashton, Adam (2015, February 9). Wounded warrior project sues a veteran critic in gig harbor.
Retrieved August 30, 2016, from
http://www.thenewstribune.com/news/local/military/article26253748.html
Z
!Nardizzi, Steven (2014, July 11). Speech at the Bridge Conference, “Your Mission or Your Overhead
Ratio”!
10
Nelson Media Research; http://www.journalism.org/2015/04/29/network-news-fact-sheet-2015/
(accessed on 08.31.2016)
11
http://www.niemanlab.org/2015/08/newsonomics-10-numbers-on-the-new-york-times-1-million-digital-
subscriber-milestone/
12
The Table Group: http://www.tablegroup.com/consulting/
13
Nardizzi, Steve (2016, August 31). Interview with Doug White
14
CBS News (2016). https://www.facebook.com/wwp/videos
15
From transcripts of interview Dave Philipps had with Meghan Wagner and Jon Sullivan (2016, January
22)
16
Giordano, Al (2016, June 15). Interview with Doug White
17
Anthony Odierno and Bill O’Reilly interview (2016, 03.14). The O’Reilly Factor, Fox News.
18
Philipps, D. (2016, January 28). Wounded warrior project spends lavishly on itself, insiders say. U.S.
Retrieved from http://www.nytimes.com/2016/01/28/us/wounded-warrior-project-spends-lavishly-on-itself-
ex-employees-say.html
19
Sisk, Bobby (2013, September 10). NH veteran says wounded warrior project saved his life. Retrieved
August 11, 2016, from http://boston.cbslocal.com/2013/09/10/nh-veteran-says-wounded-warrior-project-
saved-his-life/
20
Purdy, Joy and Gardner, Lynnsey (2016, August 5). New wounded warrior project CEO to be
“completely accountable.” Retrieved August 30, 2016, from Investigations,
http://www.news4jax.com/news/investigations/new-wounded-warrior-project-ceo-to-be-completely-
accountable
21
I am in possession of the screenshot for this post.
22
Schwartz, Tony (1981, March 31). New York Times. TV Networks Quickly Supply Vivid
Documentation of Assassination Attempt. U.S. Retrieved from http://www.nytimes.com/1981/03/31/us/tv-
networks-quickly-supply-vivid-documentation-of-assassination-attempt.html?emc=eta1
23
(2015, March 20). Walter Cronkite documentary about JFK broadcast Retrieved from
https://www.youtube.com/watch?v=tkiBRcdH_Pc
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24
CBS News. Reid, Chip., and Janisch, Jennifer. (2016, January 26). Wounded warrior project accused of
wasting donation money. Retrieved August 10, 2016, from http://www.cbsnews.com/news/wounded-
warrior-project-accused-of-wasting-donation-money/
25
White, D. (2016, January 28). Opinion: Charity Navigator must grow up or shut down. Retrieved August
10, 2016, from https://www.philanthropy.com/article/Opinion-Charity-Navigator/235084/.jobs-center--top-
jobs--slider__container
26
Stanford. (2016). The ratings game (SSIR). Retrieved August 10, 2016, from
http://ssir.org/articles/entry/the_ratings_game
27
Palmer, Stacy. (2007, November 23). Is Charity Navigator the “national Enquirer” of watchdog groups?
Retrieved August 10, 2016, from https://www.philanthropy.com/article/Is-Charity-Navigator-the/192097
28
GuideStar. (2013, June 12). Letter to the donors of America. Retrieved August 10, 2016, from The
Overhead Myth, http://overheadmyth.com/letter-to-the-donors-of-america/
29
Many professionals who work at or examine who evaluate charity activity in ways beyond the
information found on a 990 is skeptical when cost associated with overhead and fundraising are
unrealistically low.
30
CharityWatch, 2016. (1995). America’s most independent, assertive charity watchdog. Retrieved
September 2, 2016, from https://www.charitywatch.org/charitywatch-feature/169
31
The organization with the 2
nd
highest revenue, Navy Mutual Aid Association, is not included here
because it shows no administrative or fundraising expenses, and raises no money from donors. Its sources
of income are program revenues, and its endowment of approximately $2 billion.
32
Carr Riggs & Ingram. Charity watchdog groups and nonprofit fundraising costs ratings. (2014, June 15).
Retrieved August 10, 2016, from NOT-FOR-PROFITS, http://www.cricpa.com/nonprofit-fundraising-
costs-ratings/
33
Hrywna, Mark (2016, May 17) Grassley wants more answers from wounded warrior Project The
NonProfit Times. (2016). Retrieved August 12, 2016, from Boards,
http://www.thenonprofittimes.com/news-articles/grassley-wants-answers-wounded-warrior-project/
34
Grassley, Charles (2016, May 16). Letter to Anthony Odierno, WWP board chair
35
Hrywna, Mark (2016, May 17) Grassley wants more answers from wounded warrior Project The
NonProfit Times. (2016). Retrieved August 12, 2016, from Boards,
http://www.thenonprofittimes.com/news-articles/grassley-wants-answers-wounded-warrior-project/
36
ibid.
37
Nardizzi, Steve and Giordano, Al (2016). The wounded truth. Retrieved August 11, 2016, from
http://www.thewoundedtruth.com/#!A-Further-Response-to-Senator-Grassley’s-Questions-about-
Wounded-Warrior-Project/cjds/574a80bb0cf264264f40dea2
38
White, Doug (2016, June 14). Interview with Terence Cook
39
Nardizzi, Steven (2014, July 11). Speech at the Bridge Conference, “Your Mission or Your Overhead
Ratio”
40
Higham, Scott (2015, March 12). “In a word, reprehensible”: USAID contractor billed US $1.1M for
luxury parties, retreats. Retrieved September 3, 2016, from http://www.stripes.com/news/us/in-a-word-
reprehensible-usaid-contractor-billed-us-1-1m-for-luxury-parties-retreats-1.334244
41
Gardner, Lynnsey and Frazier, Francine (2016, March 28). Founder says wounded warrior project grew
too fast. Retrieved August 30, 2016, from Investigations,
http://www.news4jax.com/news/investigations/wounded-warrior-project-founder-talks
42
Stiffman, Eden (2016, August 30). 1 in 3 rich donors held their philanthropy back. Retrieved August 30,
2016, from https://www.philanthropy.com/article/1-in-3-Rich-Donors-Held-
Their/237624?cid=pt&utm_source=pt&utm_medium=en&elqTrackId=3e73d04294b341a281a9027495627
86a&elq=585d979f16db4c4c9ba6a9f2b861d16d&elqaid=10484&elqat=1&elqCampaignId=3935
43
Klotz, Curtis (2016, August 17). A graphic Re-visioning of nonprofit overhead. Retrieved August 18,
2016, from https://nonprofitquarterly.org/2016/08/16/graphic-re-visioning-nonprofit-
overhead/?utm_source=Daily+Newswire&utm_campaign=54bdf53377-
Daily_Digest_23728_16_2016&utm_medium=email&utm_term=0_94063a1d17-54bdf53377-12333785
44
Corry, Dan (2014, February 25). In the charity sector, impact is everything. The Guardian. Retrieved
from https://www.theguardian.com/voluntary-sector-network/2014/feb/24/charity-impact-measurement-
results-outcomes
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September 6, 2016
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45
Battaglia, Charles (2016, August 4). Opinion: Wounded warrior project deserves support. Retrieved
August 19, 2016, from http://www.military.com/daily-news/2016/08/03/opinion-wounded-warrior-project-
needs-and-deserves-support.html
46
Battaglia, Charles (2016 August 4). In interview with Doug White
47
Independent Sector (2006 January). Retrieved August 19, 2016, from
https://www.independentsector.org/uploads/Accountability_Documents/sarbanes_oxley_implications.pdf
48
Battaglia, Charles. ibid.
49
Philipps, Dave (08.15.2016). Email from Dave Philipps to Doug White
50
http://www.thedailybeast.com/articles/2015/05/04/wounded-warrior-charity-unleashes-hell-on-other-
veteran-groups.html
51
Copeland, John and Sutherland, David (2010). The Sea of Goodwill
52
Al Giordano (2016, August 23). Interview with Doug White
53
Norris, Sean (2016, January 29). NonProfitPro. Retrieved September 3, 2016, from
http://800notes.com/forum/ta-dc74646da727801/cbs-news-wounded-warrior-project-scandal
54
Board roles and responsibilities. (2016, July 13). Retrieved August 14, 2016, from
https://www.councilofnonprofits.org/tools-resources/board-roles-and-responsibilities
55
Nonprofit Times (2013, April 1). Retrieved September 2, 2016, from
https://www.thenonprofittimes.com/wp-content/uploads/2013/04/BestPlacesToWork_20132.pdf
56
Johnson, Tom (2016, August 30). Discussion with Doug White
57
Wounded Warrior Project webpage. https://www.woundedwarriorproject.org/mission/executive-
staff/michael-linnington (accessed 08.26.2016)
58
Paltrow, Scott (2016, August 19). U.S. Army fudged its accounts by trillions of dollars, auditor finds.
Retrieved August 27, 2016, from http://mobile.reuters.com/article/idUSKCN10U1IG
59
Purdy, Joy interviewing Michael Linnington (2016 August, 4). WJAX.
http://www.news4jax.com/news/investigations/new-wounded-warrior-project-ceo-to-be-completely-
accountable
60
Reid, Chip and Janisch, Jennifer (2016, March 30). Wounded warrior project faces power struggle at top
of organization. Retrieved August 10, 2016, from http://www.cbsnews.com/news/wounded-warrior-
project-faces-power-struggle-at-top-of-organization/
61
Notes to Consolidated Financial Statements (p. 26); Wounded Warrior Project; 2015, 09.30
62
Sandoval, Timothy. (2016, August 26). Former wounded warrior CEO accuses board of dishonesty
about state of charity’s finances. Retrieved August 27, 2016, from
https://www.philanthropy.com/article/Former-Wounded-Warrior-CEO/237594
63
Koenig, Rebecca. (2016, June 23). Amid Capitol Hill Criticism, Red Cross Board ‘100 Percent’
Confident in CEO. Retrieved August 27, 2016, from https://www.philanthropy.com/article/Critical-Haiti-
Report/236901
