I’ll be on Nonprofit Radio this Friday at 10:30 am PT / 1:30 pm ET discussing the Wounded Warrior Project controversy and overhead with host Tony Martignetti. Catch us live on Talking Alternative or a few days later on iTunes.

I’ve previously expressed my views on the overhead myth here and talked with Tony about good overhead and bad overhead. But the criticism of Wounded Warrior Project goes beyond a single statistic. I look forward to my discussion with Tony to see if we can share some insights about this case and on reviewing a charity’s activities.

Background

Wounded Warrior Project accused of wasting donation money (CBS News, 1/26)

[A]ccording to public records reported by “Charity Navigator,” the Wounded Warrior Project spends 60 percent on vets.

 

According to the charity’s tax forms, 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.

Ex-employee: Wounded Warrior Project conduct “makes me sick” (CBS News, 1/27)

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.

Charity watchdogs question Wounded Warrior’s spending on vets (CBS News, 1/27)

“I couldn’t tell the number of people that were assisted. I thought that was truly unusual. If the organization is asking for money and purportedly spending money to assist veterans, and talking about it, I would like to know,” said Owens.

Letter from Wounded Warrior Project to CBS (1/27)

Based on our most recent independently audited financial statements, 80.6% of total expenditures went to provide programs and services for wounded service members, their caregivers, and families.

Wounded Warrior Project on Charity Navigator’s watch list (CBS News, 1/30)

But CharityWatch president and founder Daniel Borochoff said his biggest concern is the group is sitting on a $248 million surplus — and that not enough of it is being spent on veterans.

Wounded Warrior Project Spends Lavishly on Itself, Insiders Say (New York Times, 1/27)

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.

Wounded Warrior Project Investigation: What CBS News Got Wrong (Nonprofit Pro, 1/28)

Then there’s the issue of the $26 million Wounded Warrior Project spent on conferences and meetings. That figure is almost indefensible if all of it went toward staff-only team-building events and office parties, but the charity lists $24.4 million of it as a program expense, $491,000 as a management expense and $1.2 million as a fundraising expense.

 

That could be a crafty way for Wounded Warrior Project to skirt the system in an attempt to inflate its program numbers, or it could be that some number of these events involved veterans. (Or, it could be both.)

Wounded Warrior Project: The Fundraising Factory Issue (Nonprofit Quarterly, 2/1)

This focus on expanding the fundraising base among individuals would, in fact, require capital well above what most organizations would spend, since acquiring new donors at a fast pace is an expensive endeavor, so there is a different “model” at play here—a donor acquisition and growth model or a “fundraising factory” -but the fact that it appears to be funded by current donors without an acknowledgement of that is a very big problem. We also have no sense of when and if there will be a “big enough” moment at which time we might expect a smaller fundraising cost.

What Forms 990 Can and Can’t Tell Us About Wounded Warrior Project (Guidestar, 2/3)

[T]he 990 has little to say about the allegations that have been made by CBS and by the New York Times.  But it does indicate an organization that has grown very quickly, and one that could be more transparent about its operations on its Form 990.

Wounded Warrior Project Response to False News Reports

Wounded Warrior Project provides more than 20 needs-specific, free programs and services to more than 83,000 wounded veterans, who we call Alumni, and more than 15,000 family support members. We are constantly expanding our services to better support warriors.

Wounded Warrior Project Form 990 (for fiscal year ending 9/30/14)

• The mission of the Wounded Warrior Project is to honor and empower wounded warriors.
• Number of voting members of the governing body: 10 (all independent)
• Total revenues: $342,066,114
• Total expenses: $248,005,439
• Total expenses of the three largest program services (by expenses): $81,892,441 (33% of total expenses)
• Total program services expenses: $189,558,100 (76% of total expenses), including $40,916,885 in joint costs from a combined educational campaign and fundraising solicitation
• Total fundraising expenses: $43,441,173
• Net assets: $248,285,483
• Principal officer: Steven Nardizzi

Additional Resources

(updated 3/12/16)

Myths, Misconceptions, and Mistakes: The Wounded Warrior Project (GuideStar Blog)

Wounded Warrior Project execs fired (CBS News, 3/10)

After Complaints on Wounded Warrior Project, Pressure From Donors (New York Times, 3/11)