The New York Times, in a front-page story, is reporting that the Wounded Warrior Project — “the nation’s largest and fastest-growing veterans charity” — has been spending lavishly and wastefully on itself while failing to provide some of the quality services it claims.
Since its inception in 2003 as a basement operation handing out backpacks to wounded veterans, the charity has evolved into a fund-raising giant, taking in more than $372 million in 2015 — largely through small donations from people over 65. …
But in its swift rise, it has also embraced aggressive styles of fund-raising, marketing and personnel management that have many current and former employees questioning whether it has drifted from its mission.
It has spent millions a year on travel, dinners, hotels and conferences that often seemed more lavish than appropriate, more than four dozen current and former employees said in interviews. Former workers recounted buying business-class seats and regularly jetting around the country for minor meetings, or staying in $500-per-night hotel rooms.
The organization has also spent hundreds of thousands of dollars in recent years 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.
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.
The Times’s story is a bewildering account of an organization that has lost its way under the leadership of CEO Steve Nardizzi. According to the Times, the Wounded Warrior Project, a non-profit, has “modeled itself on for-profit corporations, with a focus on data, scalable products, quarterly numbers, and branding” under Nardizzi, a former attorney who is not a veteran.
“I look at companies like Starbucks — that’s the model,” Nardizzi told the Times. “You’re looking at companies that are getting it right, treating their employees right, delivering great services and great products, then are growing the brand to support all of that.”
Nardizzi’s “Starbucks” model is a far cry from the charity’s more humble roots a decade ago when founder John Melia, a Marine veteran, “began visiting military hospitals to distribute backpacks stuffed with socks, CD players, toothpaste and other items.” As the charity grew during the heat of the wars in Iraq and Afghanistan, Melia hired a few employees, including Nardizzi — but by 2009 the two were arguing over the pace and direction of the charity’s growth, with Nardizzi “pushing for a more aggressive expansion.” Melia resigned from the Wounded Warrior Project that January.
Over the next several years the charity grew rapidly. Unfortunately, as the Times reports, “as donations poured in, many former employees say the group became wasteful.” “People could spend money on the most ridiculous thing and no one batted an eye,” said Connie Chapman, who was in charge of the charity’s Seattle office for two years. “I would fly to New York for less than a day to report to my supervisor.”
Chapman’s account was echoed by other employees and former employees of the Wounded Warrior Project:
All staff members flying to the charity’s office at a military hospital in Germany traveled in business class, employees said. One current employee said her last-minute ticket cost $7,000. …
By 2014, the group was spending $7.5 million per year on travel, according to tax forms.
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.
The spending began to attract attention. 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.
Additionally, in 2013 the Wounded Warrior Project gave over $150,000 to a non-profit outfit, the Charity Defense Council — Nardizzi even joined its advisory board — whose mission is to “defend charity spending on overhead and executive salaries.”
Steve Nardizzi received $473,000 in compensation in 2014.
The independent watchdog Charity Navigator rates the Wounded Warrior Project better — scoring the charity 84.52 out of 100 — though their publicly available records still show overly high overhead costs.
One hopes there are innocent explanations for the Wounded Warrior Project’s seemingly lavish and wasteful spending. Read the Times’s story here.