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Controversy Surrounds Wounded Warriors,Lavish Salaries, and White HouseBy Ryan Schuette
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Editor’s note: This article, originally published on April 22, was updated on April 25, 2014. The initial articlehad Ret. Staff Sgt. Dean Graham’s name as Alex Graham. The article has been corrected.
Last week, President Barack Obama, Vice President Joe Biden, and Veterans Affairs Secretary EricShinseki welcomed wounded veterans to Soldier Ride, one in a series of cycling events that the WoundedWarrior Project organizes every year.
The White House rollout was one of 19 the Florida-based nonprofit plans to hold with amputee veterans,whom it equips with adaptive bicycles specially made to fit each veteran’s specific handicap.
The South Lawn kickoff on Thursday was the fifth for the Wounded Warrior Project and represents itsascension to a place in the national spotlight that other charities can only covet.
Left unmentioned at the media-friendly reception with the president was a lawsuit in the works against adisabled Indiana veteran who claims the Wounded Warrior Project didn’t do much for wounded vets with themore than $150 million in revenue it raised in 2012.
"They want to send a message to every otherperson who wants to speak out against (theWounded Warrior Project)."— Ret. Staff Sgt. Dean Graham
The defendant, Ret. Staff Sgt. Dean Graham — a veteran of combat operations in Iraq with diagnosed post-traumatic stress disorder — first criticized the charity in a blog post he made last year, with claims theWounded Warrior Project spent little on wounded vets and paid senior execs lavish salaries. The postappeared on the now-defunct website for Help Indiana Vets, his own tax-exempt charity, which he says hehad to shut down in the wake of the lawsuit.
That was a post heard around the world.
Graham’s claims quickly ricocheted around the Internet, with numerous blogs — including Veterans Today,a news website and benefits forum — publishing his article and amplifying a Google search that now pullsup 84,000 results for the phrase “Wounded Warrior Project scam.”
The charity subsequently filed charges against Graham in December that accused the vet of defamation andunfair business competition, alleging that his post confused donors and led to a $75,000 drop-off incontributions.
By Ryan SchuetteApr 22, 2014
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“I didn’t say anything false about them,” he maintained in an interview for IVN. “They want to send amessage to every other person who wants to speak out against [the Wounded Warrior Project].”
Michelle Roberts, a spokesperson for the charity, said that Graham “had been saying things for quite sometime. We ignored it until it got to a point where there was a final post… that was so egregiously false anddefamatory that we began to get questions. It was creating confusion in the minds of the public.
“At that point we decided we couldn’t sit by and ignore it anymore,” she added.
IVN enlisted the help of three sources with years of experience in the nonprofit sector to conduct an in-depthreview of the Wounded Warrior Project’s fundraising and expenditures over the time period in question. Two— including a former controller for the United Nations Foundation and distinguished Columbia Universityprofessor — went on the record.
The Money Vets Saw in 2012
A common claim that circulated in posts after Graham published his is that the Wounded Warrior Projectspent just 3.5 percent of the whopping $154 million it raised on veteran programs and services in 2012.
Sources for IVN helped vet the tax filings to verify that this simply isn’t the case. The 3.5 percent comes fromroughly $5.5 million the charity made in grants to nonprofits, but the bulk of its expenditures—more than $69million—directly funded in-house programs and services in the course of that fiscal year.
Of the $69 million, the Wounded Warrior Project spent 27 percent on direct-assistance support that includedrepresentation for hard-to-get Veterans Affairs benefits, physical rehabilitation services, and combat stressrecovery. Another 19 percent funded educational and vocational programs that the charity says helped vetsacquire IT skills, enroll in college, and learn to navigate the workforce.
"In 2012, Wounded Warrior spentroughly 61% of its budget on services forveterans."
That year, the Wounded Warrior Project allocated the rest of the $69-million in-house budget for the SoldierRide (8%), caregiver support (6%), backpacks for recovering veterans (3.5%), and in-hospital visits by othervets that it says cultivates a “hospital buddy” system (2%).
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The value was less clear with $17.4 million the charity fronted for an alumni association and $1.1 million foranother initiative that it said helped vets “communicate effectively.”
Taken together, that brings the total amount spent by the Wounded Warrior Project on programs andservices to roughly $75 million. The expenditures amount to roughly 48 percent of more than $154 million inrevenue it counted for the 2012 fiscal year.
With $95 million in program-related expenditures, that brings the total amount that the charity spent onservices for vets during the 2012 fiscal year to roughly 61 percent — less than 73 percent it said wenttoward vet assistance but much closer to 58 percent, a number the Tampa Bay Times reported in anindependent investigation last summer.
That beats the claim that the Wounded Warrior Project spent only a small amount on veteran programs.
But that doesn’t end the criticism. Some point to the money left over by the end of the fiscal year asevidence that the charity could be doing more for beneficiaries — and that it’s using small donorcontributions to put up lavish salaries and bonuses for senior executives.
‘A Beacon of Light’
Graham asked why the Wounded Warrior Project wound up with more than $90 million in net assets by theend of the 2012 fiscal year. The charity’s net assets in fact skyrocketed by nearly 200 percent from about$30 million in 2011, benefiting a restricted endowment.
By the same token, the vet said he financed his own charity with more than $27,000 in Veterans Affairsbenefits and gave nearly all of it to the 50 Indiana-based veterans he claims he assisted. According toGraham, he provided cash assistance that came to include Wal-Mart and QuickPay gift cards and donationsthat he said helped struggling vets with rent.
“Everyone donates and thinks [their donations are] going to our wounded veterans, but when you have somuch in net assets, it looks like they’re setting up an escrow account,” he told us.
Doug White, who teaches fundraising and board governance at Columbia University, dismisses the idea thatcharities should spend everything it brings in on beneficiaries.
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"In 2012, Wounded Warrior CEO StevenNardizzi walked away with $311,538, a thirdof it in bonus pay."
“That’s a very bad idea,” he told us. “If the nonprofit doesn’t have the substructure to support its programs,then the programs will die.”
He went on to praise the charity’s 109-percent jump in revenue from 2011 to 2012, going so far as to bill it a“beacon of light” in a still-limping post-recession giving climate for nonprofits.
The Columbia University professor found it striking that the charity had so much in net assets on hand bythe end of the 2012 fiscal year.
“It’s a great thing on the face of it,” he added.
Yet another accusation is that the nonprofit pays its executives salaries and bonuses that rival corporatesums. Records show that the Wounded Warrior Project paid 10 senior executives more than a combined $2million in salaries, benefits, and incentive pay in 2012. Less than a fourth of it came out to $400,520 inbonuses for those officers.
CEO Steven Nardizzi walked away with $311,538, a third of it in bonus pay — an amount Charity Navigatorsays comes out to less than 1 percent of total operating expenses in 2012.
The base pay for the execs didn’t bother Calvin Harris, a certified public accountant and former UnitedNations Foundation controller, now president of Maryland-based Change Management. His own salary asonetime CFO for a vaccine-development nonprofit was roughly the same as the payout for the officerworking in the same role for the Wounded Warrior Project.
What raised a flag for the consultant was the bonus pay, plus a $21-million payout to the charity’s 248-member staff — especially given that it paid more than $1 million to consult with a professional fundraisingfirm that year.
Impact Hard to Measure
The Wounded Warrior Project justifies the compensation as equivalent to the salaries, benefits, andincentive pay comparable to what others receive for the same roles in the private sector, and all the morenecessary to keep talent from shipping off.
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But underlying all of that is a question that White calls the “holy grail” for nonprofits, businesses, and anyservice undertaking whatsoever: What’s the real impact for beneficiaries, and can it be broken down intohard, verifiable numbers for the public?
“When we talk about charities and how effective they are, we have to think really quantitatively,” he told us.“We have to question what we mean by effectiveness.”
"When we talk about charities and howeffective they are, we have to think reallyquantitatively. We have to question what wemean by effectiveness."— Doug White, Columbia University professor
The Wounded Warrior Project doesn’t doubt its effectiveness. The charity’s website lays claim to supporting398 vets and their caregivers, placing 320 wounded veterans in jobs, and bringing out 156 vets to SoldierRides in 2014.
For a nonprofit that Guidestar reports brought in close to $235 million in revenue in 2013, numbers likethose seem curiously low. Still another question is raised by just how some of the services that it fundedactually helped veterans recover from post-traumatic stress or rehabilitate from combat-related wounds.
Close to a fourth of the nonprofits that received $5.5 million in grants used theirs for recreational activitieslike amputee surfing, kayaking, fishing, and horse therapy. This follows lockstep behind $5.7 million for theSoldier Rides that netted so much publicity value at the White House South Lawn in April.
What’s unclear is what role, if any, cognitive therapy plays in activities like these likely to involve veteranswith ongoing disabilities and therapy needs — a question made perhaps more urgent with a report byForbes last year which found that approximately 22 vets commit suicide on average every day.
Asked whether recreational activities can benefit vets with debilitating disorders like PTSD, CaroleLieberman, a clinical faculty member with UCLA’s Neuropsychiatric Institute, says yes — but with a caveat.
“Sports and outdoors events—especially when they are enjoyed with other vets—can be very beneficial to[the vets’] mental health,” she said. “However, these cannot take the place of psychotherapy.”
To its credit, the Wounded Warrior Project appears to have spent a considerable amount of that $75 millionfrom 2012 in direct program expenses on psychotherapy and rehabilitation services — roughly $20 million,in fact, according to our analysis.
It also made three grants with questionable impact for vets. This included $300,000 for a parade, $50,000for a monument, and $25,000 for one nonprofit that forms said used the funds to “lobby and negotiate postalrates” for nonprofits.
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Roberts didn’t comment when asked how these expenses helped empower wounded veterans.
That latter lobbying expense is in addition to $1 million the organization reported spending to influenceveteran-related legislation on Capitol Hill that fiscal year. The Wounded Warrior Project takes credit forseveral bills made law, including the Traumatic Servicemembers Group Life Insurance Act, which it says haspaid service members more than $817 million in benefits since enactment in 2005.
Roberts told us the legislation was enacted to “bridge the gap” between the time when a vet suffers injury tothe time benefits kick in — a hurdle for some who have to navigate the Department of Veterans Affairs’eligibility criteria.
The Last Word
The Wounded Warrior Project certainly has the donor money — and connections — it needs to get areception on the White House South Lawn every year.
It also doesn’t appear to be the nonprofit that critics — specifically those in the online vet community — saydupes donors into funneling money that never reaches wounded veterans. Charity Navigator gives it threestars out of four on its website. For their parts, our sources found much of what it says it does to be on parwith what they’d expect from other large nonprofits.
That said, it was hard for us to get a grasp on the overall impact of the Wounded Warrior Project’sprograms. Wounded vets continue to experience epidemic rates of suicide risk and homelessness,according to various reports, and it wasn’t clear whether millions of dollars added up to provide vets withlifesaving assistance.
"The government is not supporting vetswith PTSD and other psychologicalproblems well at all."
Asked whether suing a wounded vet like Graham ultimately helped fulfill its mission — or hurt it — Robertsheld to her statement that the Wounded Warrior Project needs to protect its reputation with donors. For hispart, White said he agreed with their decision, calling it “weird” that one nonprofit like Help Indiana Vetswould criticize another.
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Even so, some wonder whether $75,000 in alleged losses — compared to $154 million in revenue capturedin 2012 that rose to more than $200 million in 2013 — is enough to justify suing a wounded veteran withPTSD in the grand scheme of things.
But Lieberman thinks the question over nonprofit assistance itself is moot, given the enormous challengesthat vets returning from combat operations face today. And we think she gives us the last word for this in-depth look at one of the nation’s largest veterans charities.
She says it’s the government that needs to be doing more for vets with ongoing problems, not charities —ironic for a White House that fronts the president and vice president for an appearance on the South Lawn.
“The government is not supporting vets with PTSD and other psychological problems well at all,” she told us,describing long waiting lists at understaffed hospitals like Walter Reed that are unable to keep up withdemand for medical attention.
“Nonprofits are doing the best they can, but they form a patchwork quilt that cannot make up for thegovernment’s failure,” she said. “It’s a disgrace.”
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Photo Credit: Wounded Warrior Project
About the Author
Ryan SchuetteExperienced journalist, columnist, and cartoonist covering international politics,foreign aid, the housing industry, and domestic politics. Also the founder of a
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