Ousted Wounded Warrior Project executives defend handling of organization's finances
By DAVID BAUERLEIN | The Florida Times-Union, Jacksonville (Tribune News Service) | Published: April 9, 2016
Steven Nardizzi and Al Giordano worked side by side building Wounded Warrior Project into one of the nation’s largest charities. They’ve stuck together in the month since their ouster from the organization; and they haven’t gone quietly.
Wounded Warrior Project’s former chief executive officer and chief operating officer have started a blog — Wounded Truth they call it — that unleashes their sharp criticism of how media reports portrayed the organization’s finances. They have written articles for opinion pages, sat for interviews with Fox News and other media outlets, and sought to make their case that Jacksonville-based Wounded Warrior Project operated in a way that upheld the intent of donors who have contributed hundreds of millions of dollars to help assist veterans.
“The two most painful (allegations) are that somehow we’re not treating donor dollars appropriately and that we’re not taking care of warriors,” Nardizzi said during a wide-ranging 90-minute interview. “For me, watching the news reports, those were the most personally painful allegations, and obviously untrue.”
In hindsight though, Nardizzi said he would have done some things differently.
He wouldn’t have chosen The Broadmoor, a five-star resort in Colorado, for the organization’s annual employee conference in 2014. Nardizzi said Wounded Warrior got discounts for room rates, meeting space and food, but the image of the group convening in an upscale resort left an impression the nonprofit spent “an exorbitant amount of money” on the conference.
And, Nardizzi said, he wouldn’t have rappelled down the side of The Broadmoor during the opening night of that conference. The video of a spotlight tracking him as he rappelled became a recurring feature in news reports on the organization.
Nardizzi said the rest of the four-day conference involved meetings based on nuts-and-bolts strategic planning for the nonprofit’s future, but the rappelling made it seem like that typified what went on at the conference.
“I would change that so you wouldn’t have the ability to misportray that event as something that it wasn’t,” he said.
News reports originally said The Broadmoor conference cost $3 million, but an internal investigation by the board put the cost at $970,000. The board said it would cut back on such events in the future.
‘THAT DOES LEAVE A QUESTION MARK’
Overall though, Nardizzi and Giordano stand by the decisions they made in running Wounded Warrior Project, whose headquarters is located off Butler Boulevard.
The non-profit is dedicated to serving veterans who have suffered service-related physical and mental wounds since the Sept. 11, 2001, terrorist attacks. The organization has used persistent advertising to fuel huge fund-raising growth, going from $18.6 million in revenue in fiscal 2007 to $342 million in 2014.
Some former employees have said the organization became too focused on fund-raising and lost sight of its mission. But Nardizzi and Giordano said the fund-raising enabled Wounded Warrior to raise money that is helping veterans cope with a wide range of injuries.
They said an internal investigation commissioned by the Wounded Warrior board to examine allegations of wasteful spending actually showed that wasn’t a problem, however those findings got lost in the headlines of the board’s decision to remove them from their senior executive positions. They said the ouster made it seem like the report had found serious wrongdoing.
“I think that does leave a question mark for folks,” Nardizzi said.
“We understand that we work for the board of directors,” Giordano said. “It’s at-will. Jacksonville is a big Navy town. I’m sure you’ve heard in Navy speak ‘loss of confidence in command,’ and that’s okay. But I think the way it was handled was poorly done.”
FORMER EXECS CALL FOR RELEASE OF REPORT
Giordano and Nardizzi said they would like the Wounded Warrior board to publicly release the report done by the law firm Simpson Thacher and Bartlett and FTI Consulting.
But a statement released Friday by the board said there is not a written report that could be released. Instead, the findings were given orally to the board and summarized in a press release issued March 10 about the board’s decision. The board said such reviews typically do not result in written reports.
“The board continues to implement changes that will move the organization forward and do everything necessary to support the thousands of men and women who rely on WWP on a daily basis,” the statement said.
Nardizzi and Giordano said they share that commitment, but fear the organization has been damaged by a “false narrative” that Wounded Warrior used the plight of veterans as a way to reap large amounts of donations that ended up going to wasteful spending on overhead costs instead of benefitting veterans in their recovery from physical and mental wounds.
HOW MUCH REALLY GOES TO VETERANS?
Wounded Warrior has consistently maintained that 80.6 percent of its expenditures went to programs, pointing to an independent financial audit. The board’s investigation likewise said its review supported that figure.
In contrast, two organizations that evaluate the finances of nonprofits say the amount going to Wounded Warrior’s programs is much lower. Charity Navigator pegs it at 60 percent and Charity Watch puts it at 54 percent.
But the Better Business Bureau’s Wise Giving Alliance uses a figure of 80 percent for the amount of Wounded Warrior’s expenses that go to programs.
The main difference between the BBB and the other watchdog groups involves how they treat “joint cost allocation” expenses. Joint costs are expenses on materials that combine fund-raising appeals with a “call to action” for something in addition to making donations. If a television ad or mailer contains both messages, the charity can allocate some of the cost to fund-raising and the rest of the cost to programs, based on accounting standards.
The most common way to allocate the cost is by counting line by line how much of the message is directed to fund-raising and how much advances the charity’s programs, said Bennett Weiner, chief operating officer for the BBB’s Wise Giving Alliance.
He said the BBB will accept that methodology as long as it is done based on Generally Accepted Accounting Principles because that creates a standard for comparing charities. Charity Navigator and Charity Watch take a different stance by counting all joint spending as fund-raising, arguing that donors do not think of such spending as being for programs.
The BBB suspended its charity seal designation for Wounded Warrior after the board cut ties with Nardizzi and Giordano. Bennett said BBB is seeking more information about the review and whether any of the findings would impact whether the nonprofit meets the Wise Giving Alliance’s standards.
The board said Friday its commitment to those standards “remains unchanged” and it is in talks with BBB.
QUESTIONS FROM GRASSLEY
Wounded Warrior also is facing a slew of questions from U.S. Sen. Charles Grassley, R-Iowa, about the spending practices highlighted by media coverage, such as a report that the nonprofit spent $26 million in the 2013-14 fiscal year on conferences for employees.
Nardizzi and Giordano sent an opinion article published Friday in the The Hill, a newspaper that covers Congress, titled “Answering Senator Grassley’s Questions.”
In regard to the $26 million for conferences and events, the op-ed piece said 94 percent went to expenses for veterans programs — an amount that was determined by the board’s review.
Nardizzi said examples of such programs are Soldier Ride and Project Odyssey, which bring veterans from around the country for days of activities. Wounded Warrior pays for airfare, lodging, event costs, and meals during those programs, which fall under the category of events and conferences on financial reports, Nardizzi said.
Wounded Warrior’s board says it is cooperating with Grassley’s request. The board named retired Maj. Gen. Charlie Fletcher as interim chief operating officer and launched a national search for a new CEO.
IMPACT ON DONATIONS UNCLEAR
It’s not clear how the glare of media attention on Wounded Warrior has affected its fund-raising.
Nardizzi said after reports by The New York Times and CBS News raised questions about how the charity spends its money, the rate of growth in donations slowed, but the organization was still retaining support from donors and gaining new ones.
Board Chairman Anthony Odierno told The New York Times a month ago that donations had fallen, but he did not say by how much.
Nardizzi, 45, and Giordano, 54, say they have not decided on their next moves. They said they are interested in serving veterans at some level, and they remain strong supporters of Wounded Warrior.
“I think WWP showed that if you can get some passionate, dedicated people to coalesce around an idea to really make a deep impact, it can happen,” Giordano said.
Nardizzi said when he sees Wounded Warrior’s television advertisements, “it’s like having an old friend back in my house.” He said, “I still have the same feeling, which is a deep sense of pride about the work that’s being done there.”
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