A Further Response to Senator Grassley’s Questions about Wounded Warrior Project

By Steven Nardizzi and Al Giordano 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 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:

  1. WWP’s annual budgets, audited financial statements and IRS form 990 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.

  2. 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.

  3. 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.

  4. 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.

While acknowledging that nonprofit organizations like WWP are required under GAAP rules to report their public awareness and outreach activity as a program expenditure, Senator Grassley appears to be questioning the utility of these rules and asking a more fundamental and important question: does such public awareness and outreach activity help the intended beneficiaries of charitable missions such as veterans? The answer, not just from WWP but from many national, military and veteran charities, is a resounding yes.

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 joint cost a portion of that activity as program expenses. A review of IRS 990s filed by these organizations reveal that they all devote a significant portion of their program expenditures to important joint cost activity, ranging from 12%-47%:

All of these organizations recognize that public awareness and outreach activities play a vital and important program function of connecting veterans with their communities, providing education on important health issues, and linking them with resources to assist in their recovery and transition to civilian life. With less than one percent of the US population serving in the armed forces, veterans are returning home to communities that are increasingly disconnected from them. Public awareness activity that provides information about the service and sacrifice of veterans helps bridge the civilian-military divide, reinforcing the value they bring to their communities and easing their transition to civilian life.

Public awareness activity can also serve to inform veterans on important health issues. For example, WWP’s most recent survey of the veterans it serves through its programs reveals that 76% are living with mental health conditions such as post-traumatic stress, anxiety, and depression. Access to quality mental health care plays a critical part in the recovery and healing for these veterans. But WWP’s most recent survey shows that over 20% of respondents indicated that the stigma often associated with mental health conditions was a barrier to receiving the care they need. Public awareness activity can help normalize behavioral and mental health issues, thereby reducing the stigma associated with these conditions and promoting care seeking behavior.

Finally, public awareness activity provides a vital outreach function, informing veterans of programs that can assist them and connecting them with the support they need to live successful, well-adjusted lives. Between 2010 and 2015, as WWP increased its investment in joint cost public awareness activity, the number of veterans joining the organization to obtain support grew exponentially, from 3461 to 58,933. This year the organization is making an impact in the lives of over 100,000 warriors and family members. WWP could not have achieved that level of outreach or so quickly scaled its impact without the important public awareness activity it conducts.

We welcome Senator Grassley’s continued inquiry into these important issues and the opportunity to further discuss, in the context of the programs and activities of other national veteran and military charities, the incredible impact WWP makes in the lives of veterans and their families through the effective use of donor resources entrusted to its care.

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Steven Nardizzi and Al Giordano are founders of the Wounded Warrior Project and served as the organization’s CEO and COO


About this Blog

This blog was created by Steven Nardizzi, former CEO of Wounded Warrior Project and Al Giordano, former COO. On March 10, 2016, we were fired by the board of the WWP in the wake of media reports about wasteful spending at the charity we had led for eight years. In the same press release announcing our firings, the Board of WWP issued findings of an independent investigation disproving the allegations contained in those media reports. Nevertheless, the media's false reporting has taken hold and and we are forced to defend ourselves and the wonderful organization and people that has done so much help our wounded veterans.

© 2016 by Steven Nardizzi and Al Giordano