Wounded Warrior Upheaval Shows Perils of Fighting Charity Watchdogs

The firing of two top executives at Wounded Warrior Project may have been inevitable, some observers said, because the leaders misjudged the public’s reaction to excoriating criticism of its spending practices. The incident may hold important lessons for other nonprofits that plan to continue the fight against those trying to pressure nonprofits to reduce administrative expenses.

Some nonprofit experts told The Chronicle the terminated officials — chief executive Steven Nardizzi and chief operating officer Al Giordano — might be victims of a rush to judgment in a climate in which high overhead, salaries, and spending on perks like first-class travel inflame the media and charity watchdogs.

Others argue the organization and its leadership should have done more to show how it achieves its mission.

One thing is absolutely clear, say those closely following Wounded Warrior Project: The public takes seriously accusations of high overhead and excessive spending, and organizations cannot be blasé or dismissive about those concerns, as some say Mr. Nardizzi had been.

“It’s not good enough to say, ‘Overhead is a stupid metric,’ which it is,” said Antony Bugg-Levine, chief executive of the Nonprofit Finance Fund. “You have to accept that while it is a stupid metric, it is the metric that many people focus on.”

Things likely would have been different if Mr. Nardizzi and Wounded Warrior had been open about the nonprofit’s spending and proactive in explaining how it helps veterans, Mr. Bugg-Levine said.

Wounded Warrior Project’s board of directors announced the firings in a statement Thursday, writing that it had determined that the charity would benefit from new leadership. Board members did not respond to requests for comment from The Chronicle. Attempts to reach Mr. Nardizzi were unsuccessful.

Vocal Critic

Mr. Nardizzi, who earned nearly $500,000 annually, according to the group’s most recent available tax filings, is a longtime critic of charity ratings used by watchdog groups like Charity Navigator and CharityWatch. Some nonprofit leaders and experts praised his outspokenness: He received a standing ovation at a 2014 conference after he called such ratings “ineffective and misinformed.”

Mr. Nardizzi also serves on the steering committee of the advisory board of the Charity Defense Council, which works to defend nonprofits from accusations of wasteful spending.

Mr. Nardizzi’s tone and actions toward watchdogs were highlighted in media reports by CBS News and The New York Times detailing the alleged misspending. The reports, released back-to-back in January, accused Wounded Warrior of spending millions in recent years on conferences, travel, and perks for its staff. The Times report also featured interviews with fired staff members who criticized the organization’s practices.

Nonprofits need to do a better job communicating how they accomplish their missions and why certain spending is necessary, said Jeffrey Reynolds, chief executive of the Family & Children’s Association, a Mineola, N.Y.-based nonprofit that serves poor families and operates a shelter that serves homeless veterans — although it can be frustrating, and it might take more than “two-second, sound-bite response” to explain certain types of spending.

“If I can go to a donor and say, ‘You gave me $10 and I spent the $10,’ I expect a thank-you from that person,” Mr. Reynolds said. “But imagine I can go to that person and say, ‘You gave me $10 and I turned it into $100, and with that $100, I achieved the following outcomes in the area that you care about.’ That’s a much more powerful conversation. But we seldom ever get to that point in the conversation.”

Mr. Bugg-Levine said he doesn’t believe that all nonprofits should be restricted in how they spend on travel and conferences, but there are problems when charities are not upfront.

“What is destructive is anytime an organization presents one face in its fundraising efforts that is inconsistent with how it operates,” Mr. Bugg-Levine said.

Moving Too Fast?

Some nonprofit leaders told The Chronicle that the two executives might have been the victims of an environment in which allegations of excessive spending trigger knee-jerk reactions and that more investigation might have been needed.

“I don’t feel like the media made its case or Charity Navigator made its case,” said Doug White, director of operations at Columbia University’s Master of Science in Fundraising Management program and a critic of the Charity Navigator’s emphasis on overhead spending. “I feel like so much more needed to be understood before such a conclusion could be arrived at. But I can’t blame the board. There’s a lot of heat.”

Still, Mr. White feels that Wounded Warrior did not move fast enough to address the concerns. When it finally got moving, it did not respond well. He said the group should have investigated the allegations thoroughly and released information as soon as possible.

“I think that was a huge problem in this last month,” Mr. White said.

And the organization’s work is not over, he adds, as the nonprofit should continue to investigate the facts and put in place proper rules and policies.

“They still have to make good to the public. They still have to make good to their constituents,” Mr. White said.

Sarah Durham, president of the communications company Big Duck, said on top of updating policies concerning spending, she’d suggest that the organization do an assessment of its values, perhaps even holding exercises in which people at the nonprofit write down qualities that are essential: “Articulating what values are important can really ensure that the next people that are hired are the right people.”