Wounded Warrior Project (WWP), an organization whose mission is “to honor and empower Wounded Warriors” has been in the news recently, and not in a positive light. CBS News aired a three-part series alleging that money contributed to the organization was being wasted and not doing enough to improve the lives of veterans. Concurrently, the New York Times published a story that criticizes both spending and management practices at WWP. As a result of these events, watchdog Charity Navigator placed WWP on its watchlist. I wanted to look at WWP’s Forms 990 to see what I could glean from them.
Let’s get this straight from the get-go: Form 990 does not give you the kind of information that is going to help you to understand whether an organization is using the contributions it receives to effectively fulfill its mission, and it can only hint at whether certain spending is lavish or appropriate. It is possible to argue the pros and cons of all the numbers cited in the reports above as well as the numbers that appear below.
If you approach WWP solely as a money-making enterprise, it has been spectacularly successful since current CEO Steven Nardizzi took over in 2009. From 2009 to 2014, total revenue increased by 1,211 percent, from $26 million to $342 million. During that same time, fundraising expenses increased at less than half that rate, from $6.3 million to $43.4 million. It would be hard to find a charity that wouldn’t take those numbers.
But charities are not just money-making enterprises; they are mission-driven organizations. Here the information on the Form 990 is harder to interpret. On the positive side of the ledger, even if you throw out the program expenses that were allocated as part of the fundraising efforts, the total spent on programs increased over the five-year period from $13 million to $149 million, and grants made to other organizations that help veterans increased from about $800,000 to more than $41 million.
On the less positive side, as Marc Owens, former head of the IRS Exempt Organizations Division pointed out in the CBS series, it is impossible from the WPP Forms 990 to determine how many veterans are being served by its various programs, and the extent of that service. The instructions to Form 990 are quite clear about how programs should be reported:
For each program service reported, include the following.
- Describe program service accomplishments through specific measurements such as clients served, days of care provided, number of sessions or events held, or publications issued.
- Describe the activity's objective, for both this time period and the longer-term goal, if the output is intangible, such as in a research activity.
- Give reasonable estimates for any statistical information if exact figures are not readily available. Indicate that this information is estimated.
- Be clear, concise, and complete in the description. Use Schedule O (Form 990 or 990-EZ) if additional space is needed.
The WWP Form 990 could do a better job in this area (and to be fair, so could many of the organizations that file Form 990). The only measures reported by WWP are the total amounts spent on the various programs. This omission seems unnecessary, because WWP has done an excellent job of describing and quantifying its programs and the progress they are making on its GuideStar Nonprofit Profile.
There is also $39 million listed as program services expenses on one line of the 2014 form (Part IX, line 11g) that is simply described as “consulting and outside svcs”; the Form 990 instructions require that “the organization must list the type and amount of each line 11g expense.” Instead, we are left in the dark regarding this very significant expenditure.
Another thing the 990 tells us is that the number of staff increased more than five-fold over the period, from 86 to 481. To add this many new employees in such a short period while also steeping them in the corporate culture is a difficult task that has implications for every aspect of the organization’s infrastructure.
The increase in the annual surpluses from 2009 to 2014 also stands out. The net assets of WWP increased from $7.8 million to $248.3 million, an astonishing 3,083 percent change. Most of this amount is unrestricted liquid assets, largely held in stocks and bonds. There is nothing wrong with an organization saving money to fund future operations and smooth out any ups and downs in finances, but WWP must balance the security that comes from accumulating this money with the intent of the donors who contributed it and the very real present needs of the veterans it serves.
Again, the 990 has little to say about the allegations that have been made by CBS and by the New York Times. But it does indicate an organization that has grown very quickly, and one that could be more transparent about its operations on its Form 990. I hope, for the sake of our nation’s underserved veterans, that WWP is able to realize its great potential. [Full disclosure: I have contributed to Wounded Warrior Project.]
Vice President of Research Chuck McLean is responsible for conducting research for GuideStar and customers interested in nonprofit sector data. He also works to identify new data sources and ways to present data effectively to GuideStar users. Chuck produces the annual GuideStar Compensation Report, which analyzes the salary and benefits of thousands of nonprofits throughout the country.