CEO, COO Out At Wounded Warrior Project

March 10, 2016       Mark Hrywna      

Wounded Warrior Project (WWP) Chief Executive Officer Steven Nardizzi and Chief Operating Officer Al Giordano were fired today. The move comes six weeks after intense media scrutiny regarding the charity’s spending and personnel policies.

In a 750-word  statement released this evening by WWP, the board determined the organization would benefit from new leadership, to best effectuate some policy changes and “help restore trust in the organization among all the constituencies” it serves.

An Office of the CEO has been created to oversee the organization on an interim basis, effective immediately. The office will be comprised of senior members of the existing executive team and led by Anthony Odierno, chairman of WWP’s six-member board since 2014. He is an Iraq veteran and vice president of military and veterans affairs at JPMorgan Chase. The board intends to initiate a nationwide search immediately for a permanent CEO, according to the statement.

The board of the Jacksonville, Fla.-based organization last month hired Simpson Thacher & Bartlett as external legal counsel and FTI Consulting as forensic accounting consultants to conduct an “independent and objective review of allegations” reported by CBS News and The New York Times. The work has included a review of financial and other records, interviews with former and current employees at all levels of the organization, including senior management and board members.

The review found that some policies, procedures and controls “have not kept pace with the organization’s rapid growth and are in need of strengthening.” The board will do another one with an external auditor, according to a source. Employee travel policies will more explicitly limit domestic air travel to economy class, with exceptions for health or disability. Policies related to employee and director expenses will be strengthened, the organization said, in addition to enhancing employee training on existing and new policies and procedures, and continuing to have financial statement independently audited and available on its website.

Nardizzi did not reply to messages seeking comment. He serves on the steering committee of the Charity Defense Council (CDC). The Topsfield, Mass.-based CDC was founded by Dan Pallotta, to act as an “anti-defamation league” of sorts for the nonprofit sector. The fledgling organization, which received a $150,000 grant last year from Wounded Warrior Project, recently hired its first two full-time staff members.

Pallotta did not respond to messages seeking comment but said via Twitter that there were reports that “the CEO & COO of @woundedwarrior have been fired. Haven’t seen any official statement from Wounded Warrior Project Board.”

The CDC is looking into the dismissals and the situation might end up in litigation, according to sources within the CDC since overhead and spending appear to be key factors. The two executives were brought into a meeting with the WWP board today that lasted less than 10 minutes before they were dismissed. Other high-level executives at the charity have threatened to quit since the two were escorted from the building, according to a source, but there’s been no movement at this point.

Nardizzi has been one of the Charity Defense Council’s loudest proponents, speaking to large charity executive audiences and challenging the metrics used by charity watchdog groups. He challenged overhead cost ceiling, often taunting those organizations.

CBS News last week reported that some major donors were shunning the charity and the donors pledged to seek changes within the organization. According to a source, it was the most recent report, in which CBS News showed up at board members’ houses seeking comment, that “spooked them” into believing the needed to take some action.

Sources said Wounded Warrior spent millions on Direct Response Television (DRTV) last year. It’s unclear how much revenue that spending yielded but Wounded Warrior has been raising huge amounts via DRTV as well as online advertising and direct mail, soliciting monthly givers.

The charity aims to raise $1 billion to be able to fund future needs for veterans, with $500 million to be raised during the next five years and $500 million that will come from investment earnings over a 20-year period. It’s placed almost $40 million toward its Long-Term Support Trust in the past two years.

WWP has been among the fastest-growing nonprofits in the country in recent years after aggressively investing in fundraising. Wounded Warrior Project reported total revenue of $342 million in its most recent fiscal year — compared with $74 million just five years ago — and has grown to more than 500 employees. It ranked No. 45 on last year’s NPT 100, a study by The NonProfit Times of the nation’s largest nonprofits that generate at least 10 percent of revenue from public support.

Nardizzi’s flamboyant nature of riding into conferences on a horse or Segway and rappelling down a building raised the ire of some former employees who talked to CBS News. The reports cited $26 million from WWP’s tax Form 990 as having been spent on conferences. That was among some inaccuracies disputed by the charity.

At issue is just how much of its donations WWP spends on programs. The charity calculates program costs at almost 81 percent, per its audited financial statements, while other calculations put it closer to 60 percent if joint cost allocation (SOP 98-2) are disregarded.

In the statement released this evening, the organization disputed parts of the earlier media reports:

  • Approximately 94 percent, or $24.4 million, of the $26 million reported spent on conferences and events in the tax Form 990 was “associated with program services delivered to wounded warriors and their families.”A source close to the organization said that between $22 million and $24 million of that total was for an initiative called Project Odyssey. The program is like a group therapy where wounded warriors from around the country get together to work out their issues.
  • Less than 1 percent of air travel may have been booked for employee travel in first or business class but the vast majority has been in economy class.
  • The cost of the “all-hands” held in 2014 at The Broadmoor, a luxury resort in Colorado Springs, Colo., was approximately $970,000, compared with the $3 million cited by media reports. “Such events will be curtailed in the future,” the statement said.
  • From 2013 to 2015, employees made more than 150,000 “outreach calls” and sent more than 114,000 “outreach emails” to wounded warriors, disputing the allegation that “We don’t call warriors, warriors call us,” which was reported amid the allegations.