More coverage of Wounded Warrior Project. Former CEO and COO talking to media. 4/12

Image courtesy of DollarPhotoClub.com

Image courtesy of DollarPhotoClub.com

Stephen Nardizzi and Al Giordano are talking to a variety of media outlets. They are defending the organization and their work. We hearing their side of the story.

Here are a few articles of interest in the last week or so. One odd tidbit is the major report received as part of the board’s investigation was provided in oral form only – the AP article says the board says there was no written report.

Another surprising tidbit – In the Chronicle of Philanthropy interview, Mr. Nardizzi indicates he was told not to speak to the media when the story broke.

One more observation after reading these articles – none of the following reports address the issue of whether WWP does or does not have a broken corporate culture.

4/10 – AP – 2 ousted executives defend work at Wounded Warrior Project – Mr. Nardizzi has repeated his comments on the things he regrets. Previous comments were not clear to me. In this article he is quoted as saying in a different interview that wishes the conference drawing so much attention has been located somewhere other than a luxury hotel. He also wishes he had not rappelled down the side of the building.

Those things allowed others (read that as media) to misrepresent the organization. His regret is allowing things to happen which would be  misrepresented.

His previous comments were confusing to me.

Think I got it straight – he should have prevented something (the specific venue and rappelling) that was easy to misinterpret in order to misrepresent the organization.

His perspective is the rappelling entrance, which I’m guessing may have cost a few hundred dollars for equipment rental, is now one of the main visuals that define the entire organization.

No written report

There is one other odd piece of news which Professor Brian Mittendorf (@CountingCharity) highlighted.

Recall the specific item triggering the termination of the CEO and COO was a report from a legal firm and a forensic accounting firm. The board asked those two firms to look into the accusations arising from the media reports.

The AP article cites a statement from the Board of Directors that the two reports were submitted in oral form only. There was no written report from either of the investigating firms.

That is rather odd.

I can imagine a written report taking a while to be developed. I can imagine a written report being tactful and discreet, even pulling punches. I can imagine the worst information being submitted orally or the oral report using less discretion.

But I can’t quite get my brain around investigating an issue for a large charity which has received this much media attention and not preparing a written report. My audit brain doesn’t understand. On the other hand, there are situations when you don’t want to put something in writing.

4/8 – Chronicle of Philanthropy – Former Wounded Warrior CEO Says He Was ‘Shocked’ at Being Fired – Mr. Nardizzi perceives he was the sacrificial lamb offered up by the board of directors in order to end the media criticism. He perceives the board just had to do something to move around and get beyond the publicity.

In the interview he pointed out the board’s investigation, conducted by a law firm and a consulting group, refuted the headline claims in the media coverage. From what I’ve seen the only issue not addressed by the two reports was the corporate culture not accepting criticism.

Mr. Nardizzi indicated the media coverage created tremendous pressure on the board. They felt urgency to do something.

Biggest issue in the interview for me is when Mr. Nardizzi says that he was told not to speak with journalists after the media stories appeared. He acknowledges the mistake of not engaging the media attention by providing answers. The quoted comment uses passive verbs and no pronouns.

4/8 – Fortune – Steven Nardizzi and Al Giordano: Why We Shouldn’t Have Made Fortune’s World’s Most Disapointing (sic) Leaders List – Subtitle:  The facts contradict the media’s morality tale.

Op-Ed points out the false parts of the media’s “morality tale”:

  • On GAAP basis, over 80% of expenses were for program services
  • 94% of the conference and event costs were for services provided to wounded warriors, not 100% for staff parties
  • Cost of the headline event in Denver was at heavily discounted room rates. (From other articles I’ve read, the meeting rooms were either heavily discounted or free.)
  • 99% of travel was in economy class.

They point out the extent of program services grew from $12M spent to assist several thousand wounded warriors in 2008 to $275M spent to assist almost 100,000 wounded warriors in 2015.

Article points out the rapid increase in services provided would not have been possible without heavy fundraising.

Organization has around 600 staff, which costs a lot of money for salaries, offices, and the tools for them to serve. It also costs a lot of money to raise that money.

Non-GAAP metrics

There is a huge debate running in the for-profit world about businesses making up their own measures of profitability which is supposed to tell the story better than the net income according to GAAP.

These are called non-GAAP metrics.

The issue we see with WWP is the same as in the for-profit world. Many businesses and the self-appointed charity monitors don’t like GAAP so they develop their own measures that tells the financial story they way they want to.

A core issue you need to resolve for yourself is whether to use GAAP or non-GAAP metrics when analyzing WWP.

4/8 – The Hill – Answering Senator Grassley’s questions about Wounded Warrior – Article makes the same points discussed above and in other articles.

4/9 – The Wounded Truth (blog by Stephen Nardizzi and Al Giordano) – Pictures and numbers tell the real story Graph describing WWP spending over the years shows dramatic increase.

Of more interest is a graph comparing percent of expenses allocated to program on the 994 of the five largest military/veteran charities. WWP has the highest percentage.

Another graph uses 990 information to show the dollar amount of program services for the five largest charities. Data is rolled into a pie chart. The largest slice at 38% ($190M) is WWP. Second largest slice at 18% ($89M) is USO. The next three largest charities combined have 44% of the program services for the five charities.

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