Wounded Warrior Project Fires CEO, COO Amid Controversy
In response to mounting criticism and a looming exodus of major donors after independent investigations by CBS News and The New York Times questioned its spending habits, Wounded Warrior Project last night announced that it has fired CEO Steve Nardizzi and chief operating officer Al Giordano.
In a statement, the charity released the results of the "thorough financial and policy review" it promised in February. Among other findings, the review—conducted by external legal counsel and an independent forensic-accounting consultant—concluded that:
- Wounded Warrior Project spent $970,000 on its 2014 "All-Hands" event, significantly less than the $3 million figure CBS News reported.
- Of the $26 million in event spending the investigations cited as evidence of "wasting donation money," 94 percent "was associated with program services delivered to Wounded Warriors and their families," as Wounded Warrior Project reported on its Form 990.
- The charity's joint-cost allocation procedures—which put its program expenses at 80.6 percent, compared to the 60 percent cited in the media investigations—are in line with "established accounting principles" for nonprofits. The statement notes that Wounded Warrior Project uses an "independent third party that performs joint-cost allocation services for many other nonprofit organizations, including several prominent charities," and that the third party's work is reviewed by independent auditors.
While the findings largely corroborate the claims Wounded Warrior Project made in its initial defense and confirm many of the CBS News investigation's notable flaws, the charity's board of directors still elected to remove Nardizzi and Giordano, citing a need to "restore trust in the organization." The review also found that Wounded Warrior Project had several areas "in need of strengthening," including its travel, employee compensation and employee training policies.
The board announced it has created an "office of the CEO," consisting of senior executives led by chairman Anthony Odierno, to head the charity on an interim basis while it searches for a new CEO.
Under Nardizzi, Wounded Warrior Project underwent rapid growth. The charity ranks 38th on Forbes' "50 Largest U.S. Charities" list, and according to its tax filings, the organization's revenues rose from $18.6 million in 2007 to $342 million in 2014—a 1,729 percent increase. That growth enabled Wounded Warrior Project to significantly expand its programs, triple the size of its alumni database (from 11,943 in 2011 to 38,954 in 2013) and launch its recently announced "Warrior Care Network," which will spend $100 million over three years to treat post-traumatic stress disorder and brain injury in veterans.
But that same growth also contributed to Wounded Warrior Project's recent image issues. The organization has been called a "neighborhood bully" for its allegedly vigorous litigation against competitors. It has drawn fire for its executive compensation rates (Nardizzi's 2014 salary was $473,000). And it ended fiscal year 2014 with $200 million in unspent reserves. These and other factors have drawn heavy criticism from the media and from many former employees, whose complaints formed the basis of the CBS News and The New York Times investigations.
Nardizzi's and Giordano's firings are the seemingly inevitable conclusion to the mounting media firestorm. Wounded Warrior Project said it now hopes to move forward.
"I would like to thank Wounded Warrior Project's dedicated employees, donors, sponsors and partners who have stood loyally by this organization over the last six weeks while the board conducted a very comprehensive review of its operations and the allegations that were made," said Odierno in a statement. "It is now time to put the organization's focus directly back on the men and women who have so bravely fought for our country and who need our support."