A Maine nonprofit that places wreaths on veterans’ graves has seen explosive growth in donations over the past decade, its revenues growing from $227,000 in 2011 to $14.6 million last year. As Wreaths Across America has grown, the company from which it buys all of its wreaths has reaped similar rewards.

But the nonprofit and the company, Worcester Wreath Co., are run by the same family, and that arrangement is drawing more criticism as the two entities have become more successful.

Wreaths Across America paid $10.3 million – 70 percent of its revenue – last year to Worcester Wreath for about 1 million circles of balsam that adorn headstones, including a quarter million at Arlington National Cemetery. In five years the company has nearly tripled its business from the nonprofit.

That relationship, which nonprofit attorneys agree is unusual though not illegal, has not changed since its inception. Yet as more money has flowed in, heightened scrutiny from charity watchdogs has followed. Wreaths Across America has added a bidding process for wreath purchases and now discloses the relationship with Worcester Wreath on its website.

But even some of the changes have prompted criticism. This February the nonprofit CharityWatch listed Wreaths Across America among three “outrageous” examples of nonprofits operating with clear conflicts of interest. It drew attention specifically to the bid process that it said seemed designed to ensure the business went to Worcester Wreath.

Dan Boxer, a former adjunct professor of governance and ethics at the University of Maine School of Law, said he can’t think of another Maine nonprofit that has such a strong and lucrative tie to a single private company.

“In an ideal world, there would be no relationship,” Boxer said. “It would be entirely independent.”

Leonard Cole, a Cape Elizabeth lawyer who specializes in representing nonprofits, reviewed Wreaths Across America’s tax documents at the request of the Portland Press Herald/Maine Sunday Telegram, as well as other information that has been made public. He said the relationship is not ideal.

“I don’t see anything obviously abusive here,” he said. “They are disclosing what they are supposed to and, it seems, making reforms.” Still, he said, if the nonprofit wanted to improve, it could create a stronger firewall between the two entities. “They don’t go as far as I would like to see if I was a donor or if I was their lawyer.”

Wreaths Across America staff has been busy over the last few weeks readying for the annual caravan of trucks that delivers the wreaths from Washington County to Washington, D.C., with an escort from a motorcycle club called the Patriot Guard Riders and many stops along the way. The convoy embarked Saturday, and the wreaths will be laid at Arlington this coming Saturday.

In an interview last week, Wreaths Across America’s executive director Karen Worcester – whose husband, Morrill Worcester, owns the wreath company and founded the wreath-laying event – said the criticism is misplaced.

“There are always naysayers,” she said. “But our story has been told so many times. None of this has been hush-hush.”

HUMBLE BEGINNINGS

The success of Wreaths Across America can be traced back to a photograph.

Morrill Worcester founded his wreath company in 1971, selling both wreath supplies and finished balsam products made from Maine-grown trees. For more than two decades, the company contracted with the retail giant L.L. Bean to make the wreaths that were sold at the Freeport store and through its catalog.

Worcester first traveled to Arlington in 1992 with 5,000 surplus wreaths from his factory. He worked with then-U.S. Sen. Olympia Snowe to get permission to lay the wreaths at the veterans cemetery. The annual tribute continued each year after that, without much fanfare.

In 2005 a military photographer took a photo of the rows of green wreaths with red bows leaning against the identical markers in the cemetery. Fresh snow blanketed the ground. That photo was published all over the world.

Two years later, buoyed by widespread support from veterans’ groups and people who wanted to volunteer, Wreaths Across America was born. Karen Worcester was named executive director, a position she’s held since. Early board members included several family members, some of whom still serve.

The timing was good for Worcester Wreath, which in 2008 lost its contract with L.L. Bean. In the final year, L.L. Bean’s orders accounted for 90 percent of Worcester Wreath’s business, court documents show. The company earns more from the nonprofit than it ever did making wreaths and other balsam products for L.L. Bean.

The nonprofit has expanded ever since to include not just laying wreaths at Arlington but at 1,600 sites across the country. This year, for the first time, Wreaths Across America staff flew to Normandy, France, to lay wreaths on the graves of American soldiers who died in World War II and were buried there.

Karen Worcester grew emotional several times during last week’s interview when talking about visiting graves or meeting family members of veterans. She said her entire family, and especially her husband, has taken this on as a cause.

Worcester Wreath officials did not respond to messages from this newspaper last week. A company executive told The Wall Street Journal in 2015 that sales to Wreaths Across America accounted for 75 percent to 80 percent of company revenues.

Despite the dramatic increase in donations each year, though, Wreaths Across America is frequently portrayed in some media as a struggling organization. Most of the donations come in the form of “wreath sponsorships” from individuals. They start at $15.

Last Tuesday, the morning news program “Fox & Friends” aired a three-minute segment about Wreaths Across America in which host Ainsley Earhardt told viewers: “There is still an urgent need for donations to make sure every single service member is remembered with a wreath.” Earhardt interviewed Bre Kingsbury, a Wreaths Across America employee, who said the nonprofit had a shortfall of 50,000 wreath sponsorships. Earhardt assured Kingsbury that “Fox & Friends” viewers would “get this done.”

Similar stories and news segments have run in the last several years, drawing attention to the need for donations. Yet each year Wreaths Across America has exceeded the previous year’s revenue, often by a significant amount of money.

Other expenses from the nonprofit have increased significantly as well.

Last year Wreaths Across America paid out $669,793 in salary and wages, according to its federal tax document. That’s double what it was two years earlier. The only salary listed on the nonprofit’s tax documents last year was for vice chairman Wayne Merritt, who earned $44,175. Neither Karen Worcester nor Wayne Hanson, who is the nonprofit’s longtime board chairman, takes a salary, they said. Other salaries are not required to be detailed.

Ashley Post, communications manager for Charity Navigator, which independently assesses nonprofits, said nonprofit tax documents have a limited amount of qualitative information.

“I can see how there would be questions about this charity,” she said. “There are things that are uncommon but no obvious indicators of wrongdoing.”

MORE CRITICISM AND RESPONSES

Others have thrown up red flags about Wreaths Across America.

The personal finance website Money Talks News cautioned in 2015 against donating to Wreaths Across America because of the cozy relationship between the nonprofit and the company. A week later The Wall Street Journal published a story that detailed the charity’s “distinctly commercial aspect.”

And in May the consumer website Cheat Sheet included Wreaths Across America in a list of 15 nonprofits that “Probably Aren’t as Wholesome as You Think,” joining such big-name charities as the National Rifle Association and People for the Ethical Treatment of Animals.

As stories and warnings about Wreaths Across America have been published, the nonprofit has countered the negative publicity with a lengthy question-and-answer section on the financials page of its website.

The material provides information about some of the questions raised in The Wall Street Journal story as well as other criticism.

“The story of the formation of the nonprofit is a story that the family and the organization are proud to share regularly as part of its shared history. Wreaths Across America is proud of its commitment to its mission and offers full transparency with donors,” the website reads. “To date, each opinion piece where the relationship and integrity of the organization and Worcester family is brought into question is based on misinformation and innuendo.”

Karen Worcester and Hanson, who has chaired the Wreaths Across America board of directors for several years and is among Morrill Worcester’s closest friends, said the nonprofit has always been transparent.

When the nonprofit was founded, its relationship with Worcester Wreath was disclosed in its IRS filing. Karen Worcester said she doesn’t vote on any matters that have to do with Worcester Wreath Co., nor do the other family members on the board.

In 2016, for the first time, Wreaths Across America developed a bid process for wreaths, Hanson said. While Maine has many wreath makers, only one bid was received – from Worcester Wreath. The company will continue to supply the products through 2019, when a new bid process will start.

“We have certain standards that we look for and for other (companies) to follow that would be difficult,” Hanson said, adding that Morrill Worcester has always made it a goal of his to honor the memories of soldiers this way.

‘A MONEY-MAKING OPERATION’

Tom McCarthy, who owns Central Maine Wreath in Skowhegan, said he didn’t bother bidding.

“At one time I might have, but now I’m not really interested,” he said, explaining that the volume has gotten too big. “But I think they should represent it for what it is: a money-making operation.”

McCarthy, who is a veteran, said he’s donated wreaths to veterans groups in the past, too. He never thought to monetize it.

“I wouldn’t want their donations to cease, but I think people have this perception that it’s all free,” he said. “Worcester Wreath makes a lot of money from this.”

Cole, the nonprofit attorney, called the bid process “window dressing.” He said it seems clear that the process was designed to ensure the contract went to Worcester Wreath.

“It’s legally defensible, but the board has fiduciary responsibilities,” he said. “I would encourage them to think about the monogamy with the supplier.”

Hanson said the company has considered diversifying whom it buys wreaths from but defended awarding the contract to Worcester.

“We just don’t think anyone else could do it,” he said, referring to the high volume of wreaths and the flexibility needed to produce them.

Boxer, the former Maine Law professor, wonders whether the board is truly independent. By that, he said, would Wreaths Across America take on a board member who doesn’t believe wholeheartedly in the mission?

Indeed, listen to anyone who has volunteered or otherwise participated in the annual Wreaths Across American event, which now includes a convoy through many Maine communities as the trucks head south, and they will describe a moving and solemn experience.

Though he criticized Wreaths Across America in his article, Stacy Johnson, the founder of Money Talks News, called the nonprofit’s mission “noble.”

“Our veterans, living and dead, have earned both our respect and recognition,” he wrote. “But is Wreaths Across America the best way to accomplish that goal? Is it enriching a for-profit company? Could it pay less for wreaths from a different provider? Could it lay more wreaths for the same money? Based on the information provided by this nonprofit, these questions are impossible to answer. Personally, that alone would prevent me from donating to it.”

Karen Worcester said she doesn’t spend time worrying about people who want to criticize her organization. For her, time is better spent looking for ways to expand their mission, which is “Honor. Remember. Teach.”

“It has always been about making sure these veterans are not forgotten,” she said.

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