Insiders say charity for veterans spends lavishly on itself

Evan McGlinn / The New York Times

JACKSONVILLE, Fla. — In early 2014, after 10 years of rapid growth, the charity Wounded Warrior Project flew its roughly 500 employees to Colorado Springs for an “all hands” meeting at the five-star Broadmoor hotel.

They were celebrating their biggest year yet: $225 million raised and a workforce that had nearly doubled in just a year. On the opening night, before three days of strategy sessions and team-building field trips, the staff gathered in the hotel courtyard. Suddenly, a spotlight focused on a 10-story bell tower where the chief executive, Steven Nardizzi, stepped off the edge and rappelled down toward the cheering crowd.

That evening is emblematic of the polished and well-financed image cultivated by the Wounded Warrior Project, the country’s largest and fastest-growing veterans charity.

Since its inception in 2003 as a basement operation handing out backpacks to wounded war veterans, the charity has evolved into a fundraising giant, taking in more than $372 million in 2015 alone — largely through small donations from people over 65.

Today, the charity has 22 locations offering programs to help veterans readjust to society, attend school, find work and participate in athletic endeavors. It contributes millions to smaller veterans groups. And it has become a brand name, its logo emblazoned on sneakers, paper towel packs, peanut butter cups and television commercials that run dozens of times per day.

But in its swift rise, it has also embraced aggressive styles of fundraising, marketing and personnel management that have caused many current and former employees to question whether it has drifted from its original mission.

It has spent millions a year on travel, dinners, hotels and conferences that often seemed more lavish than appropriate, more than four dozen current and former employees said in interviews. Former workers recounted booking business-class seats and regularly jetting around the country for minor meetings, or staying in $500-a-night hotel rooms.

The organization has also spent hundreds of thousands of dollars in recent years on public relations and lobbying campaigns to deflect criticism of its spending and to fight legislative efforts to restrict how much nonprofits spend on overhead.

About 40 percent of the organization’s donations in 2014 were spent on its overhead, or about $124 million, according to the charity-rating group Charity Navigator. While that percentage, which includes administrative expenses and marketing costs, is not as much as for some groups, it is far more than for many veterans charities, including the Semper Fi Fund, a wounded-veterans group that spent about 8 percent of donations on overhead. As a result, some philanthropic watchdog groups have criticized the Wounded Warrior Project for spending too heavily on itself.

Some of its own employees have criticized it, too. William Chick, a former supervisor, spent five years with the Wounded Warrior Project. “It slowly had less focus on veterans and more on raising money and protecting the organization,” he said.

Chick, who was fired in 2012 after a dispute with his supervisor, said he saw the Wounded Warrior Project help hundreds of veterans. But like other former employees, he said the group swiftly fired anyone leaders considered a “bad cultural fit.”

Eighteen former employees — many of them wounded veterans themselves said they had been fired for seemingly minor missteps or perceived insubordination. At least half a dozen former employees said they were let go after raising questions about ineffective programs or spending.

A spokeswoman for the charity said it fired those people because of poor performance or ethical breaches, and that each person was given the opportunity to address their work problems.

The spokeswoman, Ayla Tezel, said that more than a third of the charity’s employees are veterans, and that the organization is rated one of the top nonprofits to work for by the NonProfit Times.

“Sometimes employees make poor choices that can’t be overlooked,” Tezel said. “And sometimes those employees are veterans.”

A For-Profit Model

Veterans organizations in United States often reflect the era in which they were created: After World War I, they resembled fraternal orders. After Vietnam, many focused on advocacy in Washington.

The Wounded Warrior Project cuts a different profile. Under Nardizzi’s direction, it has modeled itself on for-profit corporations, with a focus on data, scalable products, quarterly numbers and branding.

In an interview at the organization’s four-story headquarters in a palm-lined office park in Jacksonville, Florida, Nardizzi, 45, said spending on fundraising and other expenses not directly related to veterans programs has enabled the Wounded Warrior Project to grow faster and serve more people. It estimates that 80,000 veterans have used its services.

“I look at companies like Starbucks — that’s the model,” Nardizzi said. “You’re looking at companies that are getting it right, treating their employees right, delivering great services and great products, then are growing the brand to support all of that.”

The charity recently pledged to raise $500 million for a trust to fund lifetime supplemental health care for severely wounded veterans. And on Tuesday, it started a program to provide care for veterans with post-traumatic stress disorder and traumatic brain injuries, two of the most common injuries for veterans of recent wars.

Such ambitious programs would be impossible without significant spending on fundraising and staff, said Nardizzi, who has become a vocal advocate of the idea that charities should be able to spend what they want on travel, fundraising and executive salaries.

“How many others are not scaling up to cure cancer, to help the environment, because there is a belief we shouldn’t invest in those things?” said Nardizzi, who was given $473,000 in compensation in 2014.

The Wounded Warrior Project’s roots are more humble. Its founder, John Melia, was a Marine veteran who had been injured in a helicopter crash off the coast of Somalia in 1992. When wounded troops began returning from Iraq in 2003, Melia remembered how he had arrived in a stateside hospital with only his thin hospital gown, and began visiting military hospitals to distribute backpacks stuffed with socks, CD players, toothpaste and other items.

As the backpack project grew, Melia hired a few employees, including Nardizzi, a lawyer who had never served in the military but was an executive for a small nonprofit, the United Spinal Association, which served disabled veterans.

They began raising millions of dollars and broadening their services to include adaptive sports for disabled veterans, employment and benefits help, and retreats to teach veterans to cope with post-traumatic stress disorder.

By 2009, the group had grown to about 50 employees and $21 million in revenue. But by then, Melia and Nardizzi were fighting over the charity’s future, with Nardizzi pushing for more aggressive expansion than Melia, former employees said.

In January 2009, Melia resigned.

Nardizzi said in an interview that Melia left to pursue business ventures. But Melia’s ex-wife, Julie Melia, who worked at the charity at the time, said in an interview that her former husband felt like the organization was “stolen from him.”

“He didn’t want to leave, but it was obvious something was going to happen,” Julie Melia said.

The organization paid John Melia at least $230,000 after he stepped down, according to tax forms. He has never spoken publicly about his disagreements with Nardizzi, and declined to be interviewed.

Today, on a list of 27 founders that was created by the charity’s current leadership and handed out to all new employees, Melia’s name appears well below the name of the charity’s for-profit fundraising consultant.

Rising in a Downturn

When Nardizzi took over, in the depths of the 2009 economic downturn, most charities had dialed back their fundraising efforts, figuring that the nation was in no position to give.

Nardizzi doubled his spending on fundraising and has increased it an average of 66 percent every year since. The Wounded Warrior Project spent more than $34 million on fundraising in 2014, according to tax records.

The organization began producing inspirational ads featuring wounded veterans fighting to recover.

“The secret sauce was the brand, and the mission,” said Dave Ward, a vice president who left in 2015. “We put warriors on a pedestal and the nation wrapped its arms around that concept.”

But as donations poured in, many former employees say the group became wasteful.

“People could spend money on the most ridiculous thing and no one batted an eye,” said Connie Chapman, who was in charge of the charity’s Seattle office for two years. “I would fly to New York for less than a day to report to my supervisor.”

All staff members flying to the charity’s office at a military hospital in Germany traveled in business class, employees said. One current employee said her last-minute ticket cost $7,000.

Nardizzi fired Chapman, an Iraq veteran with PTSD, in 2012 as part of a “management restructuring,” she said.

By 2014, the group was spending $7.5 million per year on travel, according to tax forms.

The Wounded Warrior Project asserts that it spends 80 percent of donations on programs, but former employees and charity watchdogs say the charity inflates its number by using practices such as counting some marketing materials as educational.

The spending began to attract attention. Charity Watch, an independent monitoring group, gave Wounded Warrior Project a “D” rating in 2011 and has not given it a grade higher than C since.

Nardizzi fought back. In 2013, according to tax forms, the Wounded Warrior Project gave $150,000 to a nonprofit called the Charity Defense Council and Nardizzi joined its advisory board. The council’s mission includes defending charity spending on overhead and executive salaries, according to its website.

In 2014, the Wounded Warrior Project lobbied in California and Florida to fight proposals that would have required nonprofits to increase financial transparency. Both bills passed in amended forms that did not significantly affect the charity, Nardizzi said.

Also around that time, the group hired the global public relations firm Edelman, which has represented Starbucks, Wal-Mart, Shell and Philip Morris, to improve public perception of the charity and its overhead spending.

Former employees said they questioned the charity’s focus on money and marketing techniques. Erick Millette, an Iraq veteran, said he quit after growing disillusioned about his work with a program called Warrior Speak, which involved veterans’ telling their stories of healing to audiences. The veterans collected donations at those events.

“I wasn’t speaking anywhere unless I was collecting a check,” said Millette, an Iraq veteran who worked for the program for about two years, until he left in 2014.

Millette said the charity encouraged him to highlight its role in helping him recover from PTSD and traumatic brain injury. “They wanted me to say WWP saved my life,” he said. “Well, they didn’t. They just took me to a Red Sox game and on a weekend retreat.”

A Focus on Metrics

As its donations increased, Wounded Warrior Project executives began using data to measure staff productivity. The metrics were intended to improve efficiency and help fundraising. But some employees assert that the productivity goals were set so high that they eroded program quality.

The Warriors to Work program, for instance, was intended to provide one-on-one counseling to develop résumés and interview skills, then place veterans in suitable jobs.

But executives quadrupled the number of job placements the program was expected to make each year, reducing the amount of time specialists had to find good ones, said Dan Lessard, who ran the program for about two years. He was fired in 2014 for what executives told him was insubordination.

“They would just come up with numbers based on nothing,” Lessard said. “I would push back and they would get very frustrated and yell. By the time I left, we were just throwing guys in jobs to check off a box and hit the numbers.”

The same push for numbers hit a program that brings wounded veterans together for social events. Former staff members said they had less time to develop therapeutic programs and so relied on giving veterans tickets to concerts and sporting events. To fill seats, they often invited the same veterans.

“If the same warrior attends six different events, you could record that as six warriors served,” said Renee Humphrey, who oversaw alumni outreach in Southern California for about four years. “You had the same few guys who loved going to free events.”

Humphrey, an Iraq veteran with PTSD, was fired in 2013. Her termination was so abrupt that her work phone and credit card were shut off while she was leading an event.

Nardizzi said his staff was constantly monitoring metrics to try to get the most out of every dollar donated. “It’s a hard balance, but I think we strike the right balance,” he said.

He said that the organization regularly followed up with veterans who receive Wounded Warrior Project services and that the vast majority reported having good experiences.

Multiple Terminations

Part of the organization’s drive for growth has been a tough stance toward workers considered unproductive or disloyal.

After Jesse Longoria recovered from a roadside bomb blast that nearly killed him in Iraq, he got a job with the organization training veterans to help other veterans.

“I loved it,” the former Marine sniper said. “By giving back, I was helping myself and helping other vets.”

In 2012, after he had been working for the charity about a year, he had to have his right arm amputated because of lingering damage from Iraq.

Soon after the amputation, he said, he was racked by haunting emotions from Iraq and checked himself into suicide watch at a psychiatric ward.

A week later, he was back at work when a fistfight broke out between veteran mentors who had been drinking after one of his training sessions. He was not in the room at the time but was held responsible for the fight, his boss at the time, Chick, said in an interview.

Chick’s own supervisor told him to fire Longoria. Chick said he refused, but was ordered by his boss to write an email recommending the firing.

“He said you better do this or you are going to look disloyal to the organization,” Chick said. “It was a very coercive conversation.”

The Wounded Warrior Project said Longoria was terminated at Chick’s recommendation. The organization fired Chick later the same day for insubordination.

Longoria said he was offered money in exchange for signing a nondisclosure agreement, but refused. Other former employees said they had signed such forms, and could not speak.

Longoria said after he was fired, he fell into depression but was also relieved. He said he felt guilty about what he saw as widespread waste.

Once a child came by the office to donate a piggy bank. Another time a woman called to donate part of her son’s life insurance after he was killed in Afghanistan, he said.

“It got under my skin, started eating at me,” he said. “I knew where the money was going to. It seemed to me like it was a big lie.”