Private charities have long been a wonderful way for people to humanely assist others in need and are certainly an ethical alternative to the false philanthropic programs of Big Government that are typically fraught with fraud, waste, and abuse. But not all private charities are magnanimous and certainly should not be viewed as such simply because they happen to be divorced from the federal bureaucracy.
Few charitable enterprises are nobler in purpose than those which seek to aid citizens and residents that have suffered permanent – often devastating – wounds while fighting to protect and defend the Constitution, its guaranteed freedoms, and the general safety of the American people. These veterans certainly deserve a maximized proportion of financial/service support from the funds that the populace is willing to provide. To that end, when we scrutinize the disclosed fiscal year (FY) 2010 financials for the Wounded Warrior Project (WWP) a very disappointing picture emerges.
In FY 2010, the WWP received a total of $73,707,063 in unrestricted revenues, from which $6,738,825 (9.14%) were retained as organizational assets at year end. This means that 90.86% of the largely donated and otherwise obtained revenues were spent in one fashion or another during the year. Of those FY 2010 expenditures ($66,968,238), the following represent large elements of the overall breakdown.*
-Media ad value: $25,635,534 (38.28% of expenditures)
-Organizational salaries: $7,483,753 (11.18% of expenditures)
-Advertising: $7,235,336 (10.80% of expenditures)
-Consulting and outside services: $5,373,930 (8.02% of expenditures)
Federal accounting laws governing 501(c) organizations permit the lumping of these types of activities, along with the genuine charitable activities, as overall program expenditures which can tend to skew the statistical description of the organization’s period activities to the casual observer. But close scrutiny clearly illustrates that of the total monies actually spent (and not retained for future use) in FY 2010, at least 68% of these expenditures went toward what the layman would call overhead costs.
Technically, overhead costs can be defined in as many ways as pleases the eye of the beholder. By my definition, media ad values and advertising, while undoubtedly serving to raise awareness of the challenges that wounded veterans and their families face, do not directly contribute to their immediate needs commensurate with the organization’s publicly professed mission. Neither do “consulting and outside services,” which is far too suspiciously ambiguous for my liking.
Even if one applies a liberal interpretation to overhead and considers media ad value and advertising as legitimate charity expenses, when an additional $5,458,934 for direct mail (8.15%), $4,896,831 for postage and shipping (7.31%), $1,744,702 for payroll taxes and employee benefits (2.61%), $1,742,491 for meetings/events (2.6%), and $1,639,489 for promotional items (2.45%) are considered, the overhead still lingers somewhere around at least 42%. This is likely a very kind subjective assessment.
The independent charity evaluation group Charity Navigator gave WWP a rating of 3 out of 4 stars, but closer inspection shows a non-weighted average was obtained between a 2-star rating for the contextually important financial conduct and a 4-star rating for transparency (which is true given the fact that the above figures were obtained directly from WWP’s website). Charity Watch (a watchdog arm of the American Institute of Philanthropy) uses much more detailed rating criteria, and in 2007 gave the WWP a “D” rating in a report provided to the Congress that year.
I am a firm believer in voluntarily helping those legitimately in need and worthy of assistance, and combat-wounded veterans clearly meet this standard. But there are often far better ways to actually assist than by naively giving money to private bureaucracies that rival the government itself in inefficiency and waste. Typically, volunteering time and a physical presence locally (labor, services, counseling, etc.) yields far better results and personal satisfaction than fueling immense, cash flow-heavy organizations such as this.
To be fair, my intent is not to isolate WWP as a singularly “bad” non-profit. Certainly, many veterans are greatly helped by this project notwithstanding its apparent inefficiency of non-profit business modeling. My intent is to bring people’s attention to the fact that just because a given entity claims to be doing good for the community in its various forms or concentrations does not mean our money cannot be better spent on the same causes via better organized and executed programs. We simply need to do our part to properly scrutinize these organizations individually to ensure that those we have deemed worthy of our assistance are receiving the maximum amount of help from that assistance.
For anyone interested in finding national veterans’ charity groups that have received favorable independent evaluations, visit Charity Watch or Charity Navigator to help make a good determination of whether the targeted recipients will realize the best bang for your buck. If you prefer to do your own research – and I applaud you if you do – then simply download the Internal Revenue Service Form 990 and/or audited annual financial statement from a prospective charity’s website and evaluate its performance and operating model for yourself.
* This is not an exhaustive accounting of all program expenditures by general area or specific activity. This partial list and those items in the following narrative represent only the “large” fruit from the tree for brevity.
UPDATE (26 January 2016): Sadly, it appears as though I was likely right. CBS News is reporting that the Wounded Warrior Project spends much of its charitable donation revenues on “big parties,” “lavish spending on staff,” “dinners and alcohol,” and “lavish hotel[s],” based on investigative reporting involving 40 former employees. Whether or not these allegations prove true or not, and as I pointed out nearly four years ago, there is no dodging the financial analysis.