WWP cautionary tale for charities

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via Moak: WWP cautionary tale for charities, clarionledger.com

Last week, the other shoe finally dropped. It had been hanging in the air for what like seemed like eternity, and it seemed inevitable the Wounded Warrior Project would soon be seeking new leadership. It’s hard to believe it had been only a few weeks since a bruising series of revelations had hit the airwaves. CBS News broke the story in January, weaving a tale of a charity that had started out well, but somewhere along the line, seemed to have lost its moorings.

Stories began to leak out about elaborate spending on things like letting its CEO rappel down a wall to an employee meeting, riding in to meetings on horses and Segways, spending hundreds of thousands on meetings and allegedly discouraging current and former employees from criticizing wasteful spending of the more than $300 million given by donors. Much of the controversy arose over what some charity watchdogs considered an unhealthy “overhead ratio” (the amount spent on overhead, vs. actual programs for veterans.)

Last week, though, it all came to a head. Wounded Warrior Project (WWP) Chairman Anthony Odierno announced that CEO Steven Nardizzi and Chief Operating Officer Al Giordano had been summarily fired, pledging to get the organization back on the right track. Odierno (himself a decorated Iraq War veteran and former WWP client) promised to take the reins himself to get the organization back on track. It will certainly be a herculean task; practically overnight, this well-regarded charity went from being the darling of the philanthropic community to a cautionary tale of what can happen when an organization gets really big, really fast.

A couple of weeks ago, after reading my take on the developing WWP story, a WWP donor named Kaylin emailed me.  “Do you think it’s still a reliable charity?” she asked. “I’ve chosen it as my charity of choice and donated whenever I can so I’m concerned.” My best response at the time was that, while the jury was still out on the issue, and there was much to learn, it was crucial that this (or any organization that takes donor dollars) take seriously her concerns, and those of millions of other donors. I thanked her for her heartfelt concern, and suggested it might be a good idea to reach out to local veterans’ groups.

Charities would do well to think about something while pondering what’s become of this organization, which started with the best of intentions, but whose reputation now lies scattered on the battlefield of public opinion: People like Kaylin, who donate their hard-earned money to a charity, are making an investment.

No, contrary to what you might think, it’s not just an investment of money. Theirs is an investment of the heart. From somewhere deep in their convictions, people want to help. Some give for selfish reasons, it’s true; getting tax advantages or public recognition can motivate some to open their wallets. But the majority of charitable gifts in this nation come from people on the lower end of the economic scale, with little economic incentive to give. Whether driven by religious convictions, altruism or just plain old compassion, it’s the $5, $25 and $50 donations that add up to support a plethora of worthy causes.

Here in Mississippi, we know a thing or two about generosity. The Magnolia State might be perennially looking at the Bottom Five when it comes to teen pregnancy rates, per-capita income or Body-Mass Index, but when it comes to giving, we’re always on the medal stand. Mississippi’s generosity has been studied, pored over, and gives headaches to statisticians. But in the end, we all know lots of Kaylins.

Last year, I watched as some of our Boy Scouts stood in front of local grocery stores, raising money for a pancake breakfast to help send boys to summer camp. More often than not, people would just pull a $5 or $20 from their pockets, no questions asked; many didn’t even want the tickets. They ran the gamut, from the well-dressed to people who’d obviously just rolled out of bed; black, white, Asian, Hispanic; young, middle-aged and older folks as well. It was obvious that many of them didn’t have a vast pool of resources from which to draw, but (like the widow in the parable of the Widow’s Mite), they gave substantially and without expectation of return.

Their generosity, while profoundly touching, also gave me pause; it would be easy for someone to take advantage. Every year, criminals or even well-intentioned, but poorly organized charities misuse or misdirect millions of donated dollars. A charity that exists to help a group who have themselves sacrificed life and limb in the service of our country is going to draw donors at a time when patriotism is a deeply emotional thing, and those donors deserve to know their dollars will be spent properly — and if not, returned.

But this is not just a tale of paid staff who appeared to have spent from an open checkbook to indulge their every whim. Somewhere along the line, it’s also possibly the story of a board of directors that could have done something, but failed. When the agenda is damage control instead of mission, it’s a signal of systemic failure. It was only when confronted with a blistering critique from a national news organization that the organization took a harder look.

Firing the top leadership is a predictable response, which is often the first thing a board does when confronted with a reality such as this one. Sometimes (but not always), such action is necessary. But usually, if top leadership has failed, quite often the board has also failed.

When you get an invitation to serve on an organization’s board of directors, it’s often seen as a compliment. And in some ways, it is. But the other side of that coin is that being a board member carries with it a lot of responsibility. A key duty of a nonprofit board is something called fiduciary duty. The nonprofit consulting organizationBoardsource defines fiduciary duty as requiring board members to “stay objective, unselfish, responsible, honest, trustworthy, and efficient. Board members, as stewards of public trust, must always act for the good of the organization, rather than for the benefit of themselves. They need to exercise reasonable care in all decision making, without placing the organization under unnecessary risk.”

Often, a board might start out in the right direction, but over time, becomes dangerously comfortable. A key tendency many boards share is they hire great paid staff, then reduce their involvement as they grow confident in top leaders. In some cases, they fail to give help and assistance when it is most needed, or to take responsibility. At the other extreme, some boards take a dictatorial approach, stifling the CEO. Both approaches can lead to trouble; many experts suggest the optimal path is usually somewhere in the middle. But it’s been demonstrated time and again that an effective board asks questions, expects good answers and takes responsibility. In a well-run organization, the board is truly part of a team with top paid staff.

It’s still not clear exactly what happened here; perhaps we’ll know more down the road.WWP’s own internal review concluded that — although it continues to dispute some of the media’s allegations and defended many of the allegedly-wasteful practices — the organization needs to strengthen “some policies, procedures and controls.” Odierno has pledged to guide WWP back to what it was designed to do: help wounded veterans.

As they do so, however, they should keep in mind the stakes are high, and they owe Kaylin (and thousands like her) no less than the best as they use the resources entrusted to them.

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