The Wounded Warrior Project, which fired its chief executive last year after news reports alleged that the organization was spending lavishly on conferences, travel, and frivolous items, is taking steps to remedy issues surrounding questionable spending, according to an investigative report released Wednesday by Sen. Charles Grassley, Republican of Iowa. Still, the report chides the organization for “inaccurately reported” program costs and “inappropriate” spending.
The report, which includes a 15-page executive summary and hundreds of pages of attached financial records and other documents, also contains suggestions from Mr. Grassley, chair of the Senate Judiciary Committee and a member of the Senate Finance Committee, for how the organization can be more transparent and honest about its finances and better monitor its spending.
News reports alleging management wrongdoing and other challenges not only led to a change at the top of the organization but also caused a substantial slide in donations and dozens of layoffs.
In particular, Mr. Grassley took aim at a divisive issue in the nonprofit world: how much of a fundraising appeal can be counted as a program cost when the solicitation includes educational information about the charity’s mission. The IRS allows groups to count some fundraising efforts in their tally of program services — but some watchdogs say that approach misleads the public.
Senator Grassley’s report says the organization has promised to provide more oversight over its “alumni program” — in which veterans build bonds through community-service projects and recreational outings like baseball games. According to the report, the charity was doing an inadequate job of monitoring the costs and usefulness of the events — which included trips to wine festivals, casino nights, and multiple resort getaways in Maine and Vermont for one participant.
From now on, Wounded Warrior will monitor employees who attend events and better track costs, the report says. But Mr. Grassley suggests that Wounded Warrior must also take steps to assess whether its activities are doing enough good for its clients
“The WWP should ... carefully choose the events it sponsors and reconsider those focused on drinking and gambling,” Mr. Grassley writes.
Mr. Grassley writes that Wounded Warrior has stopped the practice of counting donated TV and radio time for fundraising ads as “program costs.” That practice can give the public a misleading impression of what the group spends on direct services to veterans. However, the senator says Wounded Warrior also should stop reporting as program costs spending on certain marketing and fundraising materials.
“Although the tax code allows WWP to claim these engagements as program expenses on behalf of veterans, the endeavor is actually more fundraising in nature than a benefit to veterans,” the report says. “As such, its use skews WWP’s reported program expenses.”
Mr. Grassley also questioned a trust into which Wounded Warrior has transferred tens of millions of dollars intended to serve disabled veterans who lose their caregivers. He noted the fund has not made any payments yet and Wounded Warrior should ensure that it reports accurately how the trust is being used.
In a statement, Wounded Warrior said it has overhauled its procedures for employee expenses, appointed new board members, and adjusted its programs to focus more on mental health and long-term support programs for veterans. It disagrees with the report’s finding that the organization is inaccurately reporting its program costs, noting that it follows IRS accounting rules.
“We are confident that we are putting donor dollars to good use serving warriors, family members, and caregivers,” the statement says.
