Wounded Warrior Heats Up the Overhead Debate

Wounded Warrior Project reveals how criticism over spending and overhead costs could threaten more nonprofits


By now, chances are good that you have probably heard about the shakeup earlier this month at The Wounded Warrior Project.

The already well-known nonprofit became something of a household name earlier this year when a certain outspoken presidential candidate by the name of Donald Trump shone the prime time spotlight on the organization.
Founded in 2003, The Wounded Warrior Project (WWP) had been doing very well in recent years, raking in nearly $350 million in 2014 alone.

But it wasn't how much money WWP was earning in donations that finally caught the public's attention. It was just how much it was spending and more importantly, what they were spending on.

According to WWP's most recent 990 IRS filing, it was shelling out over $26 million on conferences, conventions, and meetings alone. That single WWP expense is greater than the entire annual operating budget of most nonprofit organizations. (Over 68%, in fact.)

National Center for Charitable Statistics overhead spending recommendation National Center for Charitable Statistics' overhead spending recommendation
 
According to Charity Navigator, Wounded Warrior was spending upwards of 40% of its revenue on non-program related expenses. (Even though the organization itself claimed it was only spending 20%.)

This level of spending is considered the norm among for-profit businesses, a routine average that is often referred to as "reinvestment costs."

And according to a recent interview with Guidestar president and CEO Jacob Harold, he laments that "groups that obsess over lowering expenses can lead to under-investment in equipment, technology and leaders."

Bottom line: the Wounded Warrior Project scandal shouldn't have to do permanent damage to philanthropy. Help your nonprofit learn from their mistakes so that your organization will be in a better position going forward. By increasing transparency and accountability,

Let it be a lesson to the nonprofit industry that, while many modern donors see nonprofits the same way as for-profits in that they understand "it takes money to make money," allowing that idea to take on a life of its own has real consequences.

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