Nonprofit Ethical Case:

WOUNDED WARRIOR PROJECT: Using Veteran Pain for Executive GainAlexa DavidsonValdeir Faria

NPA 601: NONPROFIT ETHICAL LEADERSHIPFall/ 2017Prof. Marco Tavanti. Ph.D

Introduction

• BackgroundandOverview• Video• Adualisticpresentationofthe“facts”

• Spending• Astrongfor-profitstructureandmetrics• Leadership

• ResponsibilityAnalysis• Questions

VideoIntroduction

CNNWoundedWarriorProjectExposé

Summary• InJanuaryof2016,theWoundedWarriorProject(WWP)becameheadlinenews

withtheallegationsofimproperhandlingofitsfinancialresources.

• BecausemilitaryserviceisconsideredoneofthehighestformsofpublicserviceintheUnitedStates,publicresentmentandoutragequicklygrew.

• Manydisgruntledpastemployeescameforwardinvariousmediapublicationsmakingallegationsof:

– lavishspending

– coerciveleadership

– wrongfultermination

– lowprogramqualityduetohighproductivitystandards

TheMedia’sRoleintheControversy

• ThemediacreatedthenarrativethatWWPwascapitalizingonveteranpain

• Publicationshighlightedpastemployeestories(mostofwhomwerewoundedwarriorsthemselves)andutilizedthesestoriesasfacts,potentiallyignoringvitalinformationforthesakeofagoodstory

• Numerouscrediblesources(nonprofitmanagementprofessors,nonprofitexecutives,etc.offeredalternativeviewpointsonthecontroversy)attributingthescandaltoprevailing/outdatedbeliefsregardinghowthenonprofitshouldoperate

UnpackingthisCase

• Takingaholisticapproachtostudyingthiscase,wewillconsiderboththefactspresentedbythemediaandalternativeviewpoints.

• Throughthislenswewillfurtherexaminethree“problemareas”:

– Spending

– Focusonmetrics

– Leadershipstyle

Spending

TheFacts:Examiningthe990’s2007 2010 2014 2016

TotalRevenue $18,634,714 $40,943,594 $234,682,943 $321,807,428

Conferences,conventions,andmeetings

$0 $1,700,000 $26,054,368 $2,120,004

Travel 1,221,849 $1,907,895 $7,492,655 $4,412,955

Fundraising $2,061,000 $9,393,128 $43,441,173 $69,367,589

PrevailingBeliefs:FundraisingOverhead

DiscussionQuestion:WhataretheprevailingbeliefssurroundingFundraisingOverhead?TEDTALK,DanPallotta

Consideringthealternativeviewpoint2007 2010 2014 2016

TotalRevenue $18,634,714 $40,943,594 $234,682,943 $321,807,428

Conferences,conventions,andmeetings

$0 $1,700,000 $26,054,368 $2,120,004

Travel 1,221,849 $1,907,895 $7,492,655 $4,412,955

Fundraising $2,061,000 $9,393,128 $43,441,173 $69,367,589

For-profitstructureandafocusonmetrics

• WoundedWarriorProjectexecutivesusedatatomeasurestaffproductivity.

• Themetricsareintendedimproveefficiencyandhelpfundraising.

• Somestaffasserthoweverthatproductivitygoalsaresettoohighandprogramqualityhaseroded.

MetricsandProgramEffectiveness

• TheWarriors-to-Work programisdesignedtoprovideone-on-onecounselingtoimproverésumésandinterviewskillsinordertohelpveteransfindemployment.

• Connectionprogramsaredesignedtoprovidetherapeuticandsocialeventsforveteranstocometogetherandenjoyeventsintheircommunities.

PrevailingBeliefs

Thepublicexpectsnonprofitstodeliveronservices,whichisagoodthing!Veteranservicesareacompetitiveareaofthenonprofitsector.DeliveringhighmetricskeptWWPcompetitiveandprovidedthepublicproofofservicedelivery.

• WWPreportsahighnumberofveterans• Employeesandthemediareportadecreaseinprogramquality

Whodoyoubelieve?

Leadership

• WWPhasastrictstancetowardsemployeesconsidereddisloyalorunproductive

• Eighteenformeremployees(manywhoareveterans)claimedtheyhadfiredformisstepsthatwerecategorizedasinsubordination.

• ManyclaimedthatwhentheyraisedquestionsregardingWWPpractices,thattheywerepromptlyfiredforbeingdisloyal

AlternativeView:EmployeeTermination

• ProfessorDougWhite- formerDirectoroftheMastersofScienceinFundraisingManagementProgramatColumbiaUniversity- createdacomprehensivereportquestioningthemedia’sreportonWWP’sfiringpractices

– EmployeeswerepartofaFacebookgroupwheretheycollaboratedwiththeintentionofdelegitimizingWWP

– NowrongfulterminationsuitswerefiledwiththeAGortheEEOC

ResponsibilityAnalysis

Consideringthedualviewpointspresentedinthiscasestudy,wewillexamine:

• IndividualResponsibility• OrganizationalResponsibility• SystemicResponsibility

First:Werethereissuesofcompliance?

• Ontheir990’s,WWPreportstheexistenceofaWhistleblowerPolicyintendedtoprotectemployeeswhoreportortakeissuewithcompanypractices.– Accordingtopersonalreport,employeeswerefiredforquestioningexecutive’sdecisions.

• WWPclaimsthatsomeemployeeswhoclaimedwrongfulterminationwerenon-compliantinregardstofinancialandcompanypolicies(makingtheirterminationcredible).

IndividualResponsibility• Leadership:

–Ifdisloyaltyandinsubordinationwererealandvalidcausesoftermination,executiveandprogramleadershiphadanindividualresponsibilitytocreateanenvironmentwhereloyaltywasbred.

–Challengesandconcernsshouldhavebeenwelcomedandaddressedbyimmediatesupervisorsandrunupthechainofcommand.

•Spending:–CEOSteveNardizzineededtoprioritizemissionactivitiesoverretreats,conferences,bar-tabs(?)

•Metrics:–CEOSteveNardizzineedstofindotherwaysmeasuretheimpactandreassessproductivitystandardsastheystartedtoaffectprogramquality

OrganizationalResponsibility:BoardofDirectors

• BoardofDirectors:TheBoardisresponsibleforapprovingthebudgetrelatedtofundraising,travel,conferences,etc.– TheBoardneededtodiligentlyinvestigatecomparableorganizationsinordertotodeterminethebudgetfortheabovecategories.

– IftheBoardfeltthatCEOSteveNardizziwasimproperlyusingfunds,theyareinchargeofinvestigating.

•Leadershipandemployeesneededtobemadeawareofthewhistleblowerpolicyanditneededtobehonored

SystemicResponsibility• Beliefssurroundingnonprofitsectorexpectationsandpracticesareindispute.

• Asasector,manyaremovingtoafor-profitmodel,likeWWP–Theyprovedsuccessfulinincreasingtheirdonationsandrevenuebydoingso

•Thepublicisveryadversetopeoplemakingmoneyoffofotherspain,sowhenscandalbrokeregarding“lavishandwasteful”spendingtheorganizationwascrucified.

•Thesystemicbeliefsdiscouragehighoverheadandspending,evenifrevenuequadruplesovertime,givingmorefundstomissionactivities.

•Thesectorischangingbutthepublic’sexpectationsarenot.

StakeholdersAnalysis• Veteran’sreceivedalowerqualityofserviceduetometrics.• Organizationalstaff(oftenveterans),werehiredbyWWPandthenfiredforquestioningauthority.

• Veteranpainwasusedforcorporategain,furtherinvalidatinganddevaluingtheirexperiencesaswoundedwarriors.

• Accusationsofmisuseofdonordollarswilldecreasedonationsinthefuture,ultimatelyaffectingveterans.

• CorporateSocialResponsibilitysuggeststhatscandalwithinoneorganizationaffectsthepublic’strustofthenonprofitsectorasawhole,meaningthatwholesectorwillbeaffectedbythiscontroversy,inparticularveteranscharityorganizations.

SoWhatHappened?

• Afterthescandalbroke,theboardfiredCEOSteveNardizziandCOOAlGiordano.

• WWPhadathirdpartyexaminetheirfinancesandarguedthattheyhavealwaysbeentransparentontheirtaxforms.

• SenatorChuckGrassley’sofficeconductedaninvestigationofWWP• WWPheldnumerouspressconferencesdefendingtheirpractices,anddefendedthemselvesagainstspecificremarksmadebyCBSandtheNewYorkTimes.

• Changesinspendingpracticesaretobeseenonthecomingyears990taxform.

Questions1) Whatwasthemedia’sroleinthiscase?2) Giventhatdisloyaltyandinsubordinationwereconsistentproblemsthat

ledtoemployeetermination,whatleadershipstyle(s)couldhavebeenusedtocreateanenvironment/culturethatbredloyaltyandintegrity?

3) Otherthanmetrics,whatarewaysthattheorganizationcouldhavemeasuredimpactandensuredqualityprogramsandservices?

4) Aftersuchapublicscandal,shouldtheboardreevaluateitselfanditseffectiveness?Shoulditconsiderachangeofmembershipandofficers?

5) WhattypeofaccountabilitycantheboardinstituteamongsteachotherandthenextCEO?

6) Doesthereneedtobeashiftinbeliefssurroundinghownonprofitorganizationsshouldbebehaveandoperate?Whatarethecostsandbenefitsofshiftingtoamorefor-profitmodel?

Resources

•JimCollins,authorofGoodtoGreatandtheSocialSectors,leadershiparticles.

•DanPallotta,TEDTalk‘Thewaywethinkaboutcharityisdeadwrong’•SimonSinek,TEDTalk‘Whygoodleadersmakesyoufeelsafe’•Lin-Hi,N.,Hörisch,J.,&Blumberg,I.(2015).DoesCSRMatterforNonprofitOrganizations? - AlternativeLink

ReferencesChasmar, J. (2016, January 27). Wounded Warrior Project accused of wasting donor money: 'It just makes me sick'. Retrieved October 10, 2017 from Washington Times Web site: http://www.washingtontimes.com/news/2016/jan/27/wounded-warrior-project-accused-of-wasting-donor-m/Chasmar, J. (2016, January 28). Wounded Warrior Project demands CBS News retract 'absurd and patently false' spending report . Retrieved October 10, 2017 from The Washington Times Web Site: http://www.washingtontimes.com/news/2016/jan/28/wounded-warrior-project-demands-cbs-news-retract-a/Fox News. (2016, March 10). Wounded Warrior Project's top execs fired amid lavish spending scandal. Retrieved October 10 , 2017 from Fox News U.S. Web Site: http://www.foxnews.com/us/2016/03/10/wounded-warrior-project-reportedly-fires-top-executives-amid-spending-controversy.htmlGroden, C. (2016, March 11). Wounded Warrior Project Sacks Two Executives Over Spending Scandal. Retrieved October 10, 2017 from Fortune Web Site: http://fortune.com/2016/03/11/wounded-warriors-project/IRS. (2016, October 10). Form 990. IRS.McCambridge, R. (2017, May 25). Senate Committee Finds Past Misrepresentation of Finances at Wounded Warrior Project. Retrieved October 20, 2017 from Nonprofit Quaterly Website: https://nonprofitquarterly.org/2017/05/25/senate-committee-finds-misrepresentation-of-finances-at-wounded-warrior-project/Philipps, D. (2016, January 27). Wounded Warrior Project Spends Lavishly on Itself, Insiders Say. Retrieved October 10, 2017 from The New York Times: https://www.nytimes.com/2016/01/28/us/wounded-warrior-project-spends-lavishly-on-itself-ex-employees-say.htmlReid, C., & Janisch, J. (2016, January 26). Wounded Warrior Project accused of wasting donation money. From CBS News: https://www.cbsnews.com/news/wounded-warrior-project-accused-of-wasting-donation-money/Team FME. (n.d.). Leadership Theories, Leadership Skills. From Free Management Ebooks: www.free-management-ebooks.comThe Wounded Warrior Project. (2016, January 26). Wounded Warrior Project accused of wasting donation money. Retrieved October 10, 2017 from Wounded Warrior Project Web site: https://www.cbsnews.com/news/wounded-warrior-project-accused-of-wasting-donation-money/White, D. (2016). The First Casualty: A Report Addressing The Allegations Made Against The Wounded Warrior Project In January 2016. Self Published.Wounded Warrior Project. (n.d.). Programs. From Wounded Warrior Project website: https://www.woundedwarriorproject.org/programs