For 2012, WWP reported that about 73 percent of its expenses went toward programs and services, but the charity is one of many that uses a commonly accepted practice to claim a portion of expenses as charitable works by lumping them under the broad category of “program service expenses.” For example, by including educational material in solicitations, charities can classify some of the expense as good deeds.
In my analysis of WWP’s 2012 IRS Form 990, “Statement of Functional Expenses (Part IX)” [see page 10], I determined that in 2012: 32.54% of contributions was added to WWP’s endowment fund (banked or invested); 59.81% of contributions was spent on programs and services, direct and indirect costs*; and 7.65% of contributions was awarded directly in grants.
* Of the 59.81% spent on programs and services, 12.31% was for salaries and other compensation and 47.50% was for other expenses, including those spent on “consulting and outside services” and on overhead
The figures above contradict the claims WWP makes on their website and in their annual reports and press releases — this is because WWP uses the broad category of “program service expenses” when reporting their operating costs.
According to WWP: “Based on our fiscal year 2013 audited financial statements ending September 30, 2013, 80 percent of total expenditures went to provide services and programs for wounded service members and their families.”
2013 Expenses By Category: Program Services: $175, 009, 142; Management and General: $9, 199, 900; Fundraising: $34, 764, 110; Total Expenses: $218, 973, 152; Total Cash Contributions: $224, 063, 935
However, in my analysis of WWP’s audited financial statements for 2013, I determined that 82.12 percent of the $175, 009, 142 in “program service expenses” was for indirect costs (overhead); therefore, in 2013 only 18 percent of total expenditures went to provide services and programs for wounded service members and their families.
WWP is one of many nonprofits that allocates operating costs (overhead) under the category “program service expenses, ” giving donors the perception that this is the amount provided in grants or services. The IRS permits this so there is no real watchdog for charities. Even the online watchdogs don't correctly analysis the IRS data.
Operating expenses are indirect costs, which include management services, salaries and other compensation, fundraising events, advertising and promotion, office expenses, information technology, conferences, conventions, meetings, occupancy (mortgage/rent, utilities, etc.), lobbying, insurance, travel, and other expenses.
WWP does not provide direct financial assistance to its alumni, which is what they call those who sign up online for their member services (as of October 1, 2014, WWP has 58, 034 alumni). WWP states that they “cannot direct funds to a geographic location or specific individual.” On their website they write: “Throughout the year, we offer a wide range of events and activities around the country designed just for Alumni. These activities include sporting events, educational sessions, and social events that give individuals a chance to spend time with other injured service members. Alumni can also participate in many WWP activities and events for injured service members.”
WWP provides “programs and services” to their alumni, in addition to backpacks (“WWP packs”). According to their website: “Warriors receive WWP packs in the hospital. They can be purchased through Under Armour and will be presented to an injured service member recuperating in a military hospital. WWP provides more than 18 programs and services to injured service members and their families, in addition to numerous valuable resources. Sign up online for our WWP Alumni program. It’s free to join. Please visit our Programs page and browse all our offerings that are categorized by Mind, Body, Economic Empowerment and Engagement.”
It is important to note that WWP does not provide programs or services to military veterans who served before September 11, 2001. On WWP’S website it states: “WWP began as a small, grassroots effort to provide immediate assistance when a warrior of this generation was injured. We felt we could do the most good by providing more comprehensive programs and services to the newly injured, rather than spread ourselves too thin by trying to help all veterans. We also knew there were many terrific veterans’ organizations for warriors from previous conflicts, but very few focused on serving our newest generation.”