Governance and oversight are essential aspects for any organization. It is through governance that vision and missions are achieved and corporate culture developed. Additionally, governance gives organizations sense of direction without which business operations is stifled. On the other hand, oversight keeps business operations on check. In the recent past, the United States has witnessed a failure of both in the Wounded Warrior Project Scandal. In the end, millions of well-wisher funds were misappropriated through lavish lifestyles. This article examines what went wrong in the scandal.
As the name suggests, Wounded Warrior Project is a charity service that was incorporated in 2005 to help warriors wounded in battle. The charity grew so fast that by 2016 it ranked 38th in the country in terms of contributions. In the first year of operation, WWP collected over $10 million from well-wishers. The figure had grown to over $312 million in the 2014-15 fiscal years. However, this growth was interjected when reports of fund mismanagement emerged in 2016.
Scrutiny of WWP began when the charity’s board of directors terminated its chief executive and chief operations officers. The terminations came amidst reports of lavish spending through extravagant parties and drinking sprees. Investigations that ensued thereafter found the allegations to be true. Audits revealed that the top executives took home close to half-million dollars in a year with other executives getting a quarter million. All this was paid from donor funds.
In addition to the hefty salaries, auditors revealed lavish spending in unjustified parties. “All Hands” was an annual get together for the company which was often scheduled in locations far from the home town of Jacksonville, Florida. During these meetings, invited guests would fly on first class and drive in jeeps to the meeting venue. However, what hurts most is how whistle blowers within the organization were treated. Past-employee reports emerged of people who were terminated if they questioned the lavish spending.
The Wounded Warrior Project scandal was squarely the result of managerial failure. This tragedy could have been averted if the management understood principles of nonprofit governance. Investigations revealed a clash between principals and agents. There was also poor leadership from the board since funds misappropriation was obvious and would have been identified early enough. Corporate ethics were also defied openly without corrective action from the leadership. With time, the charity had diverted from its mission and vision of assisting wounded warriors and focused on accumulating wealth.
An understanding of the governance models is crucial to avoid such frauds in the future. Additionally, board member and organizational leadership should have an understanding of their fiscal oversight responsibilities. Non-profit organization should also establish internal controls to perform oversight roles.
