CBS News investigates Wounded Warrior Project

In a three-part investigation, CBS News looked into the Wounded Warrior Project, the nation's most recognizable veterans charity. What caught our attention is how the Wounded Warrior Project spends donations compared to other long-respected charities.

For example, Disabled American Veterans Charitable Service Trust spends 96% of its budget on vets. Fisher House devotes 91%. But according to public records reported by "Charity Navigator," the Wounded Warrior Project spends 60% on vets.

• Part 1: Wounded Warrior Project accused of wasting donation money
• Part 2: Ex-employee: Wounded Warrior Project conduct "makes me sick"
• Part 3: Charity watchdogs question Wounded Warrior's spending on vets

The organization has invested heavily in fundraising and says this philosophy best positions it to carry out its stated mission: to honor and empower wounded warriors.

But in Part 1 of the CBS News investigation, Army Staff Sergeant Erick Millette and former WWP employee said the charity is not living up to its mission. Millette said he witnessed lavish spending on staff.

"You're using our injuries, our darkest days, our hardships, to make money. So you can have these big parties," he told CBS News.

CBS News spoke to more than 40 former employees who described a charity where spending was out of control. One former employee called WWP's conduct "what the military calls fraud waste and abuse."

Former employees say spending skyrocketed since Steven Nardizzi took over as CEO in 2009. According to the charity's tax forms, spending on conferences and meetings went from $1.7 million in 2010, to $26 million in 2014.

Captain Ryan Kules, Director of Alumni for the Wounded Warrior Project, denied excessive spending on conferences or alcohol. "It's the best use of donor dollars to ensure we are providing programs and services to our warriors and families at the highest quality."

In Part 2 of the investigation, former employees of the Wounded Warrior Project said they're concerned that the organization has become more focused on raising money than on serving wounded veterans.

Many of those former staffers believe that after raising more than a billion dollars since 2003, the charity should be providing more comprehensive services to wounded veterans. They also raised concerns that WWP was not doing enough to follow-up with warriors.

"A lot of the warriors I saw needed mental health treatment. They don't get that from Wounded Warrior Project," a former employee said.

Capt. Kules told CBS News that WWP is committing $100 million over three years to a warrior care network in a partnership with four hospitals that will provide outpatient mental health services to post-9/11 veterans.

• CBSN: Is the Wounded Warriors Project leaving vets behind?
• CBSN: Veterans take aim at Wounded Warriors on Facebook

Kules also said WWP does follow up with veterans. "Wounded Warrior Project contacts alumni and family support members multiple times over the course of the year, we call each and every one of our alumni and family support members on their birth month to be able to ensure and check in, see how they're doing, and see if they need other programs and services."

Marc Owens, a former director of tax exempt organizations at the IRS, reviewed the Wounded Warrior Project's tax documents at the request of CBS News in Part 3 of the investigation.

"I couldn't tell the number of people that were assisted. I thought that was truly unusual. If the organization is asking for money and purportedly spending money to assist veterans, and talking about it, I would like to know," said Owens.

Wounded Warrior Project says 80% of their money is spent on programs for veterans. That's because they include some promotional items, direct response advertising, and shipping and postage costs. Take that out, and the figures look more like what charity watchdogs say — that only 54 to 60% of donations go to help wounded service members.

Charity watchdog Daniel Borochoff says his biggest concern is that the group is sitting on a $248 million surplus — and not enough of it is being spent on veterans.

"It would be helpful if these hundreds of millions of dollars were being spent to help veterans in the shorter term in a year or two rather than being held for a longer term," Borochoff said.

The CBS News investigation drew a strong reaction on social media, with many veterans taking to Facebook to voice their frustration. Some even called for the resignation of CEO Steven Nardizzi, who has defended his organization's spending.

The charity has not responded to CBS News' repeated requests to interview Nardizzi, and instead offered Kules, a program director, as qualified to answer questions about the charity.

The Wounded Warrior Project has also responded on their social media pages.

Top donors were also upset by the allegations that their donations were not being spent how they expected.

Fred and Dianne Kane had two sons serving in Iraq, and have helped raise $325,000 since 2009 for WWP. Fred Kane was even honored with an award for being a VIP donor.

"Hearing that there was this waste of money, donor dollars that should have been going to servicemen and women that were injured, and that it was spent on their having a good time — it's a real disappointment," Dianne told CBS News.

Outraged, the Kanes cancelled this year's benefit tournament and started a petition on Change.org calling for a public audit. Fred also called senior management, and said he thought Nardizzi should be fired.

"Where is this guy? You lead from the front, good or bad, you don't hide," Fred Kane said. "I don't understand how an organization that has many veterans who value honor and service and chain of command can be led by a guy like that."

CBS News learned the Kanes are just some of several major donors who are ending their support and calling for change.

On Thursday, the WWP board of directors fired CEO Nardizzi and Chief Operating Officer Al Giordano after a meeting in New York.

Sources tell CBS News the board has received preliminary results of a financial audit. And there are discussions under way about retired senior military officers who are being considered to take over leadership of the organization.

Full disclosure, a CBS Corporate executive serves on that board.