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Wounded Warrior Project on Charity Navigator's watch list

In another response to the on-going CBS News investigation of Wounded Warrior Project, Charity Navigator, a national evaluator of charities, put the country's most prominent veterans charity on its watch list.

Wounded Warrior Project is facing criticism from more than 40 former employees about how it spends the more than $800 million it's raised in the past four years, reports CBS News correspondent Chip Reid.

CBS News asked Marc Owens, a former director of tax exempt organizations at the IRS, to review the Wounded Warrior Project's tax documents.

"What was your biggest concern in reading these forms?" Reid asked him.

"That 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 spending money -- purportedly spending money -- to assist veterans, I would like to know," Owens said.

Wounded Warrior Project says 80 percent 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 including CharityWatch and Charity Navigator cite -- that only 54 to 60 percent of donations go to help wounded service members.

"The CEO has said that the fundraising should and can be included in the programs and services," Reid told Owens.

"Well, I'd be curious to know how asking people for money equates to the assistance of wounded veterans," Owens responded.

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Steven Nardizzi, Wounded Warrior Project CEO
AP

Steven Nardizzi has been the Wounded Warrior Project CEO since 2009. In 2014 he was paid $496,415.

It's in line with similar-sized charities, but former employees told us they thought it was too much. Nardizzi defended his salary to our CBS Norfolk affiliate last April.

"My salary is less than one tenth of one percent of the donations that come in, and I am running an organization that is helping hundreds of thousands of warriors," Nardizzi said in the interview.

Last year, Wounded Warrior Project gave a $150,000 grant to a group that defends higher spending on overhead, executive salaries and fundraising by charities.

Nardizzi said the more money the charity raises, the more money it can spend on veterans.

"If your only fixation is spending the most on programs, that's feeling good, but not necessarily doing good," he said. "You can run a lot of program activities, you can spend a lot of money on and have them be wholly ineffective."

But CharityWatch president and founder Daniel Borochoff said his biggest concern is the group is sitting on a $248 million surplus -- and that 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 longer term," the charity watchdog said.

Wounded Warrior Project has strongly rejected several of the claims in our investigative report. Its CEO has not responded to multiple requests for an interview.