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Financial Dereliction of Duty: Are Charities That Aid Servicemen and Veterans Systematically Mismanaged?

Charity watchdogs and the media level serious allegations of mismanagement of funds at charities serving former and current members of the U.S. armed services, affecting service recipients, families, donors, grantors, foundations, and taxpayers. To examine these allegations, we use two approaches from the literature to assess nonprofit financial effectiveness: the organization’s ability to gain resources and to sustain activities. We mirror the approach of charity raters, whose measures are widely available to the public. Using GuideStar/IRS data, we compare fundraising expenditures, assets, and financial sustainability of large national military and veterans nonprofits to a random sample of national nonprofits. We apply propensity score matching and compare organizations similar in size, age and other factors. We find little difference between military and veterans charities and other nonprofits, and provide an improved method for evaluating the financial health of nonprofits across academic discipline, nonprofit field of service, and within or among countries.