A legal battle over the rights to the Purple Heart trademark has split two sister organizations tasked by Congress with providing services and funding to veterans who were wounded in combat.
The Military Order of the Purple Heart and its funding wing, the Purple Heart Foundation, are embroiled in a dispute over which organization can use the term “Purple Heart” for fundraising purposes. The order accuses the foundation of failing to properly fund it, forcing the order to make drastic cuts in staff and services. The foundation has responded by claiming the trademark dispute is an attempt at a hostile takeover on the part of the order.
“We’re mad. We’re angry, we’re mad, we’re frustrated, we’re unfunded,” Douglas Greenlaw, national commander of the order, told the Washington Examiner.
The Purple Heart itself has its roots in the Revolutionary War, when Gen. George Washington awarded it to his subordinates as a badge of merit. In 1932, it was recommissioned with Washington’s likeness and awarded to troops wounded in combat beginning in World War I.
Congress chartered the Military Order of the Purple Heart in 1932 as a veterans’ service organization dedicated to aiding recipients of the award. In 1957, the Purple Heart Foundation was established as a 501(c)3 tax deductible nonprofit organization charged with handling fundraising while the order focused on services. The foundation was later given rights to use the Purple Heart trademark for fundraising purposes.
The arrangement worked well for decades, according to Greenlaw, until financial problems began to take a toll on both organizations.
As fundraising began to suffer, so too did the relationship between the sister organizations, leading to a 2009 agreement in which they recognized each other as sovereign entities. The order agreed not to interfere with the foundation’s fundraising efforts, which was reiterated in a 2016 agreement. That agreement also put the trademark’s rights under a separate entity called the Military Order of the Purple Heart Service Foundation Holdings, an affiliate of the foundation.
The foundation had previously agreed to provide the order about $6.4 million for the 2019 fiscal year, which ended on June 30, but had only paid $3.7 million as of June 18, plus another $700,000 for local chapter and auxiliary efforts. The discrepancy is one of the major points of contention, though that money was supposedly contingent on the foundation’s ability to fundraise.
The foundation’s financial situation has become especially dire in recent years, according to a letter from an independent auditor sent to the foundation’s board of directors in February. The letter, which was obtained by the Washington Examiner, said the foundation generated net losses for three years before the end of its fiscal year on June 30, 2018, ranging from $4.3 to $4.9 million.
“We strongly encourage management, in light of its current strategic plan, to evaluate all of its revenue and expense sources and assess the feasibility of generating the funding necessary to support its future operations,” the auditor said.
Greenlaw’s position with the order comes with membership on the foundation’s board, giving him a unique insight into its internal operations.
“I’m totally prepared to do this job I am doing, and I’ve witnessed many boards in my career, nonprofit and profit,” he said. “And this is the worst-run board I’ve ever seen.”
As an example, Greenlaw said the foundation had a net asset value of $21.8 million in 2014, compared with a net value of negative $2.7 million today.
“In other words, they’re less than zero,” he said. “And that’s our funding source.”
The order’s headquarters have been effectively furloughed due to a lack of funding, Greenlaw said, putting its 70 service officers indefinitely out of work and forcing the national adjutant and national service officer to work without pay. At risk are the hundreds of thousands of cases the order handles on behalf of wounded veterans. It handled approximately 135,000 cases last year alone, according to Greenlaw.
“And with that, we brought in over $140 million worth of benefits to those veterans,” Greenlaw said. “So we’re a very strong service organization, actually the strongest in the country.”
The order claims to have a 90% return rate on cases it handles, compared with an average of 60% among similar programs nationwide. Local chapters across the country have been able to survive, as they are relatively self-sufficient.
“So we are now in a counter-lawsuit with our foundation,” Greenlaw said. “And we are requiring that we take all of the intellectual rights from them and put it back into the order, where it originated.”
But the foundation claims it is the order’s infringement of the trademark that has impeded its ability to raise money.
“[T]he order has continuously used the trademark for fundraising without first seeking permission, which the Service Foundation contends is a blatant and serious violation of the licensing agreement and a previous agreement entered into between the Service Foundation and the Order,” said Eric Yaffe, the foundation’s lawyer, in a statement to the Washington Examiner. “The Service Foundation contends that this and other actions taken by the Order have seriously harmed and undermined the Service Foundation’s fundraising efforts.”
Historically, the foundation has raised money through its car and household item donation programs, but with the cost of scrap metal dropping in recent years, those efforts have suffered. A direct mail program created to diversify revenue has yet to yield any significant results.
Greenlaw said he rejected the foundation’s suggestion for mediation, noting the foundation has a choice to fund the order or not. The case will be settled in the courts, with a trial scheduled to begin in September.
