Under Georgia law, nonprofit organizations are prohibited from “misrepresenting or misleading” anyone to believe that any person “sponsors, endorses or approves” solicitation of charitable funds without written consent to use their name.
In 2012, Historic Augusta submitted a grant application with The 1772 Foundation in Rhode Island to “increase the capacity” of its revolving fund, an account the organization has to save for the acquisition, rehabilitation and eventual resale of architecturally significant sites in Richmond County to “preservation minded buyers.”
In its application, the nonprofit specifically stated it hoped to purchase the Goodale House, a distressed plantation home east of downtown Augusta that was built in 1799, is listed on the National Register of Historic Places and in danger of being lost.
Wesley Sims, the property’s owner, was listed as a potential “partner” and the application further states that the Alabama investor who bought the Goodale House for $15,250 in a December 2009 online auction “lives out of town and has indicated he does not have the means to make necessary repairs.”
Sims, who called the statements lies and reaffirmed his commitment to restore the Goodale House, said he had no idea his name was included in the application in a phone interview last week, more than a year after The 1772 Foundation sent Historic Augusta a $75,000 check on Jan. 22, 2013.
“I was blown away,” said Sims, who mailed a report Friday to the Secretary of State’s office, the Georgia agency that monitors nonprofit activity. “It’s unethical and laws have been violated.”
In his complaint, Sims told Secretary of State Brian Kemp that Historic Augusta’s grant solicitation has put a “cloud over our fundraising efforts and stopped donors from getting involved.” He asked Kemp to investigate and hold accountable those involved.
As of Friday, the secretary’s office had not yet received the complaint, spokesman Jared Thomas said.
“These violations were not and are not made in error nor ignorance,” Sims wrote. “Their acts were intentional and for the purpose of receiving money.”
The Secretary of State and Attorney General’s offices declined comment on the accusations, but if criminal charges are filed, historic preservation experts in Georgia said the case could be a hard sell for the prosecution.
“Fraud is pretty hard to prove,” said James Reap, a member of the state bar who teaches historic preservation law at the University of Georgia. “It would be a question of fact and whether there is enough evidence to show Historic Augusta portrayed its grant solicitation in a way that was untrue.”
Erick Montgomery, the executive director of Historic Augusta, said last week he feels confident no violation occurred, since the grant was requested for the organization’s revolving fund.
“A revolving fund is a tool historic preservation organizations nationwide use to secure property that is in danger in some way or needs to be acquired for it to be catalyzed for the good of a community or neighborhood,” he said. “There’s nothing improper about it at all.”
Montgomery said the organization has not spent the funds and that it was not eager to publicize the grant’s amount or intended purpose on the assumption that the owner might become “greedy.”
The nonprofit initially announced in a news release in February 2013 that Historic Augusta had received a $75,000 grant from the 1772 Foundation to enhance the preservation organization’s revolving fund.
“If it ever gets consummated where we buy the house and start rehabbing it, we certainly want to credit 1772 fully, but when it comes to real estate, sometimes you just need to keep quiet,” the director said.
In March 2013, Montgomery said Historic Augusta offered a $20,000 contract to Sims to purchase the house, after 19 months had passed with little noticeable effort being made to stabilize the home.
Montgomery said, however, the nonprofit did not receive any response from Sims, who in October was cited by the city and has been summoned to Richmond County Magistrate Court three times this year because the house’s collapsed wall and chimney jeopardize its structural integrity.
Sims was given a 90-day extension to obtain construction permit and start work on the house, but before the last court hearing in July, Montgomery said Sims offered to sell the property to Historic Augusta for $107,000.
Montgomery said the organization declined because cost estimates completed in 2012 determined it will take about $165,000 to make the property, which has an assessed value of $13,000, whole again.
“We are still interesting in buying the house, but his counter offer was unreasonable,” Montgomery said.
The Georgia Trust for Historic Preservation supported the nonprofit this week, saying that “nothing inappropriate” occurred in the organization’s efforts to purchase a building seen as a significant landmark statewide.
Mark McDonald, the president and CEO of the trust, said in his 15 years in historic preservation, nonprofits often hold or seek funds for a specific property without the knowledge or consent of the landowner.
Historic Augusta said in its application that it hoped to partner with the Georgia Trust for Historic Preservation to market the Goodale House to someone who will complete a certified rehabilitation.
Sims registered a nonprofit called Historic Home Preservation Society in 2012 with the Georgia Secretary of State, but online federal records do not list the organization as a 501c3 charity, which is required for transferring preservation grants. Sims said the status is pending.
“A nonprofit is not required to disclose all of its strategies involved in a potential real estate deal,” McDonald said. “When you’re negotiating to buy property, the amount of money that you are willing to pay has to be kept close to your chest or else you would not have any bargaining position.”
Reap agreed the practice generally is acceptable, but that determining if a violation occurred would most likely fall in the hands of the granting organization.
Mary Anthony, the executive director of the 1772 Foundation, said her organization asks for a report on grants nine months after they’re awarded and said that it regularly meets with its grantees.
In Historic Augusta’s follow-up report in October 2013, it stated it continues to work toward acquiring the Goodale House, stabilizing it and selling it through its revolving fund.
“Our applicants generally highlight pending opportunities, as with the Goodale property, and that was the project featured in the application,” Anthony said in an e-mail. “However, the grant was designated for the revolving fund program, not a specific house, and not an individual.”
Anthony said the grant does not have a deadline.
“These funds ideally operate in perpetuity,” she said. “The proceeds from revolved properties replenish the funds. This recycling means that successful funds are ongoing and are never ‘done.’”