The FBI and Virginia Attorney General’s Office are investigating the closure of a decades-old Richmond, Virginia community foundation and whereabouts of what is believed to be upwards of $500,000 entrusted to it by more than 80 local groups now unable to recover the funds.
A spokesperson for Richmond Mayor Levar Stoney confirmed the ongoing investigations Tuesday, one day after the Richmond City Council approved a special budget appropriation to assist the impacted groups.
“FBI Richmond has been in contact with investigative partners. However, we have no further comment or clarification to provide about this matter,” confirmed a spokesperson for the FBI’s Richmond office.
The Virginia Attorney General’s Office told The NonProfit Times that it, too, is looking into the matter, which came to public attention when the 30-year-old Enrichmond Foundation abruptly shut its doors at the end of June 2022 and the attorney tapped to lead the dissolution process withdrew from doing so shortly afterward. “I can confirm the investigation but cannot comment further, as we do not comment on ongoing investigations,” said a spokesperson for the Virginia AG’s office.
Enrichmond, with the mission to support city parks, recreation, and the arts, also served as an umbrella nonprofit for other community and “Friends of” groups that it enabled to raise money for specific causes by letting them piggyback on its nonprofit status. The foundation, as a fiscal sponsor and registered 501(c)(3) charity, would then hold the funds in trust and write a check when the money was needed to pay for a specific project or program.
Since its closure 10 months ago, the foundation’s website and contact information have been scrubbed from the internet and the community groups have been frozen out from their funds with what appears to be little or no explanation. Phone and email messages by The NonProfit Times to John Sydnor, the former executive director who stepped down shortly before the foundation dissolved, have also not been returned.
Among the funds entrusted to the foundation was money for the restoration of a historic pump house and two historically Black cemeteries. The Giving Wall, which launched four years ago as a platform for citizens to donate to the urgent needs of city residents in crisis, is also trying to recover what founder/director Becky Lakin said was the $27,000 entrusted to the foundation at the time of last year’s closure. The lack of answers has been troubling for Lakin, who felt comfortable banking her group’s money with the foundation based on assurances that it would be held in trust and not be commingled with other foundation assets or used for other purposes.
“I was a mom with children and a full-time job who was just a volunteer trying to do what I thought was a good thing in the community,” Lakin told The NonProfit Times. “Having a fiscal sponsor is what allowed someone like me, who wanted to make her community better but didn’t have time to take on the administrative burden of running an organization, to do that.”
The Giving Wall is now working with a pro bono attorney to complete the process of applying for its own 501(c)(3) status, she said. Another community organization has agreed to serve as an interim fiscal sponsor for her group while she awaits Internal Revenue Service (IRS) approval, but others haven’t been as fortunate. “I was lucky to find someone else who was willing to be a sponsor, but they only had the capacity to take on The Giving Wall. They didn’t have the capacity to take on anyone else,” said Lakin.
Stoney recently agreed to place $250,000 in a community-advised fund with another local foundation to assist the total of more than 80 groups believed to be impacted by the closure. The Richmond City Council approved the measure amid the ongoing investigations. “I can confirm that both the Virgina AG’s Office and the FBI are investigating. We do not have any updated information to share,” Petula Burks, a spokesperson for the mayor, told The NonProfit Times.
It is unclear what assets the foundation had on hand at the time of its closure last year as those records do not yet appear to have been filed. The most recently available data from its federal Form 990 filings show it took in revenue of $3 million and had $970,000 in net assets on hand for the fiscal year that ended in December 2020.
At least five community-led groups including Lakin’s have since obtained legal representation, she said. Lakin, for her part, hasn’t ruled out legal action. “I am in discussions with legal counsel about available options,” she said.
