Josephine Wright Foundation lacks nonprofit and charity status with IRS and SC
The Josephine Wright Foundation never registered as a nonprofit corporation, as a charitable organization nor does it have tax-exempt status, according to the office of the South Carolina Secretary of State.
The family raised funds through a GoFundMe page while in violation of the Solicitation of Charitable Funds Act, according to the Secretary of State’s spokesperson Shannon Wiley.
This means the donated funds totaling more than $365,000 and growing are not monitored by the state. It also potentially impacts tax deductions for hundreds who have donated, including celebrities such as Kyrie Irving and Snoop Dogg.
Charise Graves created the GoFundMe in May 2023 as her grandmother Josephine Wright drew national attention for her fight on Hilton Head Island against developers to retain Gullah land that had been in her husband’s family since before the Civil War. Graves first mentioned the foundation on the GoFundMe page on August 11, 2023, saying that the foundation will aid other “Josephine Wrights” in preserving property.
This solicitation of funds for a charitable purpose without being registered as a charity is illegal, according to Wiley, making the GoFundMe illegal. The fund is still receiving donations, with over $150 in donations on Wednesday alone. Registration allows the state to track a charity’s finances and protects donors. The South Carolina Secretary of State’s office is responsible for oversight of all charitable organizations operating in the state. The federal agency that grants nonprofit status 501(c)(3) is the Internal Revenue Service.
Despite Wiley saying the Secretary of State’s office contacted the family, and either Wright or Graves had signed for notices of fines and suspensions, Wright family spokesperson Altimese Nichole said the family believed the organization had nonprofit status. Nichole said that they never intended for the foundation to be registered as charity, only a nonprofit.
Only registering as a nonprofit isn’t enough, according to Wiley.
“If you are representing that you’re a charitable organization and soliciting funds for that you need to be registered as a charity,” she said. “As of right now, they have not done that.”
As the Wright family figures out the specifics of the foundation, Nichole said that she wants people to stay focused on the foundation’s mission.
“The family commitment is to help other people because of what happened to their grandma,” she said. “I don’t want us to lose sight of that.”
Added to list of suspended charities
Until the needed IRS and state documentation is complete, the foundation is listed on the Secretary of State’s list of suspended charities. This list includes organizations that have registered but failed to file the necessary reports and organizations that appear to be charities but have never had nonprofit or charitable status.
The family removed the tax exempt, or 501(c)(3), messaging from its website Tuesday and Nichole said they are working to rectify the issue. “This is a family trying to figure it out,” Nichole said of the confusion, explaining that this is the first time Graves has set up a foundation.
The Wright family has also been busy the past couple of months. Since the start of 2024, the Wright family has been grieving Josephine’s death at the age of 94, and working with celebrity Tyler Perry, the Town of Hilton Head and designers to construct the home Perry promised.
Nichole said this week was the first time Graves said she was contacted by the office of the Secretary of State. However, Wiley said that an investigator from the office spoke to Graves in July 2023 to explain that the foundation wasn’t registered as a charitable organization.
“They said that they were going to get everything in order with our office,” she said. “And when that didn’t happen we issued the notice of violation.” The Island Packet and Beaufort Gazette tried to reach Graves, but were told all communications would be handled through Nichole.
The office of the Secretary of State took the following actions, according to Wiley:
- July 2023 — contacted Graves to discuss the charity. The investigator explained what was needed to be in compliance
- October 4, 2023 — sent a notice of violation for failure to register as a charitable organization
- December 5, 2020 — sent a notice of fine for failure to register as a charitable organization
- December 27, 2023 — received a signed acknowledgment from the USPS of receipt of the fine notice
- February 2, 2024 — sent notice of suspension for failure to register as a charitable organization
- February 20, 2024 —received a signed acknowledgment from the USPS of receipt of the suspension notice
The fine is currently $2,000; however, the office offered to reduce it 90% to $200 because it is the foundations first violation, according to Wiley. The acknowledgments were addressed to Wright and Graves, and were signed for when picked-up at a Post Office.
What does this mean for those who donated?
As the Josephine Wright Foundation stands currently, the hundreds of people who donated cannot apply their donations to their 2023 income taxes, according to tax law expert Tessa Davis of the University of South Carolina.
For smaller donors, it might not impact their tax bill. However, for larger donors such as Snoop Dogg, who donated $10,000, or Kyrie Irving, who donated $64,240, it could impact how they classify the donations on their returns. Donations to registered nonprofit charities can reduce the amount of income that is subject to tax.
“The simple assertion that ‘We are a nonprofit,’ or representing yourself as a nonprofit or a ‘charitable organization’ is not enough,” Davis said.
In order for donors to be able to take a donation off on their taxes, the IRS has to grant 501(c)(3) status, meaning the foundation has the IRS approval as a tax-exempt, charitable organization.
If the Josephine Wright Foundation was granted the status from its inception, it wouldn’t be a problem for donors. But since donors contributed without the foundation operating as a registered non-profit charity, “it’s not a straightforward answer,” according to Davis. She said that the “crux of deductibility” for a contribution is whether the nonprofit met 501(c)(3) requirements at the time of donation, and there is no way to guarantee that unless the IRS granted 501(c)(3) status.
“It’s quite possible that contributions to the organization are not deductible,” she said of contributions prior to 501(c)(3) certification.
What will happen to the donations?
If the Josephine Wright Foundation registers as a nonprofit corporation and charitable organization, and receives tax-exempt status, then it may be able to use the money towards its goal: helping Gullah landowners.
If they don’t, there’s a remote possibility they’d be required to give all the money back to donors, according to Wiley, who said that could happen if the office of the Secretary of State took the foundation to court.
“If they don’t register, we would seek an injunction and then we would take them to court to require the registration and the filing of the financial report,” Wiley said.
If the foundation does register, they must report how much they’ve collected and how they’ve been using their funds, according to Wiley. The money from the GoFundMe has not been transferred to a bank account, according to Nichole.
The office of the Secretary of State wants to work with the family to bring the foundation into compliance, according to Wiley. She said the Director of Public Charities had a call scheduled with Graves Wednesday but Graves canceled.
This story was originally published March 20, 2024 at 6:07 PM.
