In a dramatic turn of events yesterday, the staff of the Love Wins Community Engagement Center, a community center and advocacy group for Raleigh’s homeless population, quit and posted a Facebook video alleging financial mismanagement by the group’s executive director, Hugh L. Hollowell. The board of Love Wins and Hollowell are disputing the employees’ allegations.
According to the video, narrated by a former Love Wins employee, the staff hopes to continue Love Wins’ work under a different name, the Raleigh
and plans to raise money to keep the new facility afloat. The employee read the letter on camera through tears. She described the organization’s work and outlined her concerns about its financial operations— including a lack of transparency over its nonprofit certification and allegations that it may have misappropriated thousands of dollars of donations.
“It has recently been brought to my attention that for the past year under the leadership of Hugh Hollowell, the executive director of the Love Wins Community Engagement Center, has not been ethical stewards of the monetary donations it has received,” she said. “The story being told by the executive director over the last year, even to those of us on staff, is that we completed our 1023 which is our application back in May 2016 and have been waiting for our official 501(c)(3) tax-exempt status to be approved any day. In the past week, it has come to my attention, and to the full-time staff’s attention, that this is not true, and that the Love Wins Community Center’s executive director Hugh Hollowell did not complete the 1023 process, never constituted a legal board, never paid employee taxes all the while withholding them from employee paychecks, and may have misappropriated thousands of dollars of donated funds.”
The INDY is unable to confirm these allegations, and Hollowell directed the INDY towards an official statement published by the board of Love Wins. But at least one previous employee has told us she dealt with related issues while working with the organization in 2014.
Meanwhile, Hollowell and the board of Love Wins are pushing back against the video’s allegations. In a Facebook post, Hollowell said he was “incredibly disappointed in the people I trusted to care for the community I have spent the last 10 years building” and “was as caught by surprise over this as you were.”
Hollowell later posted a link to an official statement from the organization’s board members, Al
, Carolyn McClendon, and Sarah Jessica Farber, which claimed Love Wins is in the process of filing for tax-exempt status.
There are some serious misunderstandings that we would like to rectify one on one, but there have also been some allegations made public that are false and harmful to all involved. We’d like to address the statements made by our friends engaged in this work with us so that you, our friends who are with us in partnership, do not have to worry.
First, regarding Love Wins Community Engagement Center’s status as a 501(c)(3) organization. This application, known as a IRS form 1023, is pending. Part of getting that form done has required getting other changes made through the North Carolina Secretary of State’s office, and those have been slow going. In any event, while pending, we have a fiscal sponsor, Love Wins Ministries, Inc., and all of our donations have gone through that organization. This is standard operating procedure for young non-profit organizations; it is why the fiscal sponsorship process exists.
Second, Love Wins’ Community Center’s employee tax withholding. As a matter of course, withholding for state and local taxes comes out of each paycheck for our employees. A staff member had been overseeing payroll, and had taken on responsibility for forwarding withholdings to the appropriate agencies. The staff member responsible was not a good fit for the role, and has since moved on. It turns out that some of those taxes had not been paid. As of the writing of this letter, all taxes for 2016 have been paid. First quarter payments for 2017 have not been paid, but will be paid by the close of the month. Going forward, Hugh will personally ensure that these remittances are made on time. Sometimes, when you trust people, they let you down. That’s what happened here. Thankfully, this was a simple fix.
This is not the first time Love Wins has come under fire for its financial management. As far back as 2014, the organization failed to disclose to donors that it had lost its IRS status, the INDYreported. At the time, Sarah McCoy, a former associate pastor at the organization, filed a complaint about the ministry’s lack of transparency and then resigned.
Hollie Woodruff, a former community engagement director of Love Wins who worked with the organization on contract, told the INDY the recent events didn’t “just happen in a vacuum.”
Woodruff, who was in charge of managing relationships with donors and applying for grants, said she was shocked to learn about the organization’s loss of tax-exempt status in 2014.
“A church donor contacted me and said ‘we can no longer support Love Wins.’ They gave money on a monthly basis, and I said, ‘why not?’ And they said, ‘well you lost your tax-exempt status.’ And I was like, ‘what? What are you talking about?’”
Concerned that there had been some sort of mistake, Woodruff said she immediately called Hugh, who told her it was a filing error and he was working on it.
“I wanted to tell our donors that we temporarily lost tax-exemption,” she explained. “There’s a protocol for this. I wanted to make a plan. He refused to address it. And I immediately was like, I can’t do this anymore. I’m done. So I just kept my losses. And it was heartbreaking. And it was never reconciled”