In 2020, RI historian Pat Conley gave his home to his nonprofit. Then, they gave it back.

PROVIDENCE – In August 2020, the state's honorary historian laureate, Patrick T. Conley and his wife, Gail, made an extraordinary gift to one of the nonprofit foundations he led.

Quietly, and without recording the deed for almost two years, the Conleys gifted "Gale Winds" – their 10-room, waterfront home on Bristol Point Road in Bristol – to the Heritage Harbor Foundation.

The gift was given under the terms of a "life estate" that would enable the couple to continue living there, as tenants, while the foundation paid one or more of their mortgages, totaling $880,000, according to a board member and a fundraising letter written by Conley.

On paper, it may have sounded like a win-win for both the Conleys and the foundation.

The couple could potentially live out their lives mortgage-free. The foundation would get what was described, in a January 2023 fundraising package, as a "prestigious headquarters ... [and] site for small scale, but elegant events" with its "voluminous library on American legal and constitutional development" as a resource for nearby Roger Williams University's law school.

On May 22, 2023, however, the foundation gave the property back to the Conleys.

Patrick T. Conley signed the quitclaim deed as "President, Heritage Harbor Foundation, a Rhode Island nonprofit corporation."

Why give back a bayfront estate?

First, some background:

The foundation deeded the property back to the Conleys after a capital fund drive to raise money to free "Gale Winds" – valued at a potential $4.5 million – of "$880,000 of encumbrances," according to a Jan. 12, 2023, letter from Conley to potential donors.

A companion goal: to retire the $110,000 mortgage on the foundation's headquarters on the Wampanoag Trail.

Conley described the aims this way in his fundraising appeal to Heritage Hall of Fame members and directors emeritus:

"To build the amount of interest-earning funds at the Rhode Island Foundation; and render our permanent prestigious home, Gale Winds, free of encumbrances in order to broaden our grant-making and project-creating ability."

"We all voted happily to accept the gift when it was first offered. We again voted unanimously to return it when the mortgage payments cut into our grant-making ability," writer/publisher Kenneth Dooley, a Heritage Harbor board member, told The Journal last week.

"The Conleys returned all of the mortgage payments, with interest," Dooley said.

Who is Patrick Conley?

A lawyer, real estate investor and former professor of history and constitutional law at Providence College, Conley, now in his 80s, has been a familiar and sometimes controversial figure for decades.

On his résumé, he wrote: "Owner of more individual parcels of Providence real estate than any individual in the city’s history, and holder of more Rhode Island real estate titles (via tax sale purchases) than any person in Rhode Island history."

He made news most recently as the defender of the Rhode Island Heritage Hall of Fame's decision to induct – and in his words, vindicate – retired Lt. Gen. Michael Flynn, a Middletown native who was pardoned by then-President Donald Trump after pleading guilty to lying to the FBI about his contacts with Russia during the transition period before Trump's 2017 inauguration. Revelations about those contacts had led Flynn to resign as Trump's national security adviser after only 24 days.

What does the Heritage Harbor Foundation do?

The foundation was created in 2015 with the $3.6 million in proceeds from the sale of "assets of the proposed Heritage Harbor Museum" at the former Narragansett Electric power plant in Providence that never got off the ground.

It is one of three nonprofits led for years by Conley. The others are the Rhode Island Publications Society and the Rhode Island Heritage Hall of Fame.

The foundation helps to fund the other two, according to the prospectus obtained by The Journal.

"It also aids the Rhode Island Publications Society's continuing output ... [having] already published over 115 books and pamphlets on Rhode Island's heritage and history." (Among the most recent: "The State of Rhode Island: Politics & Government," a look at what has and has not changed in Rhode Island in the last 20 years," it reads.

As of June 30, 2022, the foundation had $3,186,043 invested with the separate Rhode Island Foundation, $22,562 in bank accounts and $318,000 invested in what was broadly described, in the prospectus, as "outstanding investment liens."

On Monday, Dooley conveyed this message from Conley, that as of today: "All 'outstanding investment liens' have been paid and closed at a 14% return on investment." He did not elaborate.

Between 2017 and 2023, the Heritage Harbor Foundation funded a total of $1,251,284 in "grants and heritage projects," according to a summary compiled by board member Russell DeSimone, the grants committee chairman.

That includes $551,009 in "external grants" to "over 100 nonprofits," in amounts ranging from the $520 given the Town of Johnston to help provide a new home for an oft-vandalized Columbus statue to $10,000 given the Pothier Foundation for a St. Jean Baptiste celebration in Woonsocket and $40,000 given to Writers' Associates LLC last fall to burnish the Hall of Fame website.

Another $546,377 was spent on "internal grants."

One went to the Heritage Hall of Fame ($95,000) for operations and the other ($451,377) to the Rhode Island Publications Society for "over 3 dozen books and booklets on Rhode Island distributed free to libraries and others, including the recently published 308-page book on 'The State of Rhode Island: Politics and Government.'"

In addition, "the foundation has acquired and renovated approximately 5300 square feet of space for its headquarters at 1445 Wampanoag [Trail], East Providence," DeSimone wrote in a summary provided to The Journal last week.

"This [now] mortgage-free facility includes offices, meeting rooms, a public lecture hall, our library and research archives, a photography studio display and storage areas for Rhode Island Publications Society books and a small museum of Rhode Island immigrant history," DeSimone wrote.

"All of these operations are supervised by 85½-year-old Dr. Pat Conley free of charge ... [who] also substantively edits (at no charge) all of the books and booklets produced by the Publications Society," DeSimone wrote.

"This amount also represents the creation and management of a 1200-volume library of Rhode Island books and a research archive consisting of nine large file cabinets of Rhode Island research materials open to scholars."

What happened after the August 2020 gift of 'Gale Winds'?

On July 28, 2022, the Conleys recorded the quitclaim deed, signed almost two years earlier, that gave their Bristol home to the Heritage Harbor Foundation subject to "the retention of a life estate" by Patrick and Gail Conley.

Among the other conditions of the gift:

• That the property be known as "Gale Winds" in perpetuity.

• That the foundation "maintain the building and grounds [in] a manner consistent with its current condition and elegance ... [and] catalog and maintain the contents of the Conley Library ... for its use by visiting scholars."

• That after the Conleys die, an addendum to the deed required the foundation to seek "a succession of tenants, preferably those with historical and heritage and/or library expertise, to reside at the premises as caretaker and curator [to foster] the educational and cultural mission of the foundation and its operations."

There was also this:

• "Should the foundation need to sell Gale Winds because the maintenance of this estate seriously impairs the foundation's financial resources and seriously diminishes its grant-giving and internal project capability, then [$1 million] of the sale proceeds shall be distributed to" the Conleys' seven children.

In the fundraising package he sent potential donors last January, Conley quoted the late Vartan Gregorian, a onetime Brown University president and Hall of Fame inductee:

"We cannot and must not lose our sense of history and our memory, for they constitute our identity. We cannot be prisoners of the present and wander out of history. For a society without a deep historical memory, the future ceases to exist and the present becomes a meaningless cacophony."

"Please contribute to creating 'our deep historical memory,'" Conley wrote potential donors.

Why give back a gift?

Board member Ken Dooley explained the foundation's dilemma:

"It was appraised by two impartial evaluators (one being a bank) at $3.3 million in mid-2019," he said. "The surge in real estate values, especially for prime waterfront estates ... raised its reasonable value to over $4 million at the end of 2022."

After the mortgages were deducted from the gift, the net value "exceeded $3 million," Dooley explained, but the foundation soon found that the mortgage payments were "burdensome and interfered with its grant-making power," even with the Conleys paying the taxes and utilities and financing the renovations and maintenance of the property.

Dooley said the foundation then transferred Gale Winds back to the Conleys, who reimbursed the foundation for the mortgage payments and interest the nonprofit made on the property.

"Gail and Patrick then committed to give the foundation proceeds from the eventual sale of Gale Winds upon their death. That amount is estimated to be well more than 2 million dollars," Dooley said.

A year-to-year comparison indicates what happened.

In 2019, the foundation announced $86,155 in grants to 12 organizations. In Tax Year 2021, it reported just $29,900 in grants to the IRS. (It is not clear why the numbers do not completely match a summary provided to The Journal last week.)

It is not known whether anyone on the board questioned how the giveback comported with the state and federal rules that govern private foundations, including the rule that prohibits the "transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a private foundation." (Conley would not comment on this.)

Conley explains the deal

In an email to The Journal on Friday, Conley explained what he hoped would happen to his bayfront estate "at the pre-eminent tip of Bristol Point with an eleven-mile view down Narragansett Bay" when he and his wife, Gail – for whom "Gale Winds" is named – gifted it to the foundation.

He said he and his wife wanted to "create another cultural and charitable institution" in Bristol – already home to Roger Williams University, Mount Hope Farm, Brown's Haffenreffer Museum, the Herreshoff Marine Museum and Blithewold – by granting their home to the foundation.

"To accomplish this," he said, "one problem had to be overcome, namely the cost of maintaining this project due primarily to an $880,000 mortgage encumbrance on Gale Winds," he wrote.

"Initially I went to our investment partner, the Rhode Island Foundation to seek help," he continued. "After meeting with its president and chief financial advisor, I was informed that RIF financial assistance with our mortgages was not available because it would set an undesirable precedent for RIF's other investment partners."

With this avenue closed, Conley said, he decided to set the stage for a fundraising drive.

Among his first steps: placing "the fully executed and unanimously approved deed of gift to the foundation, reserving a life estate for Gail and me, in escrow with the [RIF] secretary because of the possibility that the mortgagee might demand immediate and full payment of the mortgage if the property's transfer was recorded."

He said he prepared a detailed "Capital Fund Prospectus setting forth in detail to potential donors the outline of my plan to pay off the obstructing mortgages to facilitate the foundation's acquisition of the property."

"I also assured them and the foundation that the doubling of the foundation's corpus and the rental of this spectacular property for mini-weddings and conferences after our deaths would ensure that it would not financially burden the foundation."

By 2023, though, Conley said the fundraising effort had "completely failed." And the original transfer agreement from 2020 contained a provision that when he turned 85 "and became at least semi-retired," the foundation would also begin paying other expenses related to Gale Winds – including taxes, renovations, insurance and maintenance that the Conleys had been paying, "it was obvious the gift project had failed."

And so, "on the eve of my 85th birthday," Conley explained, he got approval of every director at the foundation to transfer the property back to himself and his wife.

"We never took a charitable tax deduction for our gift because it was always tentative," he said.

Breaking it down further, Conley said while the foundation held the title to the property, it paid the first mortgage and insurance to Eastern Bank, while Conley and his wife paid the second mortgage to Bank 5, the taxes, utilities, and other expenses.

"With the property back in our name," the Conleys applied for and received a $4.99-million reverse mortgage with Finance America that paid off the two existing mortgages and "gave us a substantial line of credit."

"At our request, our accountant then computed the amount the foundation had paid on the first mortgage during its ownership of the property. It totaled $87,181.04, which we repaid to the foundation with interest.

"This payment was not legally required, but we considered it our moral obligation," Conley said.

Looking ahead, Conley said: "Gail and I have also decided that upon the death of the survivor, Gale Winds will be sold and its proceeds will be gifted to the foundation as our legacy."

"Given the appreciation in value as computed by Finance America, that sum should be well in excess of $2 million," he continued.

But "if some benefactor should donate a large sum to the foundation to pay off the reverse mortgage, our original legacy dream of a foundation headquarters at Gale Winds would be revived," he wrote, still holding out hope.

This article originally appeared on The Providence Journal: RI Historian Laureate Pat Conley once gave his home to his nonprofit