Supporters of the Downtown Library Hit With Error Letter from Clerk; Library Green Conservancy Could Get Pounded By IRS

8/7/2025: This article was corrected to reflect the percentage of its total expenditures the Friends of the Ann Arbor Library expended on lobbying.

by P.D. Lesko

In a July 30, 2025 letter signed by Rena Basch, County Clerk Larry Kestenbaum’s Dir. of Elections, Basch flagged the July 25, 2025 campaign finance disclosure submitted by Supporters of the Downtown Library for errors on four pages of its disclosure. The group, whose State of Organization says was formed by Alex Lowe on March 11, 2025, has until Aug. 12, 2025 to correct the errors caught by Rena Basch. If Alex Lowe fails to correct the errors in the July 25 pre-election statement by the Aug. 12 deadline, Basch’s letter states, “If we do not receive a response to this notice by the above due date, MCL 169.216(8) requires this office to refer the matter to the Attorney General.”

The pages with errors according to Basch’s letter include:

Summary Page: In-kind Contributions do not include the $3,000 contribution from July 17.

Schedule 4A – Itemized Contributions: The total amount of contributions says $44,372, but an error was found at Page 10; the total amount reads $565, but the math only adds up to $555, meaning the total contributions should say $44,362.

Schedule 4-IK – Itemized In-Kind Contributions: I believe you forgot to include the $3,000 from a July 17 fundraiser at 1928 Packard Road (York).

Schedule 4B – Itemized Expenditures: The cumulative total on your report says $69,115.98. However, we triple-checked our math and came up with $69,089.48, a difference of $26.50.

The Supporters of the Downtown Library total pre-election itemized expenditures was offset by $12,500 in donations by Adam Goodman. Goodman is the retired co-founder of Duo Security, which was purchased by CISCO for $2.35 billion in 2018. The nonprofit Friends of the Ann Arbor Library donated $23,000, and the Michigan Regional Council of Carpenters donated $7,500.

How Much Can a Nonprofit Spend on Lobbying?

In 2024, the Friends of the Ann Arbor Library federal 990 income tax return showed the nonprofit received a $46,000 grant from the AADL.

501(c)3 charitable organizations are required by the IRS to spend only an “insubstantial” amount of annual spending on lobbying. The IRS defines “insubstantial” as 3-5 percent of a nonprofit’s annual spending. In 2024, the Friends of the Ann Arbor Library spent $118,130 on total expenses. Thus, the $23,000 in donations to the Supports of the Downtown Library for the purposes of lobbying on behalf of ballot proposals A and B, amounts to 19 percent of its 2024 annual spending.

The nonprofit Library Green Conservancy reportedly spent $59,000 of its funds on lobbying against ballot proposals A and B. Between 2014 and 2024, the Library Green Conservancy nonprofit has never declared more than $50,000 in annual receipts to the IRS.

An individual filed a campaign finance violation complaint with the State of Michigan Elections Division against the Library Green Conservancy. The complaint, a single page of which was posted here, claims that the nonprofit was required to form a ballot question committee in order to expend more than $500 on lobbying. IRS rules for charitable organizations don’t support this claim. However, it appears the Library Green Conservancy may have expended well over 100 percent of its annual expenditures lobbying voters to reject Proposals A and B.

The IRS may revoke a nonprofit’s status for violating the rule that it expend only an “insubstantial” portion of its expenditures on lobbying (if the rule is broken annually over a four-year period), but that is the least of the potential consequences. A charitable organization that exceeds the annual lobbying limits under the IRS expenditure test in any given year can be punished by being required to pay a 25 percent excise tax on the excess lobbying expenditures. Under the “no substantial part” rule, nonprofit managers who knowingly agree to excessive lobbying expenditures may face personal excise taxes.