Following the Rules

First, I'd like to thank each of you who continue to engage in this conversation. The last few days, I have attempted to introduce the rather complicated constructs of a 501(c)(4) non-profit organization.

On Monday, I asked for two pieces of information from We Love Harbor Springs that any non-profit should be able to produce to verify their status.

• The IRS "Determination Letter"
• The organization's Employer Identification Number (EIN)

We Love Harbor Springs has not posted either of these pieces of information or responded to a formal letter requesting they be made public.

We Love Harbor Springs and its spokespeople have said that they have filed an extension for their tax returns Form 990. The extension would place the new due date for their returns after the next election. In short, they will have spent money throughout two election cycles without the transparency and public accountability afforded by the 501(c)(4) statute.

An EIN would be required to file their extension (it’s like a Social Security number for businesses), but the IRS does not seem to have any record of "We Love Harbor Springs."

However, for the purposes of today's post, I am going to assume this is all just a paperwork issue and the IRS will get it sorted out. We are going to assume We Love Harbor Springs is a 501(c)(4) organization, as they claim, and are subject to all the rules and requirements that status entails.

That brings us to yesterday's post in which we explored what 501(c)(4)s can and cannot do legally.

• 501(c)(4)s CAN engage in political campaigns. However, their “primary purpose” must be social welfare. The IRS says it may be a red flag if a majority of the organization’s budget is used for political activities.

• The State of Michigan says a 501(c)(4) CANNOT make any direct or in-kind contributions to any candidate for office.

• If a 501(c)(4) spends more than $100 to support local ballot issues in Michigan, they must disclose that spending in papers filed with the County Clerk. https://tinyurl.com/3599teyf

I want to be careful with my words here: We Love Harbor Springs may be in conflict with all of these prohibitions based on publicly available information.

• Based on two public filings, one from the "Vote Yes 439" committee which supported the repeal of the City's zoning code, and one from Meta (Facebook's parent company) I can document that We Love Harbor Springs spent at least $20,000 on directly supporting the campaign to repeal the code (through Vote Yes 439) and at least some portion of $5,383 spent on Facebook ads supporting local candidates, signature gathering, and the repeal effort. (Receipt #1)

It is unclear if this is all that was spent or how much the organization's entire budget was because they have not filed any information with the IRS to date. At a bare minimum, public filings tell us they spent between $20,000 and $25,383 on political activity last year. That seems like a significant portion of their activities. https://tinyurl.com/zca8ueu4

• We Love Harbor Springs also spent money to support Tom Graham in his campaign for Mayor and Wendy Reeve in her campaign for City Council. This money was not spent on ads supporting general voter education about all candidates. The ads in question specifically advocate for the election of Tom Graham and Wendy Reeve. Facebook uses large ranges to describe the ad spending. But from the available information the ads could not have cost less than $202 per candidate or more than $598 per candidate. (Receipt #2) Spending by a 501(c)(4) directly in support of candidates for office is prohibited by Michigan Law.

• We Love Harbor Springs was required to disclose their expenditures (not their donors) to the Emmet County Clerk after they crossed the $100 contribution threshold. (Receipt #3)

As of today, publicly available filings indicate We Love Harbor Springs has contributed over 200 times the threshold amount that would trigger the filing requirements. They have not filed any paperwork with the County Clerk.

A final note: Some will rightly ask, why don't I have to file any of these documents or be subject to this level of scrutiny?

The First Amendment (currently) protects individuals’ ability to advocate for or against candidates or issues. I am not an organization. I have claimed no no-profit status-I paid taxes on all the money spent here. I have not asked for, nor will I accept money from anyone. Every dime spent on this effort comes from my own pocket. As an individual, who is not running for office, I am exempt from these reporting requirements. However, I want to be as clear as I can be: I am the sole funder of this effort in my capacity as a private citizen, full-time resident, and registered voter in the city of Harbor Springs.

I am looking forward to hearing from We Love Harbor Springs about places where I may have errored. I have done my best to learn and present this information fairly. If I’ve gotten something wrong, I will own it and correct it openly.

Given the intense focus on rules and regulations generated by our zoning code discussions, I think questions about whether WLHS are following the rules, designed to protect us all, as they try to shape our little town are worth asking.

Thanks, as always, for reading. I hope, together, we can meet this moment. Receipts are attached as images below.