Image: Burning Man Project
BMOrg have finally released the financial information for the Burning Man Project for 2014, beating our estimate that we’d have to wait until 2016 by a whole 2 weeks. They have provided a lot of commentary and analysis to go with the IRS Form 990. They are required by law to share this form with the public now that they are a tax exempt non profit. This has always meant that we the Burners would get access to some information about the inner workings of Burning Man that we had never seen before – in particular, revenue numbers and salaries of high-level insiders.
The IRS 990 data is accompanied by an Annual Report.This is in addition to the 2014 Afterburn Report.
This combination of legally required form, commentary, and an annual report is a step in the right direction of transparency. It is certainly much more than many non-profits provide. BMOrg should be applauded and encouraged for moving in this direction, as they told us they would in 2011 and promised again in March 2014 when they revealed the mysterious Decommodification, LLC company that owned everything and was/is still private.
So how transparent is it? How accurate is the commentary? And are there any juicy details?
Here is our previous coverage of the 2013 and 2012 financials.
Some quick 2014 stats:
Population 65,992
Volunteers: 7,500
Paid Burners: 896
Registered art projects: 311
Honoraria art grant funded projects: 61
Mutant Vehicles: 652
Regionals participating in the Souk: 24
Regional Events in 2014: 65
Placed Theme Camps: 975
Walk-up volunteers: 902
Volunteer Departments: 32
Attendance has slipped, down from 69,613 in 2013 to 65,992 in 2014. There was a minor change in the interpretation of “paid participants” in the permit, if you add in the 896 people who get paid to do Burning Man and the 7,500 volunteers we’re up to a city size of 74,388. Plus cops, dogs, robots, and kids.
In the previous financial charts, shared in the Afterburn reports, we did not get Revenue information. We had to ask pros from companies like the North Shore Advisory to decifer spending patternes and other information, we had to infer that from ticket sales, a task made easier with an allegedly sold out event. So that is a positive step for transparency – one that was required by the IRS. We also did not get a detailed list of the salaries of Founders and senior executives before now.
We did get quite a detailed breakdown of expenses: 42 categories.
This has now been reduced to 19 categories.
The effect of this has been to greatly reduce transparency. How, you ask? Well, let’s look at some of the more glaring anomalies.
- We can no longer see how much gets spent on Fire Safety and Medical Services
- We can no longer see how much is spent supporting the Regionals.
- We don’t know how much was spent on The Man
- Donations to Local Schools in Nevada seems to have been totally eliminated.
- The cost of fuel is no longer tracked separately.
- Utilities, Internet, and Phone are now all lumped together, and thus less visible. This is not aligned with the “be more environmental” post we got last week.
- Food costs have greatly reduced, and the cost of sales for ice and the cafe seem to be lumped in with that too.
- There is no sign that any money spent on ice and coffee is given to charities.
- We can’t see how much gets paid to local agencies, and how much to the BLM. The Permit fees of $3.65 million were less than expected from the Chocotacogate numbers.
These are just a few examples, there are many more expenses that have also been hidden. Basically, 23 expense categories that we now can’t see because they’ve been eliminated by lumping them together with other expenses.
Some new information has been revealed, but only because it is legally required. Other information that we used to get every year, that would indicate to us that the pool of Burner money being collected by this group of companies was being well spent – that has been obscured.
We now get to see who the true big-wigs are on the payroll:
Marian Goodell $276,913
Larry Harvey $232,381
Harley Dubois $212,671
Crimson Rose $171,069
Doug Robertson (CFO) $167,267
Ray Allen (general counsel) $158,574
Charlie Dolman (runs Burning Man event) $150,673
Heather Gallagher (IT) $136,384
Heather White (Managing Director) $130,535
Stuart Mangrum $130,045
Will Roger Peterson $79,604
Michael Mikel $76,072
Total: $1,922,188
plus Board of Directors
Terry Gross (legal services) $192,153
Jennifer Raiser (annual report) $34,605
Kay Morrison (art grant) $8,500
Insider Total $2,157,446 (6.7% of revenues)
CFO Jennifer Raiser got paid $34,605 for producing the annual report. That would be quite a lot of money just for a single IRS form, but it seems all of that work was done by others – this contract is presumably for writing the report that accompanies the form. Total accounting costs to count the money and fill the form out were ten times that, $319,363.
Board member Terry Gross got paid $192,153 for legal fees, on top of Ray Allen’s salary and about a third of the $518,931 total legal expenses. He generously gave them a 20% discount to his usual super-lawyer rate.
Here is a comparison of the financial charts of the last 3 years. 2013 and 2012 Burning Man event revenues are estimates.
We can see the Medical services from the list of 5 largest contractors:
Bruno’s makes $400,000 a year in revenue from Burning Man, and is still for sale.
There is another contradiction, with the $1,415,645 bill to Spectrum Catering for Food Service listed in the tax return, and the $1,199,534 reported in the Annual Report.
Lawyers and Accountants has gone – I’m assuming that has moved to “Contractors”. The information is separated out in the 990, the 2014 total is $838,294 – back to around 2012 levels.
Costumes has gone, there is a new category “Performance Supplies” – I’m assuming that is the same.
The royalties is to Decommodification, LLC, for licensing the Burning Man trademark.
Taxes, License Fees, Interest – as a 501(c)3 non-profit, they don’t pay tax; they don’t seem to have a lot of long-term debt, so what is this for? It’s about half a million a year.
“Toilets” I’m assuming is now part of “Safety Equipment/Services” and not “Heavy Equipment Rental”
“Medical Services and Supplies” is now “Safety Equipment/Services”
Contradictions in BMOrg’s Version
Here’s what they say:
Some highlights from 2014:
- Black Rock City, our primary annual event and largest program, brought 65,992 participants together from 80 countries for 8 days of mind blowing creativity and participatory community building.
- Burning Man Arts supported the creation of more than 100 artworks on and off playa through over $1.1 million in grants and support services.
- In terms of Civic Engagement, Burners Without Borders celebrated its 123rd grassroots initiative and has 17 active chapters nationwide.
- And our Global Network of over 250 Regional Contacts hosted the 8th annual Global Leadership Conference and our first ever European Leadership Summit.
And straight away, we find a contradiction between the form and the narrative.
It was not $1.1m of grants – according to the tax return, a total of $911,955 was paid in Grants. If $200k of in kind support is there somewhere, I can’t find it.
And what about the 80 countries? A contradiction with the CEO’s Letter, which says 68 countries:
In their FAQ and tax return, they say
But their own expense chart says
So there is $172,135 gone missing somewhere. [see Update below – there are some adjustments with BRAF]
$23,227,579 was spent on programming costs related to Black Rock City. Another $7,634,810 was used to support management and general expenses of Black Rock City and our off playa programs. Funds remaining after covering the cost of producing Black Rock City stay in the community and are used to fund Burner projects and initiatives (for more detail check out our 2014 Annual Report). This includes year-round staffing and infrastructure to support the administration and management of our Black Rock City Honoraria and Global Art Grants, Burners Without Borders projects, the annual Global Leadership Conference for Regional Contacts and community leaders, and the annual leadership summit in Europe for the growing Burner community there. What do we not spend money on? Advertising and promotion (not a dime).
These numbers don’t add up either. $23,227,579 + $7,634,810 is $30,862,389. A different number again, one that appears nowhere else in their calculations or mine, or in the IRS Form 990.
The IRS Form 990 says total expenses of $30,013,511, and a “profit” of $2,350,498. My spreadsheet, and Burning Man’s, says expenses of $30,185,646, which would leave a profit of $2,178,363.
You’d be forgiven for thinking, having read this, that $25,118,300 is how much the Burning Man Project spent directly on programming in 2014. But didn’t they just say it was $23,227,579?
Looking at this another way: Burning Man the event brings in $30,679,219, and it cost $23,227,579. If that was all the Burning Man Project did (throw Burning Man), then it would make $7,451,640 profit. Having “BMOrg” there to do all the things they do year round AS WELL as the event, costs another $7,634,810. So we’re actually behind. Luckily, donations and other revenue came in.
What are they doing with the surplus? Either this means something different from how it reads, or they are spending more than half of it on lobbying politicians. For what?
$33,000 of the $911,955 grant money was spent on 4 overseas projects:
The bulk of the overseas money, $24,000, went to David Best’s Temple in Ireland.
Two grants of $15,000 were also in support of Best:
Burners Without Borders got support for 8 projects in the Phillippines. I guess money goes a long way down there, because the total grant to all the projects was $4,000.
As regular readers of this blog will know, they also have been out there saving the world through speeches and panel discussions.
35, to be exact:
Requests for speakers and panelists from the organization continued to increase across geographical lines and sectors of interest. Leaders from the organization represented Burning Man in 35 speaking engagements, introducing aspects of Burner culture to a broad cross-section of professional and public audiences. These included two TEDx talks from CEO Marian Goodell, presentations by Chief Transition Officer Harley K. Dubois at The Feast and DLD Cities, a presentation at the Long Now Foundation by Chief Philosophical Officer Larry Harvey, and a keynote by Black Rock City Event Operations Director Charlie Dolman at the Project Management Institute’s annual conference.
Burning Man culture and methodology has proven to be of great interest to diverse audiences including municipalities, nonprofits, corporations, and organizations devoted to civic engagement, the arts, volunteerism, and process management. Burning Man representatives participated in conferences and public events — teaching and sharing the Burning Man story — including the Skoll World Forum, the Whole Earth Festival, San Francisco Earth Day, the Commonwealth Club of San Francisco, San Mateo Innovation Week, and South By Southwest Interactive. Burning Man also hosted several outreach events at our offices in San Francisco, including a well-attended panel discussion on pop-up urbanism and temporary spaces
Was this a worthwhile fundraising activity?
So they used $57k of grants for this – 6.2% of the total. It cost $234,520 and brought in $10,108. No word on how many lives were transformed for that.
Other outreach activities seem to have fared better. They netted $223,501 from the Artumnal, Decompression, and 3 other events.
What of the “In Kind” contributions to art grants?
25 BRC artists without LLCs shared $372,600 of cash grants an average of $14,904 each. One community-based project got $7,500. There were no non-cash contributions to any of these, nor to the LLC grant recipients. How BMOrg managed to inflate $827,000 of art grants to $1.1 million of donations is a bit of a mystery.
The big grant recipients were:
It looks like David Best got a total of $119,000 – about 13% of the whole pie. Other perennial favorite grant recipients like Flaming Lotus Girls, Iron Monkeys, Jen Lewin and Box Shop all got the nod once more. Board Member Kay Morrison got a $8,500 Honoraria art grant.
An interesting tidbit here – BMOrg wants the IRS to know that they get the Intellectual Property transferred or licensed to them…
…at least the rights are going to the Burning Man Project and not Decommodification, LLC.
Royalties of $75,000 were paid to Decommodification, LLC for use of the Burning Man trademarks. They have reiterated their intention to donate this company to the Burning Man Project in 2018.
Black Rock City, LLC appears to be the owner of Black Rock City Properties LLC, which owns $1.2 million of real estate.
There is also Gerlach Holdings LLC, an insider company that the Org rents real estate from:
Ticket Services Expenses were $768,219. This has been lumped together in BMOrg’s accounts summary with a mysterious charge of $1.34 million in “merchant bank fees”. One reader has suggested this could be “credit card processing fees” – if so, BMOrg or Ticketfly may want to renegotiate their merchant facility, because 4.15% seems a little high.
Image: Burning Man Journal
So how much of your dollar goes to supporting artists?
You could be forgiven for thinking, if you read that, that $0.58 of your $1 went directly to supporting artists in the form of grants.
But wait a minute…
Doesn’t that mean $0.84 out of each $1 goes to support artists?
Sadly, no. This 83.69% number includes Burning Man. They sell tickets – it’s not tax deductible for us buying them. They put on the party, travel around the world doing panel discussions, pay $827,000 towards the art on the Playa, pay themselves around $11 million in salaries. After all this, at the end of the year, there’s a left over pile of about $2.5 million bucks. So about $33 of your ticket money is just going to add to that pile, while only $13.82 gets actually handed out as grants to Artists.
Grants of $911,955 on revenues of $32,364,009 is 2.8%
So yeah, when you buy a ticket to Burning Man, a lot of the money gets spent putting on Burning Man. That doesn’t make them some kind of philanthropic heroes. The way I calculate it, for every dollar we hand over to the Burning Man Project, 2.8 cents goes out again in the form of Art Grants. That seems more like 97.2% inefficiency, than 84% efficiency.
Another way to look at it, is leaving Burning Man aside, how much of the pure donations went back out to Art Grants? Leaving aside “Other” and “Other Misc” and “Other Program Revenue”, because I don’t know what those are, and just looking at Donations and money from fundraising events and merchandising, gives $1,355,710.
And how much went to non-Burning Man art, and projects spreading the mission of the Project in The Mission?
Well, we get some more contradictory numbers from the 2014 Annual Report (Arts section)
There is another contradiction here: the arts report says grants went to 80 playa artists, elsewhere in the report it says 61.
Working backwards, $911,955 in grants minus $827,000 of on Playa grants = $84,955 of grants that went to non-Playa artists. That’s 6% of $1,355,710.
Of the surplus generated from revenues less expenses, $2,350,498 according to the first page of the IRS 990 form, the grant amount is 38.8%. Much less than the 84% efficiency they are boasting about.
The $675,000 of in-kind installation and support services mentioned by Burning Man Arts don’t show up in the tax return, and this number doesn’t add up to the $1.1 million of grants claimed.
BMOrg used their resources to promote Jennifer Raiser’s book, making it an Amazon.com best seller and selling 14,000 copies, but this didn’t merit a mention in the “Conflict of Interest” section – just the $34k for putting the annual report together.
Buried in the arts report above is some really good news: they found a non-profit that will provide insurance to artists.
In summary. Is it a step in the right direction? Yes. Is it more transparency? Yes in some ways, no in others. Overall, it is less transparency. It’s harder for us to see what’s going on, and there is a big disconnect between what the numbers say and what the commentary says.
“We’re achieving our mission because Burning Man”…doesn’t work if your mission is to spread Burner values beyond the NV Burn. 2.8% of revenues goes to art grants, that’s the real bottom line here.
Is it a “clean well lighted suite of rooms”? That’s not how I would describe it. Does it reveal any skeletons? Not yet, that I can see. Just more spin from the Propaganda department. What do you think?
[Update 12/18/15 8:37am]
There is some confusion in that the Black Rock Arts Foundation was only assimilated into the larger Burning Man Project in the middle of 2014. They have filed their own IRS Form 990, but that has not been made public. We will have to wait until it comes up on Guidestar to piece together what really happened. You can read BRAF’s 2014 year in review here, but there is no financial information.
This might be able to explain the discrepancies between 61 funded Honoraria projects and 80; between $911,955 in grants and $1.1 million claimed; and $675,000 of “in kind support” that Burning Man Arts say they provided but I can’t find any evidence of in the tax return.
The anomaly of $172,135 is explained by this, at the very bottom of their FAQ. I must have missed it last night.
This means that the higher expense figure we are using in the spreadsheet here is more accurate.
It looks like BRAF made a net contribution of $176,663 and had $633,053 of expenses, including the $287,836 in grants they disbursed. How this matches up with the claims in their pie chart that they spend 75% of their funding on program services is a mystery to me, perhaps someone out there can shed some light.
Was their “total grants awarded” therefore $911,955 + $176,663? It adds to $1,088, 618, they said:
- Burning Man Arts supported the creation of more than 100 artworks on and off playa through over $1.1 million in grants and support services.
If this is how they came to the figure, then “support services” must have been $11,382 – different from the $675,000 of support services and in-kind contributions claimed in the annual report. If this is the case, then BRAF’s Civic and Global art grants of $287,836 mean the contribution to on-Playa art was actually $812,164, not $827,000.
Cost of Goods Sold looks to have been $521,794, of which $477,770 was for ice.
[Update 12/18/15 11:11am]
They are sitting on $6,068,794 in cash and equivalents.
Here’s the 2010 Afterburn Financial Chart, which is no longer available at Burning Man’s web site. 2009 is also hidden.
I have updated an earlier spreadsheet I made tracking BRAF and BMP combined, to add in the Honoraria art grants for previous years. Viewed this way, total grants have either gone down slightly from 2013 (combined $931,836) if you go by the 2014 tax return figure of $911,955; or increased 28% ($1,199,791 combining BMP and BRAF numbers as per the Burning Man Arts Annual Report). Confusing, isn’t it?
[Update 12/18/15 1:01pm]
Here’s art compared with lawyers and accountants over the past 6 years. Note this assumes that Jennifer Raiser’s fee for preparing the annual report is included under the Accounting total, and Terry Gross’s fees are included in legal (but not Ray Allen, he is payroll/contractors).
[Update 12/19/15 2:06pm]
Nomad Traveler queried into the $14.2 million in assets the Burning Man Project has, and how it could have grown nearly $7 million in a year, when “only” $2.1 million of profit was generated.
Here’s the Balance Sheet from the IRS form:
The “net worth” of Burning Man, assets minus liabilities, is $9.62 million.
The Burning Man Project ended 2014 with $14,243,495 in total assets, and $4,620,573 of liabilities.
This year, they are holding $4.2 million in intangible assets. What could this be? The trademarks are owned by Decommodification, LLC – as far as we know. This large asset wasn’t there last year, but another whopper was – investment in securities of $7.4 million.
I can’t find any narrative or explanation in the accounts or the annual report for the change in the nature of these assets. However, their cash at hand did suddenly jump up – from $198,205 at the beginning of the year to $2,080,043 at the end. It looks like a bunch of assets were cashed out, and the Project ended up with some very valuable intangible assets and millions in cash. What those assets were, is up to you to speculate, dear reader – or perhaps someone from BMOrg will be kind enough to explain in the comments.
[Update: A Balanced Perspective thinks the $7.4 million is the donation of Black Rock City LLC to BMP from the Founders; this is now accounted for as Goodwill, being the $7.4 million less the value of the Fixed Assets.]
The assets include $3.4 million of Land, Buildings and Equipment – netted down to $3 million after Depreciation. Specifically:
Of the liabilities, the $276,000 represents payments of $46,000 to each of the 6 Founders of Burning Man, for their share in Black Rock City LLC. That’s all they got for 20-30 years of work…that plus a couple of million a year in salaries, a tax deduction, royalties for Decommodification LLC, and the typical benefits that accrue to executives of a $30 million corporation like travel and expense accounts.
The biggest liability is Accounts Payable of $2.45 million. Since a company with $2 million cash in the bank and another $4 million close at hand should be able to pay its bills, I suspect most of this is to the BLM for the annual permit fees, some of which are not due until months after Burning Man.
There is a secured mortgage or note to an unrelated third party, of $1.6 million. This is also new. Bank financing related to the $3.4 million of real estate and other assets on the Burning Man Project’s balance sheet, or the related companies Gerlach Holdings LLC and Black Rock Properties LLC? Maybe someone lent them some cash and that’s why they’ve got $2 million in the bank. They also hold on to a list of expert credit repair companies, it seems a little unnecessary when there’s an average of almost $3 million a month flowing into the company.
BMOrg claim “nobody’s getting rich off Burning Man”, and perhaps it’s true that the 6 Founders themselves couldn’t figure that out over three decades. They’ve been surrounded by some of the most successful capitalists in history at the epicenter of wealth creation on the planet; perhaps they were too shy to ask one of the many Billionaire Burners paying them homage over the years for help or advice. As a businessman myself, I look at Burning Man and I see a lot of money being made. Millions in fuel, rental, insurance. $50 million a year estimated spend by Burners just in Nevada – not to mention California, New York, and the rest of the world. I see thousands of places where ads are being sold around Burning Man-related content: Facebook, Google, YouTube, Huffington Post, Business Insider, the Daily Mail, and so on.
Did the Founders miss out on the gold rush? And if so, why? Altruism? Ignorance? Dysfunction? Or perhaps they didn’t actually miss out. We can’t say, because it hasn’t played out yet. For some reason, this handover is taking many years, and it is only now, as we enter 2016, that the simple transparency of a set of accounts is being shared with Burners. Assuming that IRS compliance now, shows that there has been the same transparency for the previous 29 years is a clear sign that you have sipped too much from the Kool Aid dispenser.
We don’t know the full details of the hand-over transaction, and not only that: we don’t know why we don’t know. “Oh we want to assure that the business is in good hands and it won’t all be absorbed by the State if it goes bankrupt” is the party line…but doesn’t explain the secrecy, or the continued wait to 2018 (when this transaction is presently scheduled to happen) and more likely 2020 (when they will perhaps disclose some limited details of the transaction).
[Update 12/19/15 4:08pm]
And another thing…
Where is the Vehicle Pass revenue? Is that just part of “ticket revenue”? There should be 27,000 or more passes at $50, or $1.35 million. That is to say, much more than the entire combined art budget at Burning Man and around the world.
If this were broken out separately, it would be more useful in assessing the environmental performance of the business. Remember when vehicle passes came in? They were sold to us on the basis of BMOrg might have to pay for road repairs. Wonder what ever happened with that?
[Update 12/19/4:36pm]
There’s a shoutout to Burners who have made donations in the Annual Report. There are a few high profile names in there, including 2 Rockefellers, 2 Russells, and a Pritzker.
All these Burners’ names will now be publicly linked with Burning Man forever thanks to Google, hope they were expecting that at the time of Gifting…
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I find it quite sad to read so little is given to artists. I have become involved with BM Australia after a few Nevada burns, and after reading this blog went to their financial report (fairly transparent) and they report that 17% of expenditure is on art grants. Mind you, I don’t think anyone there gets a wage…
Bring on the regionals I say!
http://burningmanaustralia.com/images/2014/financials/REC_Town_Council_approved_Burning_Seed_Finance_Dept_AfterBurn_Report_2014.pdf
Amen.
But at some point I hope we move from the term “regionals” to “other burns,” so as not to imply that any other burn is a subset or subservient to the Borg. When any organization is rotted at the head, it cannot achieve excellence.
Long live Figment, Night Market, and Bring to Light!!
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I heard tonight at dinner that there is a salary cap on 501(c)3 of $300k. I haven’t been able to confirm that yet, maybe someone knows?
This site lets you put in the annual budget of the charity and see how it rates. It is definitely top end pay.
https://burnersxxx.files.wordpress.com/2015/12/screenshot-2015-12-24-22-08-38.png
Some commenters have said that the salaries are quite reasonable for San Francisco. I personally don’t think it’s “apples and oranges” to compare a tech startup with a 30-year old non profit, but for the sake of argument, let’s say they’re similar…again, we’re at the high end. CEOs like Larry Ellison and Marissa Mayer aren’t appropriate comparisons because they get stock options in INC’s, this was an LLC and now it’s a 501(c)3, given away for the lowest value they could attribute.
https://burnersxxx.files.wordpress.com/2015/12/screenshot-2015-12-24-22-12-23.png
If anyone else has any useful comparative data, please share.
I don’t begrudge them high salaries, there’s obviously demand for tickets in their for-profit division; but if they want me to donate to their charity, I would rather see high grants to target beneficiaries, than high wages to the administrators.
False. As I noted in another comment, an organization’s Board, in compliance with IRS regulations, must certify that the salary is “reasonable and not excessive” (https://www.councilofnonprofits.org/tools-resources/executive-compensation and https://www.guidestar.org/ViewCmsFile.aspx?ContentID=3890). The Board, to comply with the law, generally gets a management consultant to certify compliance. The consultant surveys other “similar” entities and makes a determination. Since that higher salary gets approved, then the next person (in the theory of a rising tide lifts all boats) gets a higher salary. Or, in the words of Garrison Keillor, “Welcome to Lake Wobegon, where all the women are strong, all the men are good-looking, and all the children are above average.” There is no monetary cap of $300k and the other comment had other non-profits/501(c)(3)s with salaries at well above $1M/year.
https://burnersxxx.files.wordpress.com/2015/12/screenshot-2015-12-22-16-16-45.png
Source? Do you have paid access to payscale.com, or did you find it elsewhere?
The city controller surveyed 71 San Francisco nonprofit organizations and found an average salary of $121,400 for the leaders of those organizations. – SF Gate, 2008. Those are 2008 numbers, the high range of the salaries closed in on $500,000.
Did you include location in that search? It matters greatly. Plugging in SF bumps up the median for executive director to 85K. Also, depending on what service you use, the numbers vary drastically.
That said, sure does look like BMORG executive salaries are at the high end of the scale. I don’t really care, it’s a drop in the bucket and not out of line with high profile SF gigs at all. And it’s not extravagant. I believe the people facilitating BM should be paid. I’m more interested in where the rest of the money goes, which both the Form 990 and your analysis has shed some light on.
I believe your salary numbers are way too low, but large salaries of top execs at non-profits is a pet peeve of mine. As I noted in another comment, a non-profit has no owners and the entity is run by the Board. The Board, in compliance with IRS regulations, must certify that the salary is “reasonable and not excessive” (https://www.councilofnonprofits.org/tools-resources/executive-compensation and https://www.guidestar.org/ViewCmsFile.aspx?ContentID=3890). The Board, to comply with the law, generally gets a management consultant to certify compliance. The consultant surveys other “similar” entities and makes a determination. Since that higher salary gets approved, then the next person (in the theory of a rising tide lifts all boats) gets a higher salary. Or, in the words of Garrison Keillor, “Welcome to Lake Wobegon, where all the women are strong, all the men are good-looking, and all the children are above average.”
To conclude today’s graduate level class, here are some fun links to read (and I need to finish up my work):
https://www.governor.ny.gov/news/governor-cuomo-announces-proposed-regulations-ensure-state-funded-providers-do-not-pay
http://www.thenonprofittimes.com/news-articles/judge-rejects-new-yorks-salary-contract-caps/
http://www.nytimes.com/2014/07/16/nyregion/at-newyork-presbyterian-hospital-its-ex-ceo-finds-lucrative-work-.html
http://www.nytimes.com/2011/03/16/nyregion/16about.html
http://www.nytimes.com/2010/07/27/us/27nonprofit.html
http://cityroom.blogs.nytimes.com/2011/08/03/pay-for-heads-of-nonprofit-groups-will-be-scrutinized/
Great comment at the BJ from Larry:
____________________
High marks for posting these financials online! Looking at the BM 990 with quick math below.
These salary/benefit packages for the 5 listed ‘Founders’ would place their compensation (especially the part-timers) at the highest level for non-profit employees in the entire country. Stats can be found online for comparison.
Top two salary/benefit packages = 253k average. There may be other benefits not readily available upon quick review – besides the value of the LLC below.
Of the 5 founders listed the average work week is 28.6 hours with an average salary/benefits package of 166k.
For the three founders listed (not full time) the average work week is 17.8 hours with an annual average salary/benefit of 108k.
There is also a very significant value (maybe 9 figures just guessing?) to the LLC that is owned by the founders and is described in the notes as retaining ownership to the ‘rights’ to BM i.e. the brand etc – this is most of the value of the entire operation some would argue. Therefore meaning A LOT……this was not given away at the time of establishing the non-profit but rather transferred to the LLC apparently. Defending the brand is something that apparently is taken very seriously for obvious reasons.
Also one regret I have is not telling off Larry when I ran into him in 2002. I have some Radical Self Expression to share with you Larry.
Thank you to those who have spent effort to sort through the financial quagmire designed by The BORG. They think it will be so confusing no one will bother to try or be able to see the crap. Kudos to those who love numbers and details. In the words of my grandfather, the BORG are a bunch of shysters. (In other words, full of crap.)
Also, laying here recovering from major surgery, I think the pain fest surgery I just did and hellish recovery I’m going through is preferable to burning man. Back to Judge Judy and BBC News until I have to move again.
Yes, delivery of drugs on demand has a lot going for it. But the BBC News may cause coronary hemorrhage. See if you can’t get DW News, or the Chris Hedges channel.
Decommodification
Marian Goodell $276,913
Radical Self-Expression
Larry Harvey $232,381
Radical Inclusion
Harley Dubois $212,671
Radical Self-Reliance
Crimson Rose & Will Roger $250,673
Gifting
Doug Robertson (CFO) $167,267
Civic Responsibility
Ray Allen $158,574
Communal Effort
Charlie Dolman $150,673
Participation
Heather Gallagher (IT) $136,384
“Power does not corrupt. Fear corrupts… perhaps the fear of a loss of power.”
― John Steinbeck
lol that’s great, thanks …who gets to be Leave No Trace?
…as if there would be a trace left of that person or persons.
Those salaries are not out of step with non-profits the size of BMORG. You can argue they shouldn’t be making any money, which I’d also disagree with.
Those salaries are not out of line with NPOs who do a lot more than what they do, and don’t accrue most of their revenues to private LLCs. They do for $20 million of overhead what they did for $1 million a 10 years ago.
JV, can you name an NPO, with those salaries, whose primary revenue is laundered through a private company, and the primary revenue “contributors” are not allowed to take their payments to the NPO as tax-deductible?
Much obliged, Nomad, but the financials of the BRC LLC is within the 990 of the Project. The purpose of the of the 990 of the Project including the financials of the owned companies, in the manner of the BRC LLC, dba Burning Man, being within the 990 of the Project, is to halt the hiding of cash in due of shifting the cash between corporations.
It is most humourous to view the BMOrg representatives shift the discussions from the, by estimate, $16 million dollars of cash the six took towards their pockets, within 2010, 2011, 2012, and 2013, prior of the donation of the BRC LLC to the project, and from a discussion of the payment for the Burning Man ™ trademarks within 2018, of which, the BMOrg hides from donors, towards a discussion of the reasonable salary of the six of near to $1 million of each year, at present.
I am of the need for confirmation of our belief of the comments, below, of zero net cash was upon the ledger of the BRC LLC upon the donation to the Project on January 1 of 2014, in addendum of, when the payroll of a corporation raises from $2.8 million dollars, to $7.2 million dollars, with solely thirty employees, in the manner stated within the afterburn reports of the BRC LLC of 2009, and 2010, that is of the meaning of the six owners of the corporation paid themselves $4 million dollars within 2010. Within 2014, the BMOrg hired numerous people, and they stated they had 109 full, and part time, employees, thus, the payroll number is bigger.
‘FORM 990, PART III, LINE 4C, PROGRAM SERVICE ACCOMPLISHMENTS: DESIGNATING OFFICIAL REGIONAL NETWORK CONTACTS AND EVENTS, AND CONTINUES TO EXERCISE APPROPRIATE OVERSIGHT OVER THEIR ACTIVITIES AND FURTHERANCE OF BMP’S MISSION AND EXEMPT PURPOSES THROUGH WRITTEN CONTRACTS, REGULAR REPORTING, AND ON-SITE VERIFICATION.‘ The Borg micro management of their regional
representativescontacts, including of their admins of any site utilizing their trademark of ‘Burning Man ™’ is most awesome. My belief is of this is most properly termed a representative, not a contact.Try this on for size: If you are going to MIT, you pay 60% of your tuition directly to Bose Corporation, a private company. How did that feel?
Somewhat tangentially:
http://4.bp.blogspot.com/-IlyEpvNa0fw/VnPUU24h1_I/AAAAAAAACAE/peFMj8MIs9c/s1600/media-vs-sources.jpg
nice comment over at the BJ!
You should do an updated post with any outstanding issues/concerns that remain. I’m knowledgeable, but between the updates and back and forth in the comments, this is now becoming virtually unreadable to anyone but the 6 or 7 of us. You’ve done a great analysis, but bullet points for future discussion is respectfully suggested (or whatever format you want).
anon, might you comment on my comments, below, of the goodwill, and in regards of the six of them took all net cash on the BRC LLC ledger to their pockets prior of donating the BRC LLC to the Project on January 1, 2014? My belief, in due of the numbers, is of the six of them took all profits of Burning Man over the entire history of Burning Man, while paying little of the costs of the artists, and towards others.
ABP, it might be helpful if you drafted a list of the open financial questions you see as brief numbered bullet points. Refining that list would let us focus on what we don’t know.
As for your concern about the goodwill issue, the 990 is not going to prove or disprove your belief about removal or cash/assets prior to the creation of the non-profit and public disclosures and you’re entitled to your own opinion.
On a general note, the hardest thing that people don’t understand about non-profits is that a non-profit is allowed to have a profit. The essential element of a non-profit is the ownership issue. For profit corporations, ie regular businesses, have owners, whether private (like Mom & Pop owners) or public owners (ie publicly traded companies). Non-profit companies have no owners and are run/organized for the benefit of the entity and are regulated by the federal government (through tax exemption rules) and the states (via various regulatory requirements, such as public reporting and rules about how a board should operate the non-profit). There are many non-profits that have enormous salaries (look up the NY Metropolitan Museum of Art, or NY’s Mt Sinai Hospital System, which are huge corporations that run businesses, generate profits from those businesses and pay huge salaries but are all organized as non-profits. You may or may not like this legal view, but it is what it is and a for profit and/or non-profit can run a business in the way it wants under what is called the “business judgment rule,” which essentially means that a court will not second guess decisions made by the business. Burning Man is a business with substantial revenues/expenses and it’s not turning back. If you don’t like it, and I say this from a legal perspective and not from a personal judgment (and this is similar to what I tell clients who are unhappy with an entity they disagree with), then start your own elsewhere and disclose all from the beginning.
The reality is that the folks who created Burning Man ran their entity as a for profit corporation, it is now a non-profit entity with assets flowing from the for profit to the non-profit, and unless you can show fraud, there’s nothing to see here. I’ve read the comments, and while there are good policy points and interesting issues that you raise in terms of disclosure (certainly more is always good and I agree that three should be more given the nature of the event and its history and unique circumstances), but there are no issues from a legal perspective (I make the caveat that this is my own personal opinion and nothing herein shall be considered or relied upon as legal advice, for which you should seek your own legal counsel). You’ve raised lots of good points, most of which have been discussed and answered, but there’s not more there, That’s why I suggested creating a separate post of issues that remain so that energy is focused on those points.
Lastly, I would be remiss if I didn’t say that I’m a big fan of your blog, having only recently found it, and I very much appreciate your (and the other commenters) viewpoints. Sunlight is indeed the best disinfectant, not just for financial reports but on all the other issues that you’ve addressed and highlighted over the years. It all makes for a good read and helped make my Burn. Thanks!
Thanks Anon. I haven’t really seen anyone alleging something illegal here – although as Nomad and ABP have also observed, they changed their constitution so that directors are required to uphold the Ten Principles – which is new territory in corporate law and AFAIK has never been tested in court.
They could have paid themselves multi-million dollar bonuses perfectly legally, and we would never find out due to the financial machinations over the last few years that have brought us to the current 990 numbers. And we don’t know who has been renting what to whom – if (for example) Trump Construction wants to rent equipment from Trump Excavators, that’s capitalism, not a crime.
It should be great news that they made a “profit”. It can’t be distributed to insiders, but it can be used for the organization’s ostensibly charitable purpose.
This should mean more Burner art going into cities around the world, and great opportunities for up and coming artists in our community to get their work seen. Instead, the tale that is told by these numbers is of a pittance being spent on art, a lot being spent on lawyers and accountants ($20k a month to board members AND an in-house counsel, Finance Director AND Finance Controller AND expensive external contractors), and artists with the most “Borg Points” getting contracts every year.
No disrespect to the artists, I think most of them are very talented, but there are some Burner artists who can barely make ends meet and others who own hotel chains. I would like to see an art focus, a community focus, and a Burner focus; instead this seems to be targeted at the mainstream as more of a tourism experience and pseudo-religion. That’s not illegal, but it sure is a shame – and a betrayal of the hundreds of thousands of Burners who built Black Rock City together, thinking it was our home too.
I am sure there is noting illegal going on here. I am just as sure there is something immoral going on here. At the least the Borg are waving the NPO banner to get donations under largely false pretenses. There are many other venues where that money would get more art experience to more people and have a much better chance of changing the world.
As NDT recently said on StarTalk, science and art are all that survives, and all that has a lasting influence on humanity.* I see the Borg as sabotaging what could contribute to a much better world for us all. Nothing wrong with making money; what’s wrong is to compromise art and artists in the name of financial success.
(* https://soundcloud.com/startalk/the-science-of-creativity-with-david-byrne Jump to 54:20 and listen for 60 seconds.)
well said
Again, you make good points and from a policy perspective I agree with you. I suspect there are further changes afoot (and I have no personal knowledge of this but this is guess). There are many upfront expenses to create a scaleable entity, which cost money, but once spent and created then the expenses should stabilize (unless further changes occur). If BRC were a real city, then these expenses would be in line with what’s needed to operate a real city (heck, some library, sewer and school districts waste more than this on patronage jobs/appointments alone).
You may not claim illegalities, but some of the comments below go far afield (see below for allegations of graft in credit card processing fees and interpersonal relationships on how contracts are awarded, which can be remedied by policies similar to this http://nycla.org/NYCLA%20Conflict%20Of%20Interest%20FINAL.pdf and http://nycla.org/Audit%20Committee%20Charter%20Final%204.17.2014.pdf). The same would apply for your example of Trump Construction and Trump Excavators.
As for the Board and the obligation to uphold the 10 Principles, that doesn’t seem so unusual in terms of a member’s requirements. But in a for profit corporation, that represents the new vanguard: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2144795 and http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1479572 as two quick examples of changes to come (caution-don’t operate heavy machinery while reading).
Now how about we return to the Why We Burn series, the ecological impact of United’s dumping all that chemical waste, or why NV needs to exploit a new tax to fund localities while diverting the revenue stream elsewhere 🙂
The same would apply for your example of Trump Construction and Trump Excavators.’
anon, burnersxxx stated this in due of Gerlach Holdings LLC is listed within the 990 form as an office at 660 Alabama Street, it is not owned by the Project, and it is in the business of real estate rental. I am certain the other board members reviewed, and approved, the leases in a proper manner.
The bylaws of the Project state cash gained by insiders in due of conflicts of interests must be reported towards the Project by April 30 of the next year. What is the rationale of the cash gained in due of conflict of interests, in the manner of Gerlach Holdings LLC, not stated on the 990 form, purposed towards financial transparency? In addendum, the cash gained by Spark: A Burning Man Story was not stated on the 990 form, in despite of the film on HBO, Showtime, and Netflix within 2014. The cash gained, in due of this, by Chris Weitz, whom was a Project board member within 2014, and by prior owners of the BRC LLC, was not stated on the 990 form. Perchance, what cash was gained in due of other conflicts of interests not stated on the 990 form?
From the prior SFBG newspaper – link
‘Finally, as is increasingly the case with many documentary films, the filmmakers and their subjects are essentially in a partnership. Brown and the LLC’s leaders reluctantly admitted to us that there is a financial arrangement between the two entities and that the LLC will receive revenues from the film, although they wouldn’t discuss details with us.
Chris Weitz, an executive producer on the film, is also on the board of directors of the new nonprofit, The Burning Man Project, along with his wife, Mercedes Martinez.’
You would think that the Borg would realize that people would connect the dots, and at least feign some public proactive damage control for plausible deniability.
The only explanation apparent to me is that they presume that all those that matter are the faithful, well-supplied with grape Flavor-Aid. Their NPD seems to have conflated them with potential donors. Pretty weird.
The Project did state, within the 990 form, of Decommodification LLC, whom owns the IP of Burning Man, did not gain cash in due of images of Burning Man 2014.
Other conflicts of interests not stated within the 990 form of the Project include of the costs to defend their Burning Man(tm) brand, in addendum of BMOrg saving cash for buying the Burning Man(tm) trademarks from their Decommodification LLC within 2018.
Much obliged for your comment, and for your participation in this discussion, but I must reply to your statement in regards of what I state is my own opinion, and that I am entitled to my own opinion.
No, near to everything I state is based upon their numbers, their statements, and simple maths upon their numbers and upon their statements. I provide numerous links, the words in blue to their numbers and their statements in support upon these matters. Any person is permitted to comment, in the same manner, purposed to prove that their numbers are incorrect upon these matters.
All great points and I don’t think anyone has ever questioned anything improper. is going on. The BMORG has certainly spent enough on lawyers and accountants to ensure that things are setup legally; at least twice what they have spent on supporting the arts from the looks of the financial analysis in this article, and hey seemed to have gone out of their way to construct the legal and accounting scaffolding to create relatively complex set of entities that help to obfuscate the flows of money between them.
As you have pointed out, this is very common in the business world. Some of my fellow Burners may not know that another very well known brand that is also setup as a not-for profit is the National Football League (NFL). The NFL brought in an estimated $11.2 Billion dollars in 2014 and includes some of the most wealthiest people in the country, when you consider the team owners, league commissioner and all of the marquee players with their $100 Million plus contracts. Of course there are many more lower paid players in the league as well. Fun fact, NFL players are paid on average less than the other thee major sports athletes even though the NFL makes more money than the other three.
The NFL also has a charitable arm call NFL Charities which gives out annual grants amounting to around $10M to other charitable organizations. This comes out to about .09% of total annual revenue that is given out, but it sure makes for a great narrative about a caring organization while laughing all the way to the bank.
Perhaps the BMORG has decided to model their collection of entities in a similar fashion while still getting the benefits of being seen as charitable while making a good chunk of money along the way. I think the cognitive dissidence associated with all of this comes from the perspective that as a community and a movement, that Burning Man is supposed to be different and better than the default world. The leaders of the BMORG travel the globe selling this vision to collections of wide-eyed followers all while practicing default world business practices. I like the NFL and have no problem with what they do, though I do question their need to have a not-for-profit designation in this modern age, however, they are also not putting on the false pretense of being something different or selling their better society snake oil. That is where the I think they are being improper and taking advantage of so many people that are in fact looking for a better society and way to live.
Yes, it’s like when “solar” was going to save the planet 30 years ago. In fact, solar could have solved our global warming problem. But too many people sold the hype and not the substance, and that’s what I see the Borg doing. What they promise is not what they deliver, and it is essential for honest people not to stay silent when this happens because it displaces some – perhaps too much – of what should be done.
They key is to see it for what it is and move on to other burn events, like Figment, Transformus, Night Market, and Bring to Light, to explore and encourage the creativity. And hope that the philanthropists out there see that, too.
Like so much that can be seen in these blogs, this is mis-leading. The NFL League in not tax-exempt, never has been. So the billions allude to being untaxed were in fact taxed. I believe the non-profit that was the Office ended that status in 2015.
“like so much that can be seen on these blogs”…you mean, like so much truth, and evidence, and examples? Do you have some of these yourself?
Seems to me that Burners interested in the truth are more likely to find it in the comments here (let alone the posts), than the official announcements in the BJ
Sigh, Hot Dogs and Pigskin is obviously a BMOorg apologist, cult follower and only interested in deflection. The NFL league office has always been a non profit and yes, it finally changed its questionable status this year. However, I never said that all $11B in 2014 revenue was not taxed, since the individual teams and people all are taxed, but the approximate $330M+ in annual revenue that is received by the league office has not been taxed until this year; and that doesn’t change my point that it might be a similar model. BTW, this is the same office that runs the NFL Charities and gives away $10M per year, which when you run the math, the donation percentage is …wait for it….around 3%, about the same as the BMOrg donates to art grants.
This is not about being a not-for-profit organization, so please stop attacking the comment as way to deflect from the subject at hand. It is only misleading if you try and spin it to be. It is about lack of transparency and authenticity. If the Burning Man Org wants to preach about creating a better society and being better than the default world, then they should fucking act like a better member of society and stop hiding behind complex financial constructs and taking advantage of default world tactics; or drop the charade and just admit to being an organization which makes a lot of money throwing a great over-the-top, carbon-emitting week long party in the desert.
Oh Bob C, labeling folks whom you know nothing about is what you are about…? I was just debating your intentional desire to have folks somehow connect what the NFL does to the BM org. While you didn’t come out and say that the billions weren’t taxed, your context stating “The NFL brought in an estimated $11.2 Billion dollars in 2014” and “well known brand that is also setup as a not-for profit is the National Football League (NFL).” can certainly be said to be misleading, purposely so. Anyone looking to do the reader justice would have told them that the NFL is not a not-for-profit, and that they almost 12 billion was taxed. Mine was not a deflection, it was simply stating what this site often does. Leave a bunch on half truths up and let the reader make their own judgement. Those half-truths being the organizers hide millions floating to them. I care not for what the BM org does as a non-profit, there are certainly better ones to donate to. But I don’t care to see the ‘true until proven false’ statements that are made here. Everyone knows, once you plant a bad idea it’s terribly hard to get rid of.
The organizers are hiding things (true). We don’t know what happened with all the money (true). There are millions of dollars involved (true). The owners created a new private company that owns the IP and licensed it back (true). The details of this transaction are secret (true). Transparency has decreased (true).
So what are the half truths again? The NFL makes money? WTF does that have to do with Burning Man, besides a chief named Goodell?
Much obliged for your comment, anon, and awesome discussion. My belief is firm in regards of my comments, below, but it needs an accountant, or, perchance, a different manner, to confirm there was near to zero net cash upon the ledger of the BRC LLC at the donation of the BRC LLC to the Project.
‘The reality is that the folks who created Burning Man ran their entity as a for profit corporation, it is now a non-profit entity with assets flowing from the for profit to the non-profit, …‘ The difficulties are in regards of Burners created Burning Man, and Larry stated, for numerous years, of that Black Rock City, to be a real city, needed a government, a central meeting place, and a newspaper, and they stepped forward to be the tasked government. Within 2011, Larry stated it was time for the business owners to step out of the shadows, and of they had a new operating agreement, but solely their prior operating agreement of 2002, of the six of them would gain solely $20,000 each, remained upon their website for years.
I am in agreement in regards of nothing is illegal, I have never stated otherwise, it was within the laws of a for profit corporation to lie to people purposed towards gaining what they might desire within negotiations, and, at present, they, and their representatives, are not permitted to lie upon these matters in due of the Project being a 501(c)3 public benefit corporation, they solely refuse to answer the queries, and hide as much as they might in these regards. The difficulties are in regards of how might they obtain donors and volunteers, when numerous people are of the belief of they have been taken advantage of, and the prior owners of the BRC LLC remain in near to total control, and the Burner community does not have proper representation within the Project upon the decisions of importance to the Burner community.
Yes. A maintained ongoing list of open financial questions would be a great idea!
Thanks for the comprehensive analysis. Annual financial statements for any corporation are typically crafted by their board to tell the story they want to tell, so the numbers cannot always be taken as face value to derive meaning. One has to usually read between the lines to get at the real story behind them but I don’t think anything nefarious is going on.
My personal take away from all of this is what I have been saying for years, that Burning Man is really nothing more than a huge, self indulgent party in the desert. The community is lead to believe that its about supporting and encouraging the art, but in reality that support is pitifil, less than 3% from what these numbers say, but enough to support the narative without being a false representation of its goals. In other words, it keeps the dream alive whIle actually putting the bulk of the costs on the artists and volunteers to provide it themselves; truly a kool-aid drinking situation going on with the cult followers that that maintain their heads in the playa sand.
My only open question is how they can continue to operate as a non profit if they are not giving away at least 5% annually. Other non profits that supposedly support fire and police associations or representing victims of catastrophes are routinely found to be scams because they don’t give the required 5% to the people they are supposed to be collecting for and report such lare administrative costs. Personally, I don’t give to any organizations that have such pathetic records of giving and after reading these numbers I am rethinking my level of involvement with this organization. I wish they would just be honest about their intentions and stop trying to pretend to be more than they are; that seems like it should be counter to the Burner ethos but then again most of the people dancing around those art cars are doing just that too.
Non-profit is not the same as charity. Not all non-profits have a mission to give away goods and money to people. And those that do give away money don’t necessarily give it away to those “in need”. Medical non-profits for various diseases give away money to well paid scientists who research cures, they don’t cover hospital bills for victims of the disease.
Burning Man’s non-profit kin are arts organizations like symphony orchestras or theater companies. The difference with an orchestra is that it usually spends a lot of money on the salaries of the musicians, while Burning Man has figured out how to get people to do it for free. But nobody expects a non-profit orchestra to give lots of money away.
There are arts organizations that exist to give grants to artists.Black Rock Arts Foundation seemed to have been one of those (although their performance as a non-profit of the giving money away type was terrible). And the current BMORG absolutely should be giving more money to artists then they are, But it’s not the kind of non-profit where failing to give money away is indicative of a scam.
While having a stable of salaried musicians is a good model for a symphony, it would be awful for Burning Man. BMORG should follow the giving money away as grants model to bring in new artists and not get stuck in a rut, rather than having staff artists.
What we have now is the worst of both worlds. A large amount of art grants go to people like David Best and Peter Hudson, who get grants year after year after year, and bring out (impressive and beautiful) variations on the same theme every year. Burning Man effectively has staff artists already, but they’re paid in grants rather than salaries. Salaried staff artists would probably expect benefits like medical and retirement.
I think it is even a worse situation; more like a modern day plantation system where the majority of the art and labor are provided by the artists and volunteers who pay for the privilege of being part of the event and the BMORG profit from their work while contractually limiting the artists to making anything from it themselves.
Again, it just all seems so orthogonal to the Burner ethos preached to the cult followers.
It is a “modern day plantation”, that’s a great way to look at it. Meanwhile Larry tells everyone it’s “a new model for democracy”
Not quite there yet, but plantation is a much better analogy. The Borg duplicity is what bothers me to no end, which only seems to be explained by corporate NPD.
Perhaps not quite there yet, but it was only meant to be a metaphor for the profiting off the labor freely provided by others; specifically through the use of draconian copyright terms on the back of the event ticket and those one-sided contracts that artists have to sign in exchange for their grants.
I certainly don’t mean to imply that there is any real comparison to the inhumanity of slavery; but it is quite the successful business model where people literally line up to pay for the privilege to be taken advantage of. It’s a license to print money, so good for them; indeed the envy of anyone in the default world.
To quote Lincoln, “You work and toil and earn bread, and I’ll eat it.”
All great points. However, when one gives money to a non-profit symphony orchestra organization one expects to see the musicians and a performance that are funded by said gift. This situation seems more akin to an organization providing a recording of someone else’s symphony while having used the money to purchase the rights to play it under their name and pass it off as their own orchestra.
“[Update 12/18/15 11:11am] They are sitting on $6,068,794 in cash and equivalents.”
Sorry if I missed it, but can anyone explain the $12.2 million of year-end-assets of BRC LLC? (Schedule R, Part III) Is that $12 million included in the BMP $6 million (i.e., with $6.2 million of liabilities offset), or does the BRC LLC eoy assets not accrue to the BMP?
The BRC LLC, that is the Burning Man festival, is a for profit corporation owned by the non profit 501(c)3 Burning Man Project, thus the profits, of cash, of the BRC LLC go to the Project. My belief is in due of the Project owning the BRC LLC corporation, in addendum of owning the Black Rock City Properties LLC, the numbers of these subsidiary corporations are included within the numbers of the Project upon the 990 form of the Project.
But, for example, could not BRC LLC count the efforts of burners and regionals as say $2 million in donation to the event program, passed on as proceeds to the BMP, while having $2 million in tkt revenues go to cash expenses for purposes undisclosed, because BRC LLC is a NV LLC with private IRS filings.
And I still want to know what constitutes the $12 million in EOY assets listed on the 990 and how that is or is not reflected in the 990 final numbers.
give them the $2millions salary and they give us back Burning Man, good deal ?
I liked it better 10 years ago… when all the overhead was less than $1 million. If they want to cash in, that’s fine, but don’t lie to us about it. They lie to keep us from wanting our piece of the action, wanting us to think that $20 million in overhead is all justified, and that we should continue putting on the show at our expense while they laugh all the way to the bank.
Take all they have “added” in the last 10 years and ask if that justifies double the ticket prices. I would go again if the price was half and the event was like it was 10 years ago, and participants were all Equal, and the organization showed Gratitude for those who come at their expense to make the event. And be up front about where the money goes.
I prefer the events where the ticket price is to cover the hard costs and that most all the organizational effort is volunteer. Best are those who are doing what the Borg is pretending to do – getting donations to sponsor the costs – but where admission is free – like Figment (https://vid.me/ROW7), Night Market (https://vid.me/b3tJ), and Bring to Light (https://vid.me/Wgdd).
If Burning Man were a band, it would have eclipsed its independent “making great albums” period, and would be well past selling out with several caloric pop albums. It would be loudly plotting buying one more house in Paris, and giggling about the $500 ticket price for the “suck it and see” tour.
well said!
At present, the BMOrg is querying Nevada in regards of what entertainment they might delete, or, they might request of donors to provide, purposed to avoid the 9 per cent entertainment levy. Larry stated, within the Turning Man theme of 2016, of he desires of enlightened patrons to fund the art, in the place of funding the art from their $30.5 million of ticket sales. In addendum of Larry desires a conversation upon the money, in the manner he stated at their Eselon retreat within November, in despite of he hides the millions of dollars of cash he, and his BMOrg mates, are within contract to pocket within 2018 in payment for the Burning Man ™ trademarks. Perchance, this might be a win for them, they might not have to pay the 9 per cent levy in addendum of not paying for any costs of which Nevada might be of the belief to be entertainment.
I wonder why the CCamps, at least those who fly in their campers, don’t have to pay the entertainment tax on the fees they charge to attend.
A key thing they seem to be missing is they are treating it as a “live entertainment tax” and arguing that they don’t provide live entertainment and therefore it shouldn’t apply; while from the point of view of Nevada politics, this has always been known as “the burning man tax”.
Yes, the Borg negotiating with NV as to what is and is not allowed to avoid the live entertainment tax. I am sure they will do that with the burners first in their mind.
…Then we will see the State Police wandering BRC to write citations for illegal live entertainment. Or maybe the Borg will just empower the Rangers to throw them out. “Goddamn live entertainers! Put down the torch, I don’t want to have to use this gun.”
But I am sure Marion will get her donation to support having a live band at her camp as she suggested.
You gotta love it to see the Borg face off against people they don’t control. They are really out of their element. Reality is a bitch when you have NPD, or are an NPD follower.
I predict their first reaction is to throw the burners under the bus to protect their narcissistic supplies from the CCamp celebs. Let’s watch…
I appreciate the honest(ish) analysis. I guess I was right about nobody getting rich off of Burning Man all along. I assume the apology will be in the next post.
It’s still impossible to say, given how many details of material transactions have been kept secret. We may find out in 2020. Most likely, as ABP suggests, we will never find out – because all the deals were done *before* this new era of transparency and regulatory compliance.
You never disappoint..
Remember, it wasn’t me that came up with this mysterious, complicated, and drawn out structure. SOMETHING was worth them spending $7.5 million on… and whatever that is, they have gone to pretty great lengths to keep it hidden, while crowing “look how transparent we are now” for sharing information they’re required to.
No, it’s clearly your fault, Burnersxxx. The mysterious, complicated, and drawn out structure is a fiction of your making. I hear complaints on FB have dropped off. Even that jerk/troll Nomad Traveler seems to have disappeared from the BM groups. The complaints start and end here.
For all we know, you faked all these forms, and the real IRS forms hide nothing. After all, who would come up with all these convoluted LLCs? You have been silent for over a week. Must have taken all that time to come up with all this. Good hack of a “public benefit corporation.” 😆
So let me get this straight: “nobody is getting rich” because it’s not in the obsidian 990? I am afraid that it only shows they did their job to avoid all transparency, and it worked on the faithful as intended. 😉
I don’t know what kind of world you live in, but the world I live in is of struggling artists making 550 euros a month, and 200,000 dollars is definitely getting fucking rich.
Totally agree. As well as the struggling artists, of which there are many in the Burner community, I also know several successful artists who are selling paintings for five figures = they still aren’t making $200k/yr.
MMMM.. an income in excess of 200K? I for one would consider that getting rich.
I guess it is all relative. Seems I have heard that the median income in the USA is around 30K.
It’s about double that…doesn’t change your point, though.
http://www.advisorperspectives.com/dshort/updates/Median-Household-Income-Update
Two people at $30K = $60K? How many of the BMP BoD are co-habitating as a household? Just the married ones?
I wonder if this seemingly wandering prose is to do some name-dropping to scare off the IRS auditors: “Are you ready to take on all the heavyweights on the BoD and our lawyers?”
https://burnersxxx.files.wordpress.com/2015/12/screenshot-2015-12-17-22-07-43.png?w=1202&h=680
Of course that also puts all them on the hook, until they claim they did not understand what was represented in the form. In fact… that might be the reason for not being transparent: “Plausible confusion,” doing Charles Babbage one better.
It sounds like it wasn’t that easy for them to make sense of it all either!
Notice that the 990 was sent to each member of the BoD for “review and comment,” which is NOT the same as “approved by each member oft he BoD.” Pretty loose if not sleazy prose.
If this is their excuse for the “delay” in filing, it is not. All that could be done in a month – no external force major is apparent – all of that was under their control. If anything they should have said, “To obfuscate the actual expenditures, it took several people to muddle with the numbers until everything possible was hidden while still passing muster with the lawyers and accountants. This took several recursions to satisfy all parties involved.”
I dont know NV law, but I believe this is required (at least under NY law under the NY Non Profit Revitalization Act) as part of the post Enron and post Dodd-Frank disclosure that have migrated to the non profit world. It wont scare the IRS but is designed to involve the Board members and the finance folks.
In NV you are not legally required to identify who owns a corporation. (Hey, nothing going on here you need to know!) http://www.bizfilings.com/nevada/incorporation.aspx …and… http://www.myllc.com/which-state-to-form-llc.aspx
Hell, you don’t even have to have ANYONE in the LLC legally in the state!
The IRS budget is being slashed. They don’t have time to go after any complicated targets like the picture the Borg’s 990 is trying to paint.
The *BIG* tipoff is that the event tickets are not tax-deductible. Any reputable non-profit would allow this to pass the benefit on to the ticked buyers. It does not happen with the BRC LLC tix you buy so that profit can be legally taken before the proceeds go to BMP. As I have pointed out before, 60% of the Bose Corporation stock is irrevocably owned by a non-profit, yet none of your payment for Bose speakers is tax-deductible. If this bothers you, double-up on the grape Flavor-Aid.
Note that the 990 shows BRC LLC and BRC Holdings are >*NEVADA*< companies, with addresses in CA. Fun! 🙂
It’s still part of the tax filing process, which is federal law and not NV law, to show involvement of the board and that each person/entity reviewed the tax document. There may be much to quibble with, but this part ain’t it. It’s just to show the entity complied with the law. Trust me–no one who is knowledgeable in this area is intimidated by listing the various entities. It just gets a quick read as boilerplate.
Thanks for the write up, which I appreciated. I thought it was a fairly standard 990 disclosure. Methinks that some of the changes in categories and lumping together of areas, as well as the differing numbers, isn’t obfuscation but the harsh reality of square pegs in the round holes of the IRS form, which requires certain things done in a certain way. Tax law and accounting (both not my areas of practice) seems like a science but it works to be more of an art as you characterize things in a particular way to meet the IRS Code requirements, which doesn’t necessarily jive with what you actually did or comply with common sense, but that’s the IRS Code. Given the level of disclosure, ask for more details if you want them but this, to me, doesn’t seem like any effort to hide (at least intentionally) information, especially when they knew it would be reviewed with a fine tooth comb. They could have just made the 990 Form available and not provide helpful (and reasonably accurate) commentary.
you questioned merchant bank fees. These are likely credit card processing fees for online ticket purchases. Google would’ve helped you there and the amount works out to be about 3%, which is perhaps a little higher than 2-2.5% but not bad overall depending on the mix of credit cards used (Amex has higher rates, as do any other cards with points, cashback, etc.). If we all mailed cash for our tickets we’d save $1M for artists. Now you know why small local merchants don’t like credit cards–the fees really add up and result in higher prices.
You may well be right that the “merchant bank fees” are actually “merchant facility fees” for credit card processing on the $31 million. However that does not explain why ticketing costs have quadrupled. Perhaps these charges were treated as “cost of sales” in previous accounts.
It actually works out to 4.1%, which is pretty high for credit card processing.
As for what’s been hidden, see ABP’s comment here. Transactions and distributions of the LLC over the years leading up to the transition are not transparent. We’re also not sure why the big leap in liabilities, equipment rental, and payroll/contractor related expenses.
Again, round pegs into square holes. 3% or 4.1% is not a material difference and may reflect the difference in higher charge card rates (as I noted above, Amex charges more, as do credit cards with reward programs). Why the underlying ticket cost quadrupled is an entirely different issue. In a year, you’ll get the BRAF 990 and more questions will be asked and answered.
Do they take Amex? I remember hearing this was a problem for some Burners. I didn’t get through in the last two years, so I wouldn’t know. The BRAF 990 was due by November 15 at the latest, so hopefully we won’t have to wait another year for it.
You’re right-they didn’t take Amex (I wanted the points!) and I was just using that as an example.
But Anon is right. The processor commission varies from card to card AND payment processor to payment processor. (I have a good friend who works for Heartland.) This also means that the payment processor is another opportunity for kick-back graft. They may have changed processors where their costs per ticket went up, to someone else’s benefit. …Do any of the BMP/BRC BoD have interests in payment processors? Can you connect the dots?
And if the BRAF 990 was due by 11-15-15, without any opportunity for the usual extension request, then email BRAF for their 990 and they’d be obligates to send you a copy (yeah, it’s really that easy. I doubt guidestar.org would get it that quickly.
“…answered,” to use the term loosely.
Some good points; however, if their intent was to be transparent, they could be clearer in their details, outside of the IRS round holes. Blaming the IRS forms is not an appropriate reason not to be clear. One could easily set up the expenses detail, like they did 10 years ago, and then just have a column for each line on the IRS form each value accrued to.
The Borg know the chronic financial questions being posed. If they wanted us to know, they could do it. Imagine the *shock* if they answered all those questions instead of side-stepping them. That would be very powerful, so we can only presume the curtain is there for a reason.
http://www.themightyginge.com/blog/wp-content/uploads/2011/01/behind-the-curtain.gif
They could have released the BRAF Form 990, that certainly would help decipher the whole thing.
The Borg continue their practice of social irresponsibility. At least they are not trading hedge funds, I hope.
Kudos to the BMOrg for finally publishing their 2014 990 form, and, kudos for an awesome post, burnersxxx.
In regards of their cashout, from 2010 to 2018, there is much information upon the balance sheet upon page 11 of the 990 form. In the manner priorly estimated, by appearance, they took all the cash the BRC LLC gained over the entire history of Burning Man towards their pockets prior of their donation of the BRC LLC to the Project. My belief is the $7,390,000 upon line 12 of the balance sheet is the donation of the BRC LLC to the Project, and the donation was of the $3,431,638 of land, buildings, and equipment upon line 10a, in addendum of the $4,231,063 of intangible assets upon line 14, minus the $276,000 of loans from them upon line 22, $46,000 of each of them.
In regards of the payment, within 2018, for the Burning Man trademarks, and other IP owned by their Decommodification LLC, might the $1,625,000 of the liabilities of secured mortages and notes payable to unrelated third parties upon line 23 be the contribution, within 2014, in due of the payments for the trademarks? I do not know the rational of why it is towards an unrelated third party, in the place towards a related third party. This is of the meaning of the five years of 2014 to 2018, their contract states the payments for the trademarks is $8,125,000.
In addendum, in the manner priorly estimated, they are making the reasonable salaries, for each year of 2014 to 2018, of $900,000.
Of each year of 2010 to 2013, $4 million was estimated paid towards them each year, from their prior afterburn reports. This is consistent in regards of no cash, and solely $3,431,638 of assets, was upon the balance sheet of the BRC LLC upon the donation of the BRC LLC to the Project.
Given the amount of cash sitting in the bank compared to last year, I suspect this liability is money owing to the BLM for the permit fees. Note that even if the transaction to transfer the IP from Decommodification LLC to BMP does take place as scheduled in 2018, the payment might not – it could be deferred annual payments for a century, for all we know.
You are correct in regards of much of the 2014 BLM permit fees were not due towards the BLM prior of January of 2015. The BMOrg is hiding the amount of cash they are to be paid for the Burning Man ™ trademarks, and other IP, within 2018.
I was of the desire of the Project board might require of the BMOrg to halt hiding this number in due of how in bloody hell might a non profit gain donations of cash, stock, art, and labour when millions of dollars of cash to be directed towards the pockets of Larry, Marian, and their mates, within 2018 is hidden from donors?
Keep in mind that BRC LLC, as a private for-profit company, disbursements can be hidden before they get to the BMP. If all the BRC LLC revenues go directly to BMP, why not have ticket payments go directly to the non-profit BMP and let the burners deduct the tix as donations to a NPO?
I suspect that something funny is going on with the BMP revenues construed to be the ticket revenues from BRC LLC. I speculate that some of those “revenues” are counting other “income,” like “donations” from others, if not even what the burners or regionals bring to the event. This then lets BRC LLC make undisclosed payouts from the ticket revenues, hidden and offset by this other phantom income.
If what I suspect is not the case, what is the rationale for ticket payments going to BRC LLC and not the BMP?
‘This year, they are holding $4.2 million in intangible assets. What could this be? The trademarks are owned by Decommodification, LLC – as far as we know. This large asset wasn’t there last year, but another whopper was – investment in securities of $7.4 million.’
The investment in securities was the donation of the BRC LLC to the Project, of which, it was valued at $7,390,000, and the intangible asset of $4,231,063 is
Definition of ‘Goodwill’
An intangible asset that arises as a result of the acquisition of one company by another for a premium value. The value of a company’s brand name, solid customer base, good customer relations, good employee relations and any patents or proprietary technology represent goodwill. Goodwill is considered an intangible asset because it is not a physical asset like buildings or equipment. The goodwill account can be found in the assets portion of a company’s balance sheet. The value of goodwill typically arises in an acquisition when one company is purchased by another company. The amount the acquiring company pays for the target company over the target’s book value usually accounts for the value of the target’s goodwill.
This is of the meaning of the value of all that BRC LLC owned was solely $3,158,937 when the BRC LLC was donated to the Project, $7,390,000 minus $4,231,063. In due of $3,431,638 of land, buildings, and equipment was upon their 2014 990 form, this is of the meaning of near to zero dollars of cash was upon the ledger of the BRC LLC when it was donated to the Project. This is of the meaning of the six of them took all the cash the BRC LLC gained over the entire history of Burning Man towards their pockets prior of their donation of the BRC LLC to the Project. They got rich.
This makes sense – maybe it should have been properly accounted for as goodwill from the beginning?
It is most confusing. In addendum, it explains the rationale of the BMOrg renting near to all equipment, in the place of buying the equipment, they desired the cash for their cashout.
If this is what happened, where did the $6 million cash come from? Perhaps this is the accumulated wealth of the Burning Man Project over the years.
Might the BMorg pay the $2,448,797 of accounts payable, and the $270,776 of other liabilities, near to $3.4 million of cash is upon the ledger at the end of 2014. Our belief is of the other cash of near to $3.4 million is in due of the the $198,205 of cash upon the ledger of the Project at the beginning of 2014, in addendum of the cash gained in regards of A. In 2014 the Burning Man Project brought in $32,364,009 and spent $30,013,511. The difference between the two is $2,350,498, including of the $1,093,008 of donations. The other cash of near to $1.0 million, perchance, might be a loan or a mortgage within 2014.
Our belief is firm in regards of the $7,390,000 of the donation of the BRC LLC to the Project, at the end of 2013, is in due of $4,231,063 of goodwill, and solely $3,158,937 of the value of the assets of the BRC LLC, and near to zero dollars of cash. My prior estimate, in due of the payroll of the BRC LLC raising from $2,858,000 within 2009, to $7,283,00 within 2010, with solely 30 employees to move to their Market Street headquarters within January of 2011 – link, of near to $4 million of each year of 2010, 2011, 2012, and 2013, for a total of near to $16 million, remains most valid. They got rich.
In addendum of near to $1 million of reasonable salaries of each year of 2014, 2015, 2016, 2017, and 2018, for a total of $5 million, and the payments for the Burning Man ™ trademarks within 2018, of which, they refuse to state to donors the amount of cash they are within contract for the Burning Man ™ trademarks,
Within April of 2011, Larry Harvey stated
‘In about three years, depending on how the new nonprofit forms up, the LLC will turn over management of Burning Man, while holding onto control of the logos and trademarks for another three years after that, Harvey said. And that’s when the six board members will officially cash out.
And, they did a bait and switch, in the place of turning over management of Burning Man to the awesome Burner community, they remained in near to total control, and they do not desire to pay more than 2.8 per cent of the ticket sales to the awesome artists, and they desired to utilize the difficulties in regards of gaining tickets to replace the Burner community, in the place of building the Burner community.
A better manner of stating it might be in regards of near to zero net cash was on the ledger of the BRC LLC of when the BRC LLC was donated towards the Project. The BRC LLC might have had a tad of cash on the ledger purposed to pay bills due within Accounts Payable, in the manner of salaries and payroll levies, but, might the bills been paid within 2013 prior of the donation of the BRC LLC to the Project, zero cash would have been upon the ledger at the donation.
The near to $1 million dollars of loans, perchance, might have been in due of, within January of 2014, the BRC LLC, and the Project, were of the need to pay salaries prior of the ticket sales within February of 2014.
This is what is stated in due of the assets upon the ledger at the donation, by appearance, were more than the $7,390,000, minus the goodwill.
I am sure that the “goodwill” asset valuation is supposed to be based on fair-market/arms-length transaction. But in this case, BRC BoD gifting to essentially same BMP BoD, that’s not the case.
Suppose my $8K FMV used car is of particular value since the CEO of my company (me) is most safe and efficient driving it, and people recognize it as my car with a sense of confidence and trust. So, I donate my car to my company with a $28K valuation, acquiring $20K of intangible goodwill in the donation. So my company picks up $20K in assets for my car, that I still get to drive.
Sounds a bit like Enron, but I’ll have to check with my accountant on that. Might need to convert to a 501(c)3, but the Borg school of accounting could be interesting.
At least one of the following is true:
1. You did not read the 990 very carefully at all.
2. You ask intentionally misleading questions that you actually know the answers to.
3. You are dumb.
Any chance you can cite some specific examples to support your claims? Seems there should be many, and worth posting as comments if it’s worth your time to read and comment here (presuming you actually did read the post). That is called intelligent discourse, and, unlike the Borg, Burnersxx and ABP have posted corrections to their stories when necessary. Absent examples, you are only offering literally unfounded claims.
Please feel free not to reply, or obfuscate if you don’t have any examples.
(Since you are not too bright, let me give you a little tip: If you are going to troll, stick to your ad hominem attacks like “You are dumb.” Other popular ones are: “He is just offering click-bait,” “He has an [unspecified] axe to grind,” and “He does not tie his shoes.” Those cannot be readily challenged, totally redirects the argument away from the Borg, and will resonate as well with the Borg faithful. When you make factual challenges, you will have to support them or else those who are not already in the ranks of the Borg followers will see shills like you as adding to the irresponsible side of the scales. It’s also less work for you since ad hominem attacks don’t have to be supported. 🙂 )
I was a little frustrated about the close of the LOI process for art grants for next year already.
Now I see what a pittance they give art anyway, not a surprise.
Come on burning man. Use that $2 million extra to help bring more epic art to the playa and beyond!