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:
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
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.
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?
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…