Have you ever wondered how much money Burning Man makes and how it gets spent? Or what the Burning Man Project is doing beyond Black Rock City? Well, you’re not alone … these are some of the most common questions we hear, and today we have answers for you.
We’ve published a slew of documents this morning that give a detailed picture of what Burning Man was up to in 2014, which was quite a lot. 2014 marked the completion of the transition to the nonprofit Burning Man Project, and the full integration of Black Rock City as the nonprofit’s largest program.
So … “What did we do?” “How well did we do it?” “How much did it cost?”
Well, we’re glad you asked, because it’s all here.
There are two major pieces, and they’re both a bit complex. Frankly, it’s the kind of paperwork and niggling details you might think Burning Man never has to deal with. Here’s the thing, though. We’re not just a scrappy event in the desert anymore. Over the last 20 years, we’ve become a highly professional organization that’s now one of the largest arts and culture nonprofits in the country. And if you bear with us, in here you’ll find out exactly what Burning Man’s operational and financial situation is — kind of exciting, right?
2014 Annual Report
Our Annual Report is the big-picture story of what Burning Man is doing these days. It showcases our accomplishments and areas of focus, with different sections on the six programs of the nonprofit: Black Rock City, Burning Man Arts, Civic Engagement, Education, the Global Network, and the Philosophical Center. We’re now able to provide a more complete picture of what Burning Man Project is doing and how we’re bringing Burning Man culture to the world.
Some highlights from 2014:
- Black Rock City, our primary annual event and largest program, brought 65,992 participants together from 68 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.
For the full story, read the Annual Report.
2014 Form 990
The IRS Form 990 is all about the money and accountability. It’s a standard IRS document (technically our organization’s tax return – sexy, we know) that provides the public with key financial and programming information. You’ll recall we released the 2013 Form 990 nearly a year ago. What makes this 990 particularly interesting is that 2014 was the first year the event in Black Rock City was fully integrated as a program of the nonprofit, so now the event’s revenue and operating budget are all there for you to see.
Burning Man’s 2014 Form 990 also provides details about our grants, including Black Rock City Honoraria and Global Arts Grants, and salary and compensation for certain employees. This is the first time some of this information has been made publicly available, and frankly we’re happy to have it out in the open. To help make some of this information more clear we have provided a dynamic visualization of all of Burning Man Project’s expenses in 2014.
Together, these documents reveal Burning Man Project’s operations in 2014 and help complete the multi-year story of our transition from private ownership to nonprofit. The Burning Man event in Black Rock City is now officially our largest nonprofit program, both financially and operationally. This transition was no small logistical feat — it took a lot to get us to this point, and we’re excited to explore where we can go from here.
A standard way to measure the quality of a nonprofit’s work is the ratio of its administration costs versus spending on actual programs. In 2014, 83.69% of Burning Man’s expenses went to programming or “program services,” meaning directly to having a positive social and cultural impact and thereby fulfilling our mission. According to Charity Navigator, the nation’s largest and most utilized evaluator of charities, “The most efficient charities spend 75% or more of their budget on their programs and services and less than 25% on fundraising and administrative fees.” Reaching 83.69% in just the fourth year since the 501(c)3 was created is an accomplishment we’re proud of.
Another key trait of a healthy nonprofit is transparency, which is what, well, this is. We’re committed to providing insightful information about the organization and we’re pleased that our approach to financial reporting was called “uniquely transparent and inspiring” by a philanthropy executive who’s using our 2013 990 for a course she teaches at UCLA.
There’s one other trend worth highlighting here. You’ll notice the amount of money raised from donations continues to increase, from $539,959 in 2012 to $731,655 in 2013 to $1,093,008 in 2014. We’re encouraged by this trend. Our growth so far is allowing us to build a solid foundation for a major nonprofit with a global reach. We’re investing in staff and training to develop the right skills to accomplish our mission, and we’re reorganizing to be more efficient and effective. At the same time, we’re glad to be able to dedicate more attention to grants and programming, integrating programs like Burners Without Borders, and increasing the funding and support we’re able to offer to Burners doing the work out there. We’re excited to be in a position to do both of those things at once.
This doesn’t mean we’re moving on from the event. On the contrary, we’re committed to ensuring that Black Rock City runs safely and smoothly, while building up our year-round efforts to support Burning Man culture in the larger world. Our goal is to continue growing our fundraising capacity in order to support more projects around the world that are proposed and led by Burners. As the nexus of a growing global movement, Burning Man Project aims to provide a platform and resources for people to bring Burning Man culture to life.
We’ve enjoyed putting this all together for you and look forward to providing this information every year. Below are answers to some of the bigger questions you might have. Feel free to ask others in the comments below — we’d love to hear from you.
2014 Annual Report and Form 990 Questions & Answers
Q. So what does the 2014 Form 990 say about the nonprofit Burning Man Project?
A. There’s a ton of info in the 990. Compared to the 2013 Form 990, it’s easy to see the financial structure of the organization has changed dramatically. You’ll note a significant increase in our “program service revenue” because the event in Black Rock City is now — financially and operationally — a fully integrated program of the nonprofit Burning Man Project. “Program service revenue” is defined as revenue generated by a tax-exempt organization from programs (in this case Black Rock City) related to the achievement of the organization’s tax-exempt purposes (in our case facilitating and extending the culture that has issued from Black Rock City).
Q. Other than produce the event in Black Rock City, what does the nonprofit Burning Man Project do?
A. In the 2014 Form 990 you’ll note that $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).
Q. How much money did Burning Man make in 2014?
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, but because we are a 501(c)3, this money is not considered profits because none of it goes to benefit an individual (including board members or founders). In a 501(c)3, any funds after operating expenses are retained by the organization and reinvested to support programming and/or added to their “operating reserve.” An operating reserve is a balance set aside to stabilize a nonprofit’s finances. Keep in mind, the Form 990 is essentially a snapshot of the organization’s finances on a specific day (in this case December 31, 2014), and the organization manages its funds to make sure it can make payroll and cover basic operational costs during the rest of the year.
Q. I thought you just put up the fence and the porto-potties. Why does the organization spend so much $$$ on Black Rock City?
A. Black Rock City would be a pretty dull place without the contributions of tens of thousands of creative and hardworking Burners from all corners of the United States and abroad. But the event is truly a collaboration between the community and the organization. Burning Man Project invests substantial time, energy and financial resources in building, operating and deconstructing our temporary home in the desert (see this nifty interactive pie chart for the breakdown). And what may go unnoticed are the significant costs of the year-round behind-the-scenes efforts to protect and preserve the community’s ability to gather and celebrate its ethos (challenging Nevada’s Live Entertainment Tax is the latest of these). Just as there would be no event without the contributions of artists, creative thinkers and community leaders, there would no Black Rock City without securing permits and fending off cultural, legal and financial threats.
Q. How much does Burning Man Project spend directly on programming ?
A. The IRS groups nonprofit expenses into three categories: Programming, Management and General (“Administration”), and Fundraising. Overall, 83.69% of Burning Man’s expenses (or $25,118,300) go directly to programming or “program services.” Meaning of every dollar generated (either through donations or “earned income” like tickets to events), 84 cents goes directly to programming. The ratio of funds spent directly on programming compared to those that go to the administration of that programming, or “overhead ratio” is one of many ways to evaluate the health of a nonprofit organization. According to Charity Navigator, “The most efficient charities spend 75% or more of their budget on their programs and services and less than 25% on fundraising and administrative fees.” Our overhead ratio puts us in the category of “highly efficient” nonprofit organizations and we’re proud of this accomplishment. Overhead is certainly not the only metric for evaluating a nonprofit’s success, but it can be a helpful piece of information to throw into the mix.
Q. What are the difference between Programming, Management and General, and Fundraising Expenses?
A. Nonprofit expenses fall into one of three categories: Program Services Expenses, Management & General, and Fundraising.“Program Services Expenses” is money being used directly in fulfilling our mission of fostering Burning Man culture. “Administration” expenses are related to the overall function and management of the nonprofit organizations. Included in this category are accounting, admin and legal services, as well as some of the bureaucratic necessities (taxes, licensing, etc.) of managing a nonprofit of our size. “Fundraising” expenses are any costs incurred while raising money for furthering our programming activities. This includes any salaries, events, or travel done for the purpose of soliciting donations.
Q. Why did contributions and grants go down in 2014?
A. On the Form 990 you’ll see that contributions and grants totaled $7,845,655 in 2013 and $1,093,008 in 2014. This is because, at the end of 2013, the six founders donated the value of their shares of BRC LLC to Burning Man Project. Taken together, this gift was valued at $7.1 million and therefore represents a huge portion of the gifts received by the nonprofit in 2013. The total for in-cash donations in 2013 (separate from the gift of BRC LLC) was $731,655. In 2014, the organization secured grants and raised $1,093,008, $300k more than the previous year. We’re encouraged by this trend and hope to see even greater growth in our fundraising over the next several years.
Q. If I donate to Burning Man Arts, how much goes to support artists?
A. All of it. In 2014, 57.8% of donations to Burning Man Arts went directly to artists in the form of grants. The remaining 42.2% went to artists in the form of art support services including engineering contractors, heavy equipment support, communications and legal support, as well as a small portion for the administration of Burning Man Arts’ fiscal sponsorship program (giving artists the ability to accept tax-deductible donations). And while Burning Man encourages people to donate directly to artists, supporting artists through Burning Man Arts comes with a higher level of accountability – grant recipients are required to show the public’s money was used in a responsible way for a specific project.
Q. What is “merchandise sales and shipping”? ($39,201 in revenue)
A. Considering our whole Decommodification thing, you might think it’s strange that we have a marketplace that sells things like books and posters. This line item represents a whopping 0.001% of our revenue. Why does the marketplace exist? First, to spread the ethos via books, photographs, videos, etc. Second, to give people some kind of nice, official culture-bearing Burning Man memento. Notably, in order to maintain our trademarks, we do have to use them in some commercial ways. Selling tickets to the event is one of them. The few items we sell in the marketplace are another. Keep in mind, the $39k in revenue is gross revenue. The accountants tell us we’re lucky if we break even on the operation overall.
Q. What is Decommodification, LLC?
A. Decommodification, LLC is a company owned by the six founders of Burning Man. When they gifted the Burning Man event to the newly formed nonprofit, they thought it was a good idea to hold on to the copyrights and trademarks including the city design, the Man design, the logo and the words “Burning Man” until the nonprofit was shown to be stable and successful. This is because if a nonprofit dissolves, their intellectual property becomes owned (and able to be redistributed) by the Secretary of State (that’s right — the State of California in our case). To make sure the Burning Man name and the Man symbol wouldn’t be used down the road by a completely unrelated organization to sell products or market to people, the founders wanted to make sure the nonprofit was running stably before transferring ownership of all the copyrights and trademarks. Assuming Burning Man Project maintains its current trajectory of becoming a very successful nonprofit, the transfer will happen in 2018.
Q. Which salaries are included in the Form 990?
A. The 2014 Form 990 includes compensation information for the six founders of Burning Man, the top financial official, the five highest paid employees of the organization, contractors working in a fundraising capacity, and officers and board members who were paid for work unrelated to their roles as board members. Board members do not receive a salary or any other financial compensation for fulfilling their roles as board members.
Q. How much money do the founders make?
A. Well it’s not millions of dollars, that’s for sure. If the founders were trying to get rich, they probably would not have donated $7.1 million dollars of value to the Burning Man Project. There are six founders of Burning Man engaged at varying capacities with the daily operations of the organization. Their annual salaries are between $69,000 to $242,000, based on their present levels of responsibility and oversight. In his current role as the Chief Philosophical Officer and President of the BMP board, Larry Harvey’s annual salary is $197,000. Which, for you math lovers, represents 0.61% of total revenue. The highest paid founder (and staff member) is Marian Goodell, who serves as Burning Man’s CEO (Chief Engagement Officer) and is responsible for the operations of the organization overall. Her pay is comparable to, and in many cases less than, leaders of other nonprofits with similar sized budgets and numbers of staff.
Q. What’s the process for determining salaries?
A. Burning Man requires that compensation be fair and reasonable to the organization, and determined based upon survey compensation comparability data. We conducted two independent surveys that looked at comparably sized arts organizations to determine appropriate compensation for the Chief Engagement Officer and senior employees. When establishing founder and senior roles in the newly formed nonprofit, final job descriptions and compensation rates were sent to the then 16 members of the Board of Directors for review, discussion and approval. In this process we also looked at nonprofit arts and culture organizations based in California and/or of a similar size and scope. Among others, we looked at Sundance, the Los Angeles County Museum of Modern Art, SF Jazz, and the Exploratorium.
Q. What is “other compensation” for employees?
A. The “other compensation” column in the 990 represents nontaxable benefits outside of the base salary, including the employer portion of benefits such as health insurance and periodic 401k contributions.
Q. What contractors are included in the Form 990 and why?
A. Our five largest contracts from 2014 are in the Form 990 (because they’re the largest). These are:
- Spectrum (BRC Commissary and food for the BLM): $1,415,645
- United Site Services (BRC Porto-Potties): $1,089,084
- Humboldt General Hospital (BRC Medical): $502,760
- Crystal Ice Company (BRC Ice): $477,770
- Bruno’s (DPW and BLM Housing, Food, and Fuel in Gerlach): $409,947
Q. Are tickets to the event tax deductible now that Burning Man is a nonprofit?
A. No, afraid not. Tickets to the event in Nevada are not tax deductible because the buyer receives something in return for that purchase that is equal in value to the amount paid. Only contributions that don’t come with a direct value exchange are tax deductible.
Q. Why are Black Rock Arts Foundation (BRAF) grants not included in the Form 990?
A. BRAF officially became a part of the Burning Man Project in July of 2014. BRAF issued a total of $286,800 in grants in 2014 through the Civic Arts Grants and Global Arts Grants programs. BRAF filed their own Form 990 for 2014. Because it’s now a part of the Burning Man Project, we’ve included the money in our Annual Report to help paint the whole picture. Starting in 2015, all grants will be made by Burning Man Project and will be listed in the Grants section of our expenses.
Q. Why are there some differences in the numbers in the Form 990 and those in the Annual Report?
A. The differences in total assets, change in net assets and total expenses are due to the transition of BRAF in July of 2014. For example, the 2014 990 shows Burning Man Project’s total expenses as $30,013,511 but the pie chart has a total of $30,185,646 listed in expenses. The remaining $172,000 are BRAF operational expenses that were included in Burning Man Project’s financial statements (to give a more complete picture of expenses) but were removed from the Form 990 because BRAF filed their own 990 and those expenses are included there. This is why the 2014 990 has an adjustment of -$172,135 in expenses related to BRAF. Other slight differences are due to the fact that the IRS asks us to report certain numbers in a way that differs from “generally accepted accounting principles” or GAAP, which are used for our audited financial statements.