Burning Man Transitions To Non-Profit Organization

[trilobyte]

Big news in the world of Burning Man - read more about it on the Burning Blog. It's a good read, and a great update on the LLC and the Burning Man Project.

Huzzah!

[Hope-a-Lope]

Thanks for sharing, definitely a good read. This paragraph struck me:

"You’ll be reassured to know that the annual desert experience of Burning Man in Black Rock City as a gathering and event will be largely unaffected by this change. Over time, however, it is likely that the event will evolve in ways that support the efforts of the non-profit in more distinct ways than are currently apparent or even yet explored."

It's a given that the event will, and does, evolve every year, so perhaps that's just a disclaimer. But I'm curious and excited to see what changes may come from this transition. TTITD has changed me and countless others in profound, positive ways, so if non-profit status will further help to "spread the good word" and keep away the commercialism that has bastardized other cultural events, then this is all very good news.

[trilobyte]

Here's an interesting article about the transition on Huffington Post - check it out.

[BBadger]

Blah blah blah BM Org used to be an LLC and now isn't. Yadda yadda yadda BM Org can help this or that or whatever. We all knew that.

None of the articles really explain to me what this "non-profit" status fundamentally changes. What does this "non-profit" do for BM? Does it just mean that people can't buy stocks? Does it mean they don't have to pay sales tax? What does it actually mean? I really want to know.

To me, this "non-profit" concept seems more like a giant tax evasion ruse that should be eradicated at all levels -- especially for organized religion corporations. The designation shouldn't even exist and if you're really "non-profit" it should show on the tax forms. Or at least a real "non-profit" shouldn't be able to own other businesses. That would include, in my mind, owning Burning Man, LLC, or large chunks of downtown Salt Lake City by the LDS Church Corporation. Or maybe I've got the wrong impression about all this? Someone explain this to me.

[Ratty]

Bbadger, It does show on their taxes. Go to guidestar and browse your favorite charities. You get to see what they made and how they spent it. There are other sites that may have more info but this is the one I use.

[Roundabout]

Did the transition require the non-profit organization to buyout the members of the LLC, or did the LLC gift the whole thing to the non-profit? Just curious.

[trilobyte]

It's not quite a transition to a non-profit organization. Burning Man the event is still organized and managed by the for-profit entity...which is a subsidiary of the 501c3 non-profit.

The owners/founders were essentially bought out of the LLC, and then in turn gifted the intellectual property to BMP. All but one of the founders continues on in some capacity, but as employees rather than owners. As I think Larry mentioned in a comment to the blog post, they've now got to 'sing for their supper' as it were.

Despite the cynical bitching, it's not all part of a tax evasion ruse. That's why the event and its operations continue to live under the for-profit subsidiary - that's a for-profit enterprise, and pays taxes as a for-profit business should. Stay tuned for a more extensive FAQ covering the transition, which will probably be a part of the revamped Burning Man site that is currently in the works.

[BBadger]

Bbadger, It does show on their taxes. Go to guidestar and browse your favorite charities. You get to see what they made and how they spent it. There are other sites that may have more info but this is the one I use.

What I mean is that there should be no need for a "non-profit" designation in the first place because if the organization is truly "non-profit" it will show on their revenue and tax forms. What more, such organizations -- especially churches that masquerade as non-profit entities -- should be required to pay taxes as any corporation should they own or control profit-making entities.

My cynicism is not directed specifically at BM, but more the entire non-profit designation itself, which I consider a big tax-evasion ruse.

More specifically for BM Org, I'd like to know the "why should I care?" with respect to its former status. For now it seems more about just better PR because "non-profit" superficially sounds more "Burning Man"-like.

[trilobyte]

You're absolutely welcome not to give a flying fuck.

I think the move makes sense. Looking at BMP's long-term mission, it does align with what's classed as a public benefit organization... and if organizing the business in such a way that means more money goes to programs, and tax incentives will exist for private or institutional donors that throw money its way... good. Great, in fact.

Could the entire tax code need a re-write? Sure. But I don't see that as something that Burning Man should be tasked with, any more than it should be something that you're tasked with. So, tax codes being what they are, it's good to see that Burning Man is evolving from its hastily-created-LLC roots, and taking steps to create the kind of organization that will outlive all of its founders and current participants.

[DrYes]

Blah blah blah BM Org used to be an LLC and now isn't. Yadda yadda yadda BM Org can help this or that or whatever. We all knew that.

None of the articles really explain to me what this "non-profit" status fundamentally changes. What does this "non-profit" do for BM? Does it just mean that people can't buy stocks? Does it mean they don't have to pay sales tax? What does it actually mean? I really want to know.

As the BMORG was an LLC previously, you couldn't buy stock in it anyway. LLCs don't have stock. They have membership units. LLCs were invented in the mid-90s as a cross between corporations and partnerships, keeping the pass-through taxation of a partnership (ie the entity isn't taxed, the owners are in proportion to their ownership in the LLC) while retaining the limited liability of a corporation.

Fundamentally, what distinguishes, under US law anyway, a non-profit from a for-profit is that any surplus revenue generated by the former may not be distributed to the owners or controllers of the non-profit. Surplus revenues must be kept and used for the benefit of the non-profit's survival, plan, or expansion.

[Simon of the Playa]

from the Desk of Larry Harvey...


"Nomad writes, “The solution is simple: disclose all the financials. There is no good reason not to, unless that would disillusion the cult followers. Sorry to be the Toto that pulls the curtain”. The Burning Man Project will most certainly release this information. In fact, as has been pointed out elsewhere, it is required to do so law. It will also make the details of this transaction publicly available, including the salaries of the founders that it employs (I would never have consented to this move if I’d thought disclosing my salary would create a scandal). We will not do this now, but wait until later this year when the transition is complete. It must withstand inspection by California state attorney’s office, and there are still many complex operational details to work out.

From start to end it has taken us four entire years to create the Burning Man Project, and so I don’t think it’s too much to ask our critics to wait a little while longer to learn more about this new phase of it’s career. When that time arrives, however, a bright shining like will illuminate what we have done in thorough detail. Though critics such as Nomad may call this “smoke and mirrors”, it’s really more like nuts and bolts. In the meantime, I suggest that he is not quite like Toto, who pulls the curtain away from the fraudulent wizard, but more like less precocious canines who bark in the dark."

[theCryptofishist]

Um, Larry, "its" not "it's".

[fresh]

from the Desk of Larry Harvey...


"Nomad writes, “The solution is simple: disclose all the financials. There is no good reason not to, unless that would disillusion the cult followers. Sorry to be the Toto that pulls the curtain”. The Burning Man Project will most certainly release this information. In fact, as has been pointed out elsewhere, it is required to do so law. It will also make the details of this transaction publicly available, including the salaries of the founders that it employs (I would never have consented to this move if I’d thought disclosing my salary would create a scandal). We will not do this now, but wait until later this year when the transition is complete. It must withstand inspection by California state attorney’s office, and there are still many complex operational details to work out.

Once they finally released their finanical details then critics can be silenced. The previous financial reports show costs pertaining to the event, but lack the revenue side, so how much is left over after the event. And what is happening with that money? That is big unanswered question......

[trilobyte]

I don't think there will ever be a silencing of the critics. Once that info gets released, they'll move on to something else to be critical of.

[theCryptofishist]

I don't think there will ever be a silencing of the critics. Once that info gets released, they'll move on to something else to be critical of.

Ayup. I'm not sure why the event gets sliced under that lens. Do all similar "things" get that? Is it the burner "type" to be that suspicious? Is it that Larry Harvey broke some completely imagined social contract?

[Timezone LaFontaine]

Ayup. I'm not sure why the event gets sliced under that lens. Do all similar "things" get that? Is it the burner "type" to be that suspicious? Is it that Larry Harvey broke some completely imagined social contract?

I'm not sure that there are any similar things to BM. A common comparison would be a big music festival, but everyone seems to assume that those are big money grabs and no one holds the organizers to any sort of high ethical standards. Maybe because BM espouses ideals that include actively downplaying the role of money/consumerism/commercialism in day-to-day life, and people don't really know much of anything about the real costs associated with licensing, infrastructure and so forth for the event - aside from simply multiplying the ticket price by 60,000 - people assume that someone is walking away with millions of dollars each year.

In regards to non-profit organizations, there certainly are some unscrupulous people who favor them as ways to create high-paying jobs for themselves, while others are run more ethically. Personally I don't have any reason to suspect that the organizers of Burning Man are particularly greedy people. Even if they were, I'm not sure that that would detract any from how the event is personally meaningful to me. But that raises the question - what does everyone think is actually a fair wage for the people who organize this event each year? Specifically, what dollar amount? What is too much? Do they deserve a raise, or bonuses, etc.

[theCryptofishist]

I don't think music festivals are parallel. I wonder about Sturgis and the Osh Kosh Fly-In...

And I don't expect that there's a huge surplus horded or used for salaries for LLC members.

[BBadger]

You're absolutely welcome not to give a flying fuck.

I think the move makes sense. Looking at BMP's long-term mission, it does align with what's classed as a public benefit organization... and if organizing the business in such a way that means more money goes to programs, and tax incentives will exist for private or institutional donors that throw money its way... good. Great, in fact.

Could the entire tax code need a re-write? Sure. But I don't see that as something that Burning Man should be tasked with, any more than it should be something that you're tasked with. So, tax codes being what they are, it's good to see that Burning Man is evolving from its hastily-created-LLC roots, and taking steps to create the kind of organization that will outlive all of its founders and current participants.

Trilo, will you actually read my replies rather than making assumptions? I'm not saying "I don't give a fuck" about this change. I'm asking: why should I give a fuck? I want to know. Is this just a PR move? Is this giving BMOrg more tax flexibility? Is this just to divest Larry? This is what I want to know. These articles just preach about all the good that the BMOrg can "now" do as if the BMOrg wasn't already attempting to do that before the corporate status change. Why is it so much better now? What is it about this organization status change that the other status did not enable? It seems like a PR move to me because I haven't read any reasons why moving to a non-profit is so much more beneficial.

And as I already stated, I'm not being cynical with regards to Burning Man's operations. My tirade is with respect to non-profit corporations in general, and to be more specific, what organizations like churches do. I don't like the non-profit status, but I'm not claiming or imply that Burning Man is a vehicle through which this change should happen. I'm just bitching about the non-profit designation in general. I'm not even saying that BMORg should not exploit the situation. A business should exploit every advantage provided to them. Hell, I wouldn't be bothered if Burning Man declared itself a for-profit enterprise, but doing a good job managing the event, anymore than I care if the POTUS is fooling around with interns at the White House but keeping the economy roaring [1]. That's not what I care about -- but I do want to know more about why this decision was made by BM and what are the benefits of it, and the reasons for it.

It also appears that DrYes has answered the question with regards to what a non-profit really entails. To DrYes: thank you for explanation.


[1] To be clear: I'm saying that only the latter qualities matter to me in both cases.

[trilobyte]

Bbadger, I did read your reply and didn't just make an assumption (as you clearly have done, ironically enough). And really, you're absolutely welcome to not care about whatever aspect of it that you want (or the whole thing entirely). Alas, you're going to have to wait until the FAQ and additional information gets posted when the new site goes live, just like everyone else. As someone who's been following the longer story for years, I think the news as posted on the blog is huge. I'm not normally a fan of The Huffington Post, but the article I linked to actually did a pretty decent job explaining more about why it matters. Otherwise, wait until the FAQ and additional information gets posted.

[DrYes]

I'm asking: why should I give a fuck? I want to know. Is this just a PR move? Is this giving BMOrg more tax flexibility? Is this just to divest Larry? This is what I want to know. These articles just preach about all the good that the BMOrg can "now" do as if the BMOrg wasn't already attempting to do that before the corporate status change. Why is it so much better now? What is it about this organization status change that the other status did not enable? It seems like a PR move to me because I haven't read any reasons why moving to a non-profit is so much more beneficial.

During the mid/late 2000s, there was very serious animosity between the BMORG founders/board. They were all on the verge of lawyering up and going after each other, and had explored what the sale of the BMORG could bring, to be split up six ways. Larry was extremely opposed to the idea of selling Burning Man like that though. In the end, unable to come to another conclusion, they decided to transfer all ownership in Burning Man to the Burning Man Project, which is a non-profit that has gotten what's called 501(c)(3) status - that's the standard status under which most charities are tax-exempt. (You can be a non-profit without getting tax-exempt status from the IRS - the former is relatively easy, the latter is a lot of work.)

The possibly controversial part of this is that the original founder's agreement said that any of the founders who left the BMORG would get nothing but their compensation thus far and a $20,000 payout. That agreement was made when BM was a LOT smaller than it is now. The founders decided to transfer their ownership in BMORG to the BM Project for an amount greater than $20k that they declined to reveal. As far as I'm concerned, that's their right - it was their organization up until they transferred ownership - but given the tinfoil hat nature of some folks, I have no doubt some people will see some kind of big conspiracy designed to enrich the founders. It isn't, and they had a right to get something for the decades of work they've put into this thing we all love as the founders and shepherds of it.

My guess, and it's really only a guess, is that as much tension and animosity as there was between the founders, none of them wanted to see BM die and in the end decided they'd be willing to take less of a payout than sell it and risk sticking it in the hands of some for-profit event company that very well could ruin it. This was a compromise all of them could live with, and was preferable to suing the shit out of each other or selling. That's my guess, at least.


Sources on the org's plans to go non-profit, made/announced in 2011:
http://www.sfbg.com/2011/04/05/man-move
http://www.nytimes.com/2011/08/28/busin ... tival.html

[DrYes]

Just a note: Someone who would know got in touch and let me know that the founders (minus John Law) continue to be good friends and work together, however frustrated Larry (and others?) may have been in 8 or 9 years ago in '05-'06.

[BBadger]

That explains a bit more. Thanks!

[DrYes]

That explains a bit more. Thanks!

I'm quite likely wrong regarding the specific motivations of the founders, I should add, but I think the general gist is there. One thing I didn't mention is that the former structure - an LLC - is not a good structure for long-term stewardship of something as unlike a non-profit (or for-profit) corporation, an LLC has a legally-limited lifespan before being, or did when the org formed their LLC. (I understand the IRS now has some new rules allowing states to permit unlimited lifespan LLCs but have no idea what the details are.)

Overall I'm largely in the same camp as you (don't much care as long as the event is put on competently), but a nonprofit owning it does seem more appropriate in some ways - nobody really owns the kind of non-profit the BM Project is" instead, it has caretakers who watch over it. Seems fitting.

[DrScott626]

How about the Pyramid Lake Paiute Tribe?
Burning Man takes full advantage of the Native American good nature.

BM has a payroll of $6million/ year.
They can afford to help out the PLPT

Hey we're having a BIG party.
Can you take out our trash for. $5.?

WHAT A FKN INSULT!

BM CORPORATE NEEDS TO "PONY UP" lots of $$$ for the Tribe.

50 miles of Reservation road can be slowed to 5 mph .
How about 20 hours in the desert drive??

Any input??

[Sham]

Why in the world would they be just passing money out? I know you have a reason, but just don't get it.

[Ugly Dougly]

They are obviously following the model of another non-profit, the NFL.

[Eric]

Apparently DrScott thinks we have some power over the BMorgs decisions. We don't - and if it's an issue with the leadership of the tribe, they should take this up in meeting with the actual organization. Whinging at us that your not getting enough milk from this cow isn't going to produce more milk, it's just going to have a bunch of people going "hmmmm".

[BBadger]

Hmmmm