Anticipating a $10 Million Shortfall Burning Man Asks Ticket Holders and Participants To Donate
The Burning Man Project has revealed that it is wrestling with a $10 million budget shortfall for 2020 and is appealing to its community for donations to help the organization survive. While the nonprofit is making financial information about its operations publically available to support its funding request, the organization is also suing the federal Bureau of Land Management to prevent release of its financial records and details of its ticketing strategy.
On April 30, the Burning Man Project published an unprecedented summary of its finances in its in-house publication, the Burning Man Journal. It also shared much of this information in an April 18 call with organizers of theme camps which form the backbone of Black Rock City, the temporary metropolis built by Burning Man participants in the Nevada desert. After canceling the annual event due to the COVID-19 pandemic, the Burning Man Project has lost its main source of revenue and is hoping to convert theme camp members and other participants into donors.
The Burning Man Project did not immediately reply to a request for comment, but it posted a statement in the Burning Man Journal asking participants to focus on the future. “We have come together as a culture to save Burning Man,” reads the statement. “And we are ready to start imagining, planning and building Black Rock City 2021. Do you feel it? That’s community, and it’s magic. We can do this.” The Burning Man Project, which is the hub of a global network of allied organizations, is asking its supporters to each contribute $475, the equivalent of one ticket in its main ticket sale.
The organization had previously launched two rounds of early ticket sales grossing $23.7 million prior to calling off the event, which hosted more than 80,000 participants in 2019. It had not yet run its main public ticket sale originally slated for April 8 and indefinitely postponed on March 30. The nonprofit says that it also has a $10 million cash reserve. These funds, together with the $23.7 million in early ticket sales, could possibly have allowed the nonprofit to cover its estimated $32.3 million in 2020 expenses. In their March 20 statement on Covid-19, posted by the organization on its website, Burning Man recognized, however, that it needed to rethink its policy on ticket refunds which could cost the organization up to $22.2 million.
“We are exploring every possible option for offering refunds if the coronavirus pandemic ultimately requires cancellation of the 2020 event,” wrote the Burning Man Project. “Our terms and conditions state that tickets are non-refundable “for any reason,” but we recognize the extremely unusual circumstance we’re all in. Issuing refunds would be challenging for our nonprofit organization, which supports year-round staff and programming, but we are aware of and sensitive to the difficult financial position so many members of our global community are in right now.”
A Gathering Supported By Participants
Burning Man is a co-created festival where participants create and bring art and other forms of interactivity as gifts to the community. Tens of thousands of people not only buy tickets to attend, but also provide the overwhelming majority of the festival’s content. Burning Man plans the annual construction of Black Rock City by allocating space to theme camps based on participant applications describing what each group plans on contributing. Burning Man sold 35,000 tickets in a special directed group sale to such people. The organization also sold a much smaller number of patron-level tickets to people willing to support the event. These so-called FOMO (fear of missing out) tickets cost $1400 apiece, approximately 3 times the cost of the $475 ticket price available in the directed group sale (DGS).
On April 16, a week after announcing the cancellation of the event, the nonprofit informed its DGS and FOMO ticket holders that the organization was in financial jeopardy. “Times are tough, really tough. We are all in this together. We are committed to providing refunds to those who need and request them,” wrote Burning Man Project Staff in personalized emails to ticket holders. “Providing refunds is the right thing to do… That said, the Burning Man Project needs your support.”
Burning Man Project CEO Marian Goodell and the theme camp Placement Team also wrote an appeal to theme camp leaders asking them to help convert ticket refunds into donations and inviting them to an April 18 video conference call. During the call the Burning Man Project provided a then unprecedented look into the finances of the organization. Goodell welcomed participants with an overview of the organization’s present situation and financial consultant E Payson “Skip” Smith presented the organization’s budget and financial outlook.
Theme camp leaders learned that prior to canceling the 2020 construction of Black Rock City, the yearly budget of the Burning Man Project had been $53.3 million, of which $23.5 million goes to the seasonal expense of producing the main event. With $2.5 million of that already spent, the organization says its 2020 budget is now reduced to $32.3 million after cancelling the gathering.
In the April 30 announcement in the Burning Man Journal, the organization noted that “When it became clear Black Rock City wasn’t going to be possible in 2020, we immediately suspended an estimated $21 million of seasonal activities directly associated with BRC including, unfortunately, not hiring around 1,100 short-term staff.” To further reduce expenses, the organization announced that it was immediately implementing year-round staff cuts, salary reductions, and other cost savings measures, saving it an additional $6 million, according to the statement.
While making a funding appeal to participants and laying off staff, the Burning Man Project is likely to receive increasing scrutiny of its ticketing strategies, spending, and staff salaries. In its April 18th presentation to collaborators, the Burning Man project revealed that it spends an average of $2.7 million a month on staff costs and overhead, not counting its annual event and seasonal labor. These funds are used by the organization to finance additional projects, support a year round staff of approximately 100 people, and rent office space in downtown San Francisco. According to the Burning Man Project’s tax documents, of the $46 million in revenue made by the nonprofit in 2018, about a third went to salaries. Goodell made $267,687 which included a $7,000 raise year over year and another $24,854 in benefits. Seven members of the organization’s top management make more than $170,000 annually. On the April 18th call with theme camp leaders, Goodell says she and other Burning Man top management have agreed to take a 20% pay cut. The organization’s April 30th financial figures reveal that it plans to reduce its overall monthly burn rate further, by more than 50% to an average of $1.3 million.
Online Tool Supports Refunds
Participants on the April 18 call with theme camp leaders were briefed on a plan for an online refund tool developed by the Burning Man Project. The tool, which launched on April 30, allows participants to request refunds on the organization’s website and specify how much of their ticket purchase they wish to convert into a donation. The tool can be found by ticket holders when they log into their Burner Profile on the Burning Man website. Ticket holders are asked to specify how much of their ticket purchase they will donate by noon on May 14. Refunds will only go to those who respond, but the organization asks everyone, including those who wish to donate 100% of their ticket purchase, to reply.
Shade, an organizer with the theme camp ATTOL (And Then There’s Only LOVE), says it’s difficult to know at this time how her camp members will respond to the appeal for donations. “While some members have the financial means to donate all or part of the ticket price, others are struggling with lost jobs and wages or dealing with the sickness or death of loved ones,” says Shade. She also points out that her camp members are involved in relief efforts for those struck hardest by the economic crisis. In addition to volunteering their time, camp members have received numerous fundraising asks. “I’m going under the assumption that if I can’t build a camp, I can work on building community,” says Shade.
The DGS ticket sale, which was held in February, required those invited to the sale to purchase their allocated tickets in pairs within a few days or forfeit them. In order for theme camps to receive their full allocation of DGS tickets, many enlist their members to participate in the DGS sale without a commitment to attend and decide later who will actually use the tickets. The ticket buyers spend $1235 on behalf of their camp, the cost of buying two tickets and a parking pass – the maximum any individual is allowed to purchase. During the call to theme camp leaders, the Burning Man Project suggested that camp members who didn’t purchase tickets could provide funds to those who did. This strategy was presented as a way of reducing the number of ticket refunds and increasing the camp’s overall donations.
In addition to cash reserves and donations, the Burning Man Project says it is hoping to secure a $2.4 million loan from the Small Business Administration’s Paycheck Protection Program. The Burning Man Project is also planning an online event–a virtual Black Rock City in The Multiverse–to replace the in person gathering, which may also provide an opportunity for additional revenue.
Burning Man Sues To Prevent Release of Financial Records
The Reno Gazette Journal reported on April 29 that Burning Man is suing the Bureau of Land Management to prevent release of financial records that provide details on its ticket strategy, including Burning Man’s daily internal event reports and a detailed record of the organization’s gross revenue. The case was filed in April in the U.S. District Court of Northern California. According to the Reno Gazette Journal, the Burning Man Project said in its 13-page complaint against the BLM that, “Public disclosure of the revenue report would reveal how many tickets Burning Man sold across each price category. Thus, public disclosure of the revenue report is tantamount to public disclosure of Burning Man’s entire pricing structure, which is one of Burning Man’s most sensitive and private business details.”
The Reno Gazette Journal story notes that the BLM notified the Burning Man Project in March that it intended to release records to a member of the Pershing County Economic Development Authority who made a public records request for the information. Burning Man’s main event is partially located in Pershing County and attendance figures could impact how much money the county receives when it re-negotiates its current agreement with Burning Man in 2023. According to the Reno Gazette Journal report, Burning Man organizers stated in court documents that they provided information on its gross revenues and internal event information with the understanding that the data would remain confidential. The newspaper noted that Black Rock City LLC, the for profit sister organization of the Burning Man Project, paid $2.9 million to the BLM for services and fees in 2019.
Additional Funding Strategies
According to Goodell, a common suggestion for how Burning Man can raise funds in 2020 is by reaching out to a few ultra-wealthy participants to help save the organization. Camp leaders on the April 18 call said that while such philanthropy would be helpful, sharing the burden together rather than looking for saviors, was more in keeping with the community they wanted to foster. The organization says in its statement in the Burning Man Journal that it is encouraging participants to launch crowdfunding and fundraising campaigns and is also reaching out to donors who can provide larger financial contributions.
Members of the Burning Man Project acknowledged on the call with theme camp leaders that participants are also encountering financial challenges and assisting others in need. Theme camp organizer Jim Wheaton says he was not on the April 18th call, but has received the appeal from the Burning Man Project for participants to donate their tickets. “We are letting each DGS person decide for themselves,” says Wheaton who notes that he is also striving to keep his employees paid, supporting artists that he knows, and forgiving rent for his tenant. “I hope the BORG can manage and has access to resources without little ‘ol me.”
Goodell noted during the call to theme camp leaders that the organization is often asked “why give refunds when you can just make the tickets good for next year?” In reply, Goodell used the analogy of robbing Peter to pay Paul. The number of tickets sold is limited by the capacity of the site which is determined by the BLM. Transferring 2020 tickets to the 2021 event, Goodell explained, would create similar financial difficulties for Burning Man in 2021.
While the Burning Man Project would have the ticket revenue already collected to meet their 2020 budget, it would have to sell correspondingly fewer tickets in 2021. Goodell said that the organization calculated the cost of increasing ticket prices for the 2021 event to make up for selling fewer tickets. The resulting 2021 ticket prices would be unreasonably high and so the organization decided this was not a feasible remedy.
Prior to the call with theme camp organizers, a survey was distributed by the organization to the group to get a sense of how many tickets might be donated. The survey deadline took place after the call, so final results were not then available. At the time of the call, survey respondents indicated an average of 29% of tickets would be donated. Camp leaders also discussed strategies for enlisting members of their camp to undertake fundraising efforts on behalf of Burning Man. Several camp leaders pledged on the call that they would encourage members of their camp to donate, at a minimum, all of the DGS tickets that they had collectively purchased.
While Burning Man organizers are asking for help, they say they don’t want ticket holders or other participants to feel pressured to donate. They pledged that theme camp standing would be in no way impacted by how much the camp members chose to contribute. The Burning Man Project requested that camp leaders share this message with their camp members while organizing fundraising efforts on behalf of Burning Man.
“My career has been in the nonprofit world and fundraising and I appreciate that Burning Man puts together such a large event and year round community,” says Ann-Marie Benz, manager of the JOBI (Joy of Being In) theme camp. Benz works with the Burning Man Cultural Direction Setting Team, a volunteer committee which examines where participants can contribute to the ongoing evolution of the event. “What we are encouraging our DGS ticket holders and participants to do is to consider how they value the art community and experience we create out there in Black Rock City.”
Image by Steve Jurvetson
