1999 WINTER NEWSLETTER
Building Burning Man
The Official Journal of the Burning Man Project - Winter 1999 Newsletter
- The Cost of Survival
- Passing The Hat: An interview with Larry Harvey
- Burning Man 2000 - Theme
- Special Ticket Order Form
Passing The Hat
Interview with Larry Harvey
by Darryl Van Rhey
DVR: I know that many people are surprised to learn that Burning Man is not a nonprofit. Why isn't it?
Larry Harvey: You're right. We have a relationship with a nonprofit fiscal sponsor that allows us to accept tax deductible donations of $500 or more, but Burning Man, our organization, is not a nonprofit. We're an L.L.C., a limited liability company. It's a form of partnership that affords us protection from personal lawsuits. I think part of this confusion stems from misconceptions people have about profit. People often think nonprofit status means that no profits are realized, or even that no one gets paid. It's really a tax category. It means the corporation isn't taxed because it devotes its income to the public welfare, toward ideal ends. Burning Man, the L.L.C., is taxed on its income. Its members and employees also pay individual income taxes. We pay plenty of taxes, but in many ways we behave like a nonprofit.
We are obsessed with public welfare. We fund art and create a community devoted to ideals. We also depend heavily on volunteer aid, as many nonprofits do. But, many nonprofits, as I'm sure you know, pay very hefty salaries to their chief executives and hire a lot of professionals. They operate more like private enterprise than we do.
DVR: If you could avoid taxes and more easily accept charitable contributions, why don't you become one?
LH: Well, we have discussed turning some part of our support for art into a nonprofit. We may still do that. Our problem with turning the whole project into a nonprofit is this: in order to function as a nonprofit corporation, you have to create a board of directors that is separated from the management of the enterprise. That's to insure that funds aren't misused. The majority of board members of a nonprofit, as distinct from its managers, are not allowed to profit from its operation. They are disinterested overseers, which seems fair enough. But, Burning Man has never been a "disinterested" proposition. We're grassroots organizers. We're activists. Everything is based upon immediate participation. To do Burning Man is to be Burning Man. It's been a way of life. I don't know how to separate the direction of the project from its management. That doesn't reflect what we are or how we've evolved. If you examine our history, you'll see what I mean. Really, if you want to describe what we have been, it would be more accurate to call us a no-profit. Nonprofits, on the other hand, are usually backed by an endowment.
DVR: Tell me about your history as a "no-profit."
LH: In the beginning, we just pooled our money in the same way that people now create theme camps. It was informal, spontaneous, the kind of thing where everybody pitches in. No one made a dime and there was never any thought of profit. We were giving a party. We'd buy some lumber that was me and Jerry James then we'd scavenge what materials we could. The rest was whatever I could convince other people to bring. Our reward for this investment was the experience itself. We burned the Man. It felt like a sufficient return.
DVR: That's not exactly what you do today. How did it change?
LH: It changed when we went to the desert. Now we had to rent a truck and survive on the playa. We had to pay for a permit, insurance was required, and, as time went by, we discovered that we weren't just calling our settlement a city. It was a city and we were building it. No one possessed the personal means to pay for this, so we turned to the community we'd created.
DVR: How did you do that?
LH: We literally passed a hat. Toward the end of the event we would divide the city into sectors, then I and a few friends would run over to cars, hat in hand, and catch people before they left. We'd try to talk them out of five or ten or maybe twenty bucks. That was our collection system, but it didn't work very well. It didn't cover costs and people began to max out on their credit cards. So, we started selling tickets. That's when we invented the gate.
DVR: There was no gate before then?
LH: No, and even once we had a gate it was more like a theme camp or an art installation. It was a gate without a fence, and that is like a door without a wall. The idea was that people would go there for instructions that would guide them to the "secret" location of the city.
DVR: Rather romantic.
LH: Romantic, yes... but wrongheaded. We thought we could hide our little settlement in the vast space of the Black Rock, but half the people drove around it or got lost and found our city first. It was much easier to crash the gate, as thousands eventually did, than to find it. We kept moving it closer to the highway. The result, again, was a no-profit situation. Each year we'd manage to cover most, but not all, of our material costs, and no one made money for their labor. By 1995 we cleared a little, and that was good, because some people were abandoning their jobs for weeks at a time. But it was only in 1997 that we finally secured the entire site and were able to charge fees to everyone as they entered Black Rock City.
DVR: And that's when the money came in?
LH: Well, it came in... but then it promptly went back out again. It did loiter for a little while in our box office, then it was removed by the police. They hauled it away in large bags. That was the year we were charged nearly $300,000 for fire and police protection. These charges were forced on us late in the year, after we had already set ticket prices. We hadn't a choice and, really, the police had no choice. We occupied private property that year and this was mandated by the county government. It left us more than $200,000 in debt. Keep in mind, we were now managing a very large event, and no one, including myself, was paid full-time. We were operating out of our bedrooms using computers. None of us had the money to pay this off. So we passed around the hat again, and this time people readily responded. We stopped participants at the gate as they left and asked for contributions. Afterwards, we used the Internet. People held benefits all year. One week before Burning Man began in 1998, we'd satisfied our creditors. Half of this sum came from tickets sold in that year. We finally scrambled out of debt and I am proud of that. Had we not, Burning Man wouldn't have survived. Who would have done business with us? It was after this that I got my first full-time salary in thirteen years.
DVR: That means Burning Man is in the black?
LH: It has to be. At one time it was enough to make ends meet when things were over. We'd fall back exhausted. Those who had jobs would go back to them and we'd go dormant for five or six months. Now, Burning Man is never over. It immediately begins again. The Burning Man you saw in 1999 resulted from the efforts of several extremely committed people working full-time all year long. Last March we finally acquired an office and small warehouse in San Francisco. We couldn't continue on without it, but a lot of fixed expenses came with that. We're continuously shuttling back and forth to Reno doing politics and meeting with agencies. That generates expenses. We pay rent for land and storage buildings in Nevada. Between that and salaries for seven full-time people and several part-time helpers, we've got a $40,000 nut to crack each month! If we haven't all of that in store by the end of the event each year, enough to get us through until the next ticket cycle, then we're in trouble. Ticket sales are our entire income. We simply cannot run in the red. There is no cushion. We don't accept commercial sponsorships. We don't receive grants. We don't have investors. We've never cashed in on mass merchandising schemes and we haven't licensed vendors at the event. Maybe if we did these things we could get a loan. It would certainly improve our financial profile. Then bankers might think we were normal.
DVR: What do bankers think of Burning Man?
LH: They look at us and see no assets. We've never made enough to acquire any. We rent and lease. Money gets spent on operations and never stays in the bank for long. I suppose we have assets in the form of good will. Thousands certainly expect Burning Man to happen. Our participants are loyal. They return every year. Our numbers grow impressively and our cash flow increases. It possesses the inevitability of a movement, really. However, all of these things are matters of faith. Never talk to a banker about faith. Would you like to know how bad this can get?
LH: Last year we sold 7,700 tickets at $65. That was our bargain price in the first quarter. We were overjoyed. It was a record. However, when the bank that processed the credit card payments saw this, they panicked. Why were all these people buying tickets nine months in advance of an event? They immediately seized $200,000, plunging us into a crisis.
DVR: They can do that?
LH: You bet they can. They figured they were being forced to underwrite us. What if we ran off to Mexico and people demanded refunds of their credit card purchases? It did absolutely no good to tell them we'd been doing this event for 14 years. All they could see was that we had no assets. We had nothing to lose, they figured. They couldn't see the emotional investment, the moral commitment or the reality of Burning Man as a community. We looked fly-by-night in their books. We weren't capitalized and none of us had any money. So, we reasoned with them. We argued that we had a stake in this. We also pointed out that if, by withholding our income, they caused us to default, to go under, then they'd be liable anyway. It became an elaborate game of chicken, and gradually they yielded slightly and began releasing small sums over time to cover some of our immediate expenses, but it was touch and go. A lot of people purchased tickets early, specifically to help us with our cash flow. We had urged them to do this, and they thought we were doing fine, but we were watching the books day to day, hovering over the figures. It was tense. Not only were we deprived of the benefit of that early income, but so many people purchased tickets at the cheapest price that it was far from clear that we would cover expenses. People complain to me about selling tickets at our gate on Friday and Saturday, but that accomplished two important things. By selling all those last-minute tickets at our highest price, we subsidized the low-cost tickets we'd sold in the Spring. It made it more affordable for many people. Moreover, the sum of sales for those two days in 1999 yielded our net income for the year, the excess money over the event cost. Without that, we would be bankrupt now. There'd be no Burning Man. That was our survival margin.
DVR: Burning Man seems to always be engaged in a survival struggle.
LH: Yes, it's true even at this modestly exalted level of finance. I'll tell you why I think that's so. Our motives have always been sort of otherworldly. This makes sense, because we've been trying to create another world, something that functions very differently from the norm. This applies to how the project functions, too. Who else, in this day and age, starts and runs any kind enterprise without assets? Who else eschews investment money and refuses to commercialize, to license commodities or accept advertising? Who else encourages people to be so free? For that matter, what other project asks so much of its participants? Our very existence challenges a lot of established assumptions and values. It's no wonder many institutions are allergic to us. We've practiced what we've preached. We're radically self-reliant. We depend upon ourselves and our community. We have no institutional backing. That makes us an anomaly.
DVR: What are Burning Man's financial goals?
LH: You really want to know? I would like to do something truly radical.
DVR: What's that?
LH: Save money. I know that sounds pretty wacky in today's America. Nobody saves money anymore and everything's done on credit. We need to be able to point to assets. Maybe then, financial institutions would help us instead of impounding our income. Businesses are usually backed by investors who expect to make money. Invested money, capital, generates more money, credit. That's how a money-driven system works. We don't have this resource. We've never offered Burning Man to anybody as a money making proposition. I'd like to take a boot-strap approach by carefully putting money aside. That's how individuals and families do it. I would love to have a sort of emergency trust fund. Money we could simply point to as an asset, then maybe we'd be allowed to operate in the world. We need money, in a sense, to be free of a world that's ruled by money.
DVR: I understand that the Bureau of Land Management is drastically raising its fees. How will that affect the future of Burning Man?
LH: Well, for now, at least, it more or less banishes the dream of acquiring assets. That money will just vanish. It will go into the government's pocket. This will also force us to raise ticket prices. I worry about how that will affect artists. It's been my dream to create a society in which rich and poor could associate as equals. I've wanted to introduce the well-to-do, as potential patrons of the arts, to impoverished creators. I really want these two groups to meet. It's an alternative to using galleries, agents, or nonprofits as intermediaries. This is a radical approach to arts funding. However, artists are perennial have-nots. If we increase our lowest ticket prices, I'm afraid we'll begin to exclude a lot of creative people. I am not at all convinced that I would feel at home in such a world. We want to retain our social diversity. I think that is essential to creating culture.
DVR: As a sidebar to this, how do you answer charges that Burning Man is being "gentrified?"
LH: I think such talk is stupid and mean-spirited. I know of plenty of people with money who've done very creative things at Burning Man. They've erected theme camps and they've fashioned works of art that have benefited the entire community. In particular, a lot of this wealth comes out of Silicon Valley. Many of these people are innovators and entrepreneurs. They are self-motivated and think creatively. Their typical career arc is very often like an artist's. Just as often, they're motivated to give something back to society. I think they make a tremendous contribution to Burning Man. I know some people say there are too many RV's, but that, too, sounds like reverse snobbery to me. Of course, if someone comes in an RV, and so is spared the trouble of setting up a camp, I would agree that it behooves them more than most to decorate their camp and their vehicle. That's what the issue should be. It isn't who has wealth. It's what they choose to do with it.
DVR: What is your answer to those who you say that Burning Man is getting too big or, even, that it should grow smaller. Since size is such a factor in your costs, have you considered this as a serious alternative to raising prices?
LH: I like a real city. That's why I live in San Francisco. I like the diversity of people and I love the range of experience. I find it fascinating and challenging. I never wanted to do this for some hipster in-group or limited sub-culture. Some people complain that Burning Man conducted at this scale lacks the easy intimacy of former days. For them I have a ready prescription. They should involve themselves in an ambitious project; construct a large-scale work of art or found a theme camp. Once they recruit people and begin to work together and share resources, they'll find they're soon surrounded by an intimate community. At Burning Man it is always within your power to shape your own world! Others, I know, simply don't like large masses of people. To them I would suggest they do as we have done. They should start their own smaller-scale event. Hundreds of people are now doing this across the country. We encourage it. I would, however, offer them one piece of solid advice.
DVR: What is that?
LH: Pass the hat.
Larry Harvey is the founder and director of Burning Man.
Darryl Van Rhey is a journalist residing in Bolinas, California.