PayPal freezes the finances of Burning Man's Temple crew (UPDATED)

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PayPal has frozen the account of the Flux Foundation – a large crew of Bay Area artists and burners that is headed to the Black Rock Desert this week to build the most ambitious Temple in Burning Man's 25-year history – claiming the right to profit from the money until the group formally attains its nonprofit status from a backlogged federal government.

“All that money is just sitting there and we can't touch it,” says artist Jess Hobbs, referring to the tens of thousands of dollars that the crew has raised this summer through events and other fundraising drives to supplement an art grant from Black Rock City LLC that didn't come close to meeting the project's $180,000 budget.

PayPal -- which has been criticized for its secrecy, financial manipulation, and other corporate misbehavior -- was founded in San Jose in 1998 to facilitate online financial transactions and in 2002 was taken over by eBay, the company from which billionaire California gubernatorial candidate Meg Whitman acquired her wealth.

The company has not returned inquires from the Guardian made this morning. Hobbs and a crew that includes more than 200 other artists and burners have voluntarily worked almost every day this summer to build the Temple of Flux, a series of massive dunes that replicate peaks, canyons, caves, and other natural land forms – a project that I've been embedded with for a Guardian cover story that comes out Sept. 1.

“They will take the donations and their fees, but they won't give us our money until we get our nonprofit status,” Hobbs told a meeting of the crew last night at the American Steel warehouse in West Oakland, where they've been working on the project since early June, before she and other principle artists PK Kimelman and Rebecca Anders left for the playa today. “And the IRS is so backed up they're taking at least six months to give out nonprofit status.”

Hobbs and other Temple crew members are now scrambling for ways to support a difficult on-site build that will take more than two weeks to complete, including asking crew members for loans and encouraging everyone to put the word out to the community, hoping to find generous benefactors who can at least extend a bridge loan.

Burning Man crews and camps are traditionally informal groups, but given the scale of this project, the Temple of Flux crew this year tried to create a new model for fundraising and sustaining the organization beyond this year's Burning Man event by filing the voluminous paperwork required to create the nonprofit Flux Foundation.

But now, PayPal has thrown the effort into a real state of financial flux, taking its cut of nearly 3 percent but refusing to even explain why the corporation has deemed it necessary to freeze the group's finances.

UPDATE: PayPal has released the fund due to reader outcry. Read more here.