PayPal releases Burning Man Temple funds

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Artist Jess Hobbs (center) on Monday told the Temple crew that PayPal had frozen their funds, which the company today released.
Steven T. Jones

After Guardian readers posted dozens of comments expressing outrage that PayPal froze the account of Burning Man's Temple of Flux crew, the company today agreed to release the funds, according to PayPal spokesperson Anuj Nayar, who just responded to a Guardian inquiry from yesterday.

“It seems the power of the Interwebs still works,” Catie Magee, one of the Temple project managers, told us, saying the company contacted the crew this morning. “They agreed to release our funds and said they were doing us a big favor.”

“I'm happy we were able to get this addressed,” Nayar told us, although he says he can't explain why the Flux Foundation's funds were frozen or released: “Because of PayPal's privacy policies, we can't go into more detail on that.” But speaking generally about their policies toward groups with pending nonprofit status, he said, “We encourage nonprofits to get 501c3 certification because we are under certain regulations and we have to report that back, but I can't go into more details than that.”

Magee said the group submitted nonprofit paperwork to the necessary state and federal agencies back in April and heard back from state officials on July 22 asking for revisions to their articles of incorporation, which they promptly returned. The Internal Revenue Service won't grant 501c3 status until the state approves those articles, and even then it can take months longer, according sources in the nonprofit world.

Despite releasing the funds, Magee said PayPal won't let the group continue using the account, so the Temple crew has set up alternative ways to donate to the project, which has so far fallen short of its ambitious fundraising goals. Details for donating are on the Temple's website.

I've been journalistically embedded with the Temple project since its inception for a Guardian cover story that comes out Sept. 1, as well as for my upcoming book: “The Tribes of Burning Man: How an Experimental City in the Desert is Shaping the New American Counterculture,” due out in December from CCC Publishing.

Comments

Thank you, Steve, for posting your article yesterday and for calling Paypal out and causing their embarrassment for their obviously greedy and illegal actions! Also you've been more than just journalistically embedded in the temple project, you've been helping build it, making art for their art auction fundraiser and recruiting at least a half dozen people who are now committed to building it and going up early to do so. You're a journalist extraordinaire!

Posted by Cinnamon Girl on Aug. 11, 2010 @ 11:45 am

...does anyone stop and think that PayPal might have these guidelines in place to protect the donors from scam artists?? Not every so called non-profit is above-board especially in today's economic climate. Just sayin'...

Posted by Guest on Aug. 11, 2010 @ 12:21 pm

The head of the nail has been firmly hit!

Posted by Guest on Aug. 11, 2010 @ 12:52 pm

Actually, the hammer swung and hit the OP in the groin.

The reason for this is simple: PayPal does not have the means or ability to monitor and regulate "bona fide" non-profit transactions. Organizations charged with doing so (Attorneys General, IRS, etc.) with relatively vast resources devoted to this objective already struggle to do so. For PayPal to either insinuate or explicitly claim that they can "protect the (donating) customer" would be absurd and disingenuous.

Vetting a charity is, by far, best left to the donor. A combination of looking at their IRS Form 990 filing (see GuideStar.org) and talking to those familiar with the organization (other donors, volunteers, employees of the charity) are the most reliable ways of assessing the credibility of the operation.

If PayPal froze the account at the request of a state or Federal Attorney General, or on the order of the IRS, I would understand. That did not happen here, and neither should PayPal's untransparent "blocking" of access to the account.

Quite frankly, if PayPal wanted to do the right thing here (and maintain some semblance of credibility, which they appear to have lost by the metric ass-ton), they would work with the Flux Foundation to calculate a reasonable quantity of liquidated damages for the trouble PayPal caused (bounced checks, inconvenience caused by needing to scramble for other sources of cash flow, etc.) and cut a check to Flux.

Posted by Pete PDX on Aug. 11, 2010 @ 3:42 pm

Actually, the hammer swung and hit the OP in the groin.

The reason for this is simple: PayPal does not have the means or ability to monitor and regulate "bona fide" non-profit transactions. Organizations charged with doing so (Attorneys General, IRS, etc.) with relatively vast resources devoted to this objective already struggle to do so. For PayPal to either insinuate or explicitly claim that they can "protect the (donating) customer" would be absurd and disingenuous.

Vetting a charity is, by far, best left to the donor. A combination of looking at their IRS Form 990 filing (see GuideStar.org) and talking to those familiar with the organization (other donors, volunteers, employees of the charity) are the most reliable ways of assessing the credibility of the operation.

If PayPal froze the account at the request of a state or Federal Attorney General, or on the order of the IRS, I would understand. That did not happen here, and neither should PayPal's untransparent "blocking" of access to the account.

Quite frankly, if PayPal wanted to do the right thing here (and maintain some semblance of credibility, which they appear to have lost by the metric ass-ton), they would work with the Flux Foundation to calculate a reasonable quantity of liquidated damages for the trouble PayPal caused (bounced checks, inconvenience caused by needing to scramble for other sources of cash flow, etc.) and cut a check to Flux.

Posted by Pete PDX on Aug. 11, 2010 @ 3:43 pm

The "pending status" makes accepting funds FULLY legal under IRS guide lines. Watch where you are swinging that hammer!

Posted by Guest on Aug. 12, 2010 @ 5:08 am

So you're saying that PayPal did this to protect people from making bad decisions about where to donate their money, and it had nothing to do with the interest they collect off the money? You have far more faith in corporate America than I do.

Posted by steven on Aug. 11, 2010 @ 1:47 pm

So much for protecting the public. They were still taking money on behalf of the non-profit --- then wouldn't hand it over. If they wanted to, they could have requested permission to list them as unverified, filed for, or state only (when that comes in) or risk a lock down.

Posted by Guest on Aug. 11, 2010 @ 5:49 pm

That's what the customer rep told us, when we called them to find out why the Comfort & Joy paypal was frozen. They were swarmed with lots of people saying they were doing "Katrina" benefits where the money went who knows where.

Our account is still frozen pending their receipt of our paperwork, la la. We don't really care because we have reserves in non-Paypal accounts & can still produce our art for this year's Burning Man without a hiccup.

Posted by Kitten Calfee on Aug. 13, 2010 @ 8:44 am

Nice work on the shameless plug Stevo! Let me reiterate...“The Tribes of Burning Man: How an Experimental City in the Desert is Shaping the New American Counterculture,” due out in December from CCC Publishing.

Posted by Guest on Aug. 11, 2010 @ 1:56 pm

The last time I checked Paypal is not a bank, nor is it the IRS! If they were setting these sort of motions in place to protect from scamming, don't you think they would have worked with Temple and not against them? They were trying to hold their own money, not someone else's money. Funny how a little bad publicity makes them change their tune completely! I am not a fan of Burning Man at all but I am a fan of making corporations behave ethically and under the law and they didn't do that at all here.

Posted by Guest on Aug. 11, 2010 @ 2:49 pm

They wanted to earn interest from that money, but it backfired!

Posted by Guest on Aug. 11, 2010 @ 8:33 pm

Exactly. With my experiences with paypal and ebay I am sure they do this sort of thing all the time to make money from interest off of money that is not theirs in the first place. Then when you complain they make you jump through all sorts of hoops to get your money, then charge a fee on top of it.

Posted by Guest on Aug. 11, 2010 @ 9:26 pm

PayPal acting as bank?
Is PayPal regulated by the Treasury Dept.?
PayPal is a On-Line banking institution.
Or do they exist in the shadowy nether regions of quazi-legal under regulated bank, that draw their profit from consumer/client/donor transactions.
Pay to play financial corporations such as PayPal must be regulated and transparent
in financial matters as any bank/loan/lending/saving inststution entrusted with citizens money whether or not the capital is from a donor/consumer intended to support a 501c3 non-profit or buying more junk from the online yard-sale, aka Ebay.

As for Mr. Jones
(“The Tribes of Burning Man: How an Experimental City in the Desert is Shaping the New American Counterculture,” due out in December from CCC Publishing.)
Also you've been more than just journalistically embedded in the temple project, you've been helping build it, making art for their art auction fundraiser and recruiting at least a half dozen people who are now committed to building it and going up early to do so. You're a journalist extraordinaire!

Perhaps your next journalistically embedded story could be about PayPal & EBAY?
Although I would think it would be quite a bit less "SEXY" than Burning)'(Man>

Posted by Guest on Aug. 12, 2010 @ 6:20 am

PayPal is not a financial entity of its own. It is only a company that handles internet transactions. All paypal accounts are actually held by Chase bank, so really when you have a paypal account, your money is actually in a Chase bank account. You can actually go into Chase bank and withdraw your money if you want. I'm not sure how it works without a PayPal ATM card, but I know that if you have one, you can use Chase Bank's ATMs without paying an ATM charge. That means your card is basically a Chase ATM card that says PayPal on it. With respect to all financial transactions, it's basically just a front-end.

I wonder, actually, whether the people from the Temple crew would have been able to go around Paypal and straight to Chase bank to get their funds.

Posted by Spaceboy on Aug. 12, 2010 @ 9:45 am

"Also you've been more than just journalistically embedded in the temple project, you've been helping build it, making art for their art auction fundraiser and recruiting at least a half dozen people who are now committed to building it and going up early to do so. You're a journalist extraordinaire! "

Yikes. I'm glad he disclosed his role with the Temple project, but as another pointed out, it was more of a shameless plug than anything else. No journalistic integrity here.

Posted by Guest on Aug. 12, 2010 @ 8:33 am

I've been a newspaper journalist in California for almost 20 years and my integrity is beyond reproach, as my lack of financial resources can attest. Now that I've spent five years working on my first book -- my only hope of beginning to dig out of credit card debt with equally scurrilous financial institutions -- I would hope that readers will excuse a bit a shameless self-promotion because I intend to engage in even more of it once the book is released later this year. Sorry, folks, but I need to dig out a bit if I'm to remain a journalist with integrity.

stj

Posted by steven on Aug. 12, 2010 @ 9:09 am

Hey, Steven's book is topical--it IS about Burning Man. I don't see him plugging it in his non-Burning-Man-related posts, so why must you criticize this solitary plug?

This comments area is an open forum, so you haters are welcome to use it to promote your own book dissing Burning Man. Who knows, I might even buy it. Whether you realize it or not, "hating Burning Man" is part of Burning Man culture.

Posted by Granny on Aug. 12, 2010 @ 9:35 am

Looking forward. :)

Posted by Kitten Calfee on Aug. 13, 2010 @ 8:48 am
Posted by steven on Aug. 12, 2010 @ 3:21 pm

Haha! Awesome.

Credit Card Crusties. They're back!

Posted by Better in 96 on Aug. 12, 2010 @ 3:49 pm

We received the same unexpected freeze. Please email contact us at www.blackrockdiner.com if you can help us. Our complaints have gone into a black hole! Help!

Posted by Michael Williams on Aug. 12, 2010 @ 10:32 pm

Comfort & Joy is a queer art collective that sponsors a Burning Man Village.

We still have $1600 of fundraiser proceeds in a frozen Paypal account. We were told that we have to get a letter from a fiscal sponsor with a tax id number saying that they are "working with us" to help us become our own legal entity or somesuch, and then we can get our money back. Luckily we already have a relationship with a fiscal sponsor, but right when we're trying to get our art installations finished with only 9 days left before departure time, we get frozen & have to drop everything to send Paypal some letter. Thank goodness we have other proceeds in other accounts so we can get our work done in the meanwhile.

A lot of burner groups like ours are not finished with all their nonprofit paperwork, because it's actually rather complex stuff, setting up an effective board & writing bylaws, which is only part of what's required by the IRS.

Posted by Kitten Calfee on Aug. 13, 2010 @ 8:39 am

For valid non-profit events and art, there must be another way to collect money from willing donors. If one doesn't wish to use PayPal, but needs a method to make it easy for donors to pay online (because snail-mailing a physical check is inconvenient for many donors), what system or service can anyone suggest?

Posted by Granny on Aug. 13, 2010 @ 9:23 am

The Temple and many other burners this week have been switching over to WePay.com, which was started by a burner and has much more senstivity to the needs of grassroots groups. I'm working on another post now to update the situation.

Steven T. Jones

Posted by steven on Aug. 13, 2010 @ 4:57 pm

Great another book about Burning Man...how original....I'm sure your "counter-culture" angle will be totally unique and interesting....

Also, starting a book with "How...." is a sure receipe for mediocrity....I think there are at least 100 books in 2010 that are titled "How _______ did _____ and changed everything..." bla bla bla.... boring

Posted by Guest-1 on Aug. 16, 2010 @ 8:14 am

It will indeed be totally unique and interesting, focused on the modern era since 2004, grounded in what has been happening in the country and the culture during that time, and featuring the most extensive journalistic engagement of any Burning Man book that has come before. Before you prejudge it, please wait until you hear some feedback from someone who has actually read it. Thanks.

Posted by steven on Aug. 16, 2010 @ 10:26 am

A bit belated w/response, but will definitely buy your bk in a couple of wks. WELL DONE (whatever unfortunate, lapsarian title).

Aloha from Hawaii,

Original Burning Man participant (& yes, 1st generation. related to Nathan [Extra Action Marching Band "tribe" photographer, among other electric, explosive energies]).

Posted by Guest coni on Oct. 10, 2010 @ 3:52 pm

I am a fraud agent for PP. We see fake charities all the time. (among other scams) the vetting process for charities is relatively simple. No, donors usually do not have a clue. I can imagine how people would scream if we just let these guys rip them off. But you also need to understand that people can file credit card chargebacks and complaints that we are responsible for. In a very real sense we are not just a payment processor but we are "loaning" money for a fee. If the fake charity runs away with the money it is PP's loss.

Posted by Guest on Aug. 19, 2010 @ 7:57 pm

You mean its not some huge anti burning man conspiracy?

I was thinking that paypal just did these things to be annoying out of the blue, just part of the conspiracy to ruin the good times of the bonged out?

Posted by matlock on Aug. 19, 2010 @ 8:15 pm

WELL DONE(!) (whatever lapsarian, unfortunate title). I will POSITIVELY BUY more than one copy next payday.

Wishing you Great Sparks & Aloha for your book,

Original Burning Man participant (& yes, 1st generation relative to 2nd [longtime tribe photographer to Extra Action Marching Band , Spanish Galleon & other Tesslectric extravaganzas]).

Posted by Guest on Oct. 10, 2010 @ 4:15 pm

Legally, a Corporation does not have to be a 501c3 entity to be a legitimate non-profit. It has to do with whether or not the donations are tax deductible. PayPal is far too strict in their guidelines.

Posted by Guest on Apr. 08, 2011 @ 7:46 am