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Burning Man Defeats PayPal

Burning Man

Burning Man veterans—including top VCs, entrepreneurs, and the founders of Google—have an extra reason to celebrate today. Not only is it less than a month until they get to go camp in the Nevada desert again, but the Burner community just got a Silicon Valley giant to back down.

The saga started three weeks ago, when the Flux Foundation, a new nonprofit founded by the artists building the festival's largest structure, got word from PayPal that it needed to better document its nonprofit status. Temple Manager and Project Administrator Catie Magee said she filed the required federal and state paperwork on April 17th, opened a bank account shortly afterward, and a PayPal account on May 1.

Receiving online donations was crucial for the 300-person artist group and their efforts to construct the Temple of Flux. At $180,000, the Temple of Flux will be a series of massive dunes, peaks, canyons and other natural landscape features—the largest temple in Burning Man's 25-year history—and the stage for some spectacular fireworks.

The Flux Foundation, which scored a grant from Burning Man LLC to cover one-third of the structure's cost, raised funds through events and direct solicitations. The San Francisco-based group raised more than $80,000 in the span of just over two months—from 25,000 friends on the Burning Man Facebook page, 4,000 fans on the Flux Foundation page, and a devoted following on Twitter.

The IRS asked for more documentation, which Magee said she provided. Then PayPal asked for more documentation, which Magee said she also provided. Then, early this week, Magee found she couldn't withdraw funds. "They froze our account four days before we were ready to leave [for the Nevada desert]," she said. "We made a lot of calls to them to find out what we needed to show our status as a non-profit was pending. It was unclear what we needed to show them."

After the San Francisco Bay Guardian broke the story Tuesday that PayPal had frozen the funds, the Burner community protested PayPal's decision. "We woke up at 7:30, updated our blog and launched our Kickstarter campaign," said Magee. An account executive at PayPal called to resolve the issue shortly after. "He asked me to explain the timeline and the process I followed. I did, and at the end of the conversation he said I could do a one-time withdrawal."

Until PayPal receives final documentation, the foundation cannot accept further donations or withdraw any new funds. Not that it matters. Magee drained the account and is now encouraging supporters to use WePay, which helped the group set up an account free of charge.

PayPal did not respond to a request for comment regarding the reversal. But Magee says it was a logical move for them. "They saw what we were doing and the social media response that was happening on Twitter and in the blogosphere and on Facebook," she said. "People were sending emails and calling and saying (on comment boards) they were going to cancel their PayPal accounts."

Good customer relations is good business. After all, Burning Man's ticket site features PayPal as the first payment option for its $300 tickets—and the Burning Man organization itself is a roughly $10 million-a-year business. It pays PayPal not to upset Burners (including many of its own employees).

But it's already too late for Magee and other Burners. Said Lead Artist and Director of the Flux Foundation Jess Hobbs: "No more PayPal. Not even personally. Ever."

[Image: Flickr user mdanys]