In light of the recent accusations from Shad Khan that the KYN accelerator was charging too much in overhead and not giving enough money to startups, a Metro Jacksonville contributor takes a look at and shares One Spark's 990 financial forms.
In light of the recent accusations from Shad Khan that the KYN accelerator was charging too much in overhead and not giving enough money to startups, I decided it was time to peel back the onion even further to see if the same had occurred with One Spark. One Spark as a 501c3 non-profit is required by the IRS to share their 990 financial forms. Yesterday I made a 990 request and One Spark provided me the documentation promptly. Full disclosure, I am not an accountant and make no promises about the financial accuracy of my analysis. Some of the numbers aren't easy to match up with a quick analysis.
The 990 Form I received is from the 2012 calendar year, which runs from 7-01-2012 to 6-30-2013. One Spark 2013 took place in the middle of this reporting period. The 990 Form does not detail where the money flows to, so a more detailed forensic accounting analysis is really needed to give a comprehensive view of One Spark financials.
This is link to the 2012 990:
One Spark’s two key staffers in this period, Joe Sampson (Executive Director) and Vince Cavin (Director of Operations and Finance) were both paid reasonable salaries in my estimation. Sampson received $62k and Cavin received $60k, both for 40 hours of work a week. However, President Elton Rivas and Vice President Dennis Eusebio received compensation of $50,000 and $40,000 respectively. On the surface that does not seem like much, but they noted on the 990 form that they only worked 15 hours a week for One Spark (and 40 hours at a related organization). These equate to $133,333 for Rivas and $106,666 for Eusebio when factored at 40 hours a week. Those salaries may be reasonable for an established and highly successful festival, but not a start up in its first year. Certainly not one that only brought in $96,511 in actual revenue (not counting donations).
Now let’s look at the donations and expenses. One Spark received $1,198,105 in total revenue, but spent $1,399,817. It incurred a loss of $201,712, which appears to be covered by a $220,000 unsecured loan (presumably from Peter Rummell). In terms of revenue, $96,511 appears to be generated from the festival itself, while the remaining $1,101,594 appears to be from donations. One Spark 2013 only paid out $243,676 in cash prizes to creators at the festival. So where did the remaining money go? A portion appears to have gone to the festival itself. This includes $30,474 in “entertainment”, $7,812 in “food and beverage” and $8,812 in “rent/facility costs”. There is also $284,592 in “other direct expenses”. No clue what that is.
A grand total of $1,399,817 went to functional expenses. Of that $538,417 went to “Office Expenses”, $250,607 to “advertising”, $256,977 to staff compensation, $119,715 to “IT”, $51,041 to “other”, $53,176 to “occupancy”, $20,670 to “insurance”, $3,000 to “accounting” and $106,214 to “all other expenses”. The numbers do not exactly add up, but I believe the "other direct expenses" and "cash prizes" may be included in the "office expenses" figures. If not, then the $538,417 for office expenses is a huge red flag.
There are a couple follow up questions that I already asked One Spark.
1. What did the $538,417 in Part IX. 13 "office expenses" go to?
2. What did the $284,592 in "other direct expenses" on Part 2 go to?
3. What did the $106,214 in "all other expenses" in Part IX 24.e go to?
4. What did the $51,041 in "other" in Part IX 11.g go to?
5. Who was paid for the $119,715 in IT and the $250,607 in advertising?
This is link to the 2012 990:
Article by Jeremy Hubsch