One Spark Financials 2012-2013
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.
Published October 10, 2014 in Urban Issues - MetroJacksonville.com
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
This article can be found at: https://www.metrojacksonville.com/article/2014-oct-one-spark-financials-2012-2013-released