Most films make their profit in the DVD/VHS market. $11.5 Mil on a $3 Mil production budget, when you figure the marketing cost 2-3 times the production budget, Block Party already made or is close to making a profit.

Clerks, a film that made $3.1 Mil theatrically:
http://www.boxofficemojo.com/movies/?id=clerks.htm

Was considered a huge hit because it cost $27,000 to make. This is a similar type thing. It didn't do blockbuster numbers, but it didn't need to. It certainly didn't go "double wood". I think it's remarkable this film was even released in as many theaters as it was with the acts it had.