Discussions/WMF Board discussions/Finance

Board discussions: Finance

Objectives

Better understanding of the current board's position on funding
Better understanding of the movement's expectations of the board
Why is there a disconnect between trust in how the funds are spent and how satisfied we are with how they are spent.

Starting questions

The Wikimedia Foundation spends too much / too little
- Too much: 2
- Too little 4
- Just right 1
- Don't know 3
- In wrong places 5

I trust the WMF with the movement funds
- Yes 13
- No 0
- Unsure 1

I read the budget & annual report
- No 6
- Yes 20

Attendees

Kelly Battles (WMF board) Finance backgroiund; joined WMF board 6 months ago.
María Sefidari (WMF board): WMES - on audit committee
Christophe Henner (WMF board Chair): WMFR
Jaime Villagomez (WMF CFO)
Lisa Gruwell: WMF Chief Advancement Officer
Geoff Brigham: WMF General Counsel
Stephen Laporte: WMF Legal Counsel
Stu West: Ex WMF board member
Mike Peel: Former WMUK trustee; FDC Member
Michał Buczyński: WMPL vice president; FDC Member.
Sydney Poore (FloNight) Former FDC member; co-founder of WikiWomen User Group
Celio Costa: Admin on several PT projects. Member of User Group Wikimedia in Brazil
Vinicius Siqueira: Member of User Group Wikimedia in Brazil
Mariano Pérez: WMAR board member
Osmar Valdebenito: WMCL ex president; WMAR ex executive director; Member of FDC
Anna Torres Adell: WMAR executive director.
Risker: FDC member
Monserrat Boix: Catelonia WikiMujeres.
Another WMES member and Catalonia Wikimujeres member (name missing)
Christian Rickerts: ED of WMDE
Pranav Curmsey: Ex WMIN board member, organised WCI 11
Lorenzo Losa: WMIT president; FDC member
David Richfield (Moderator): volunteer; ex WMZA board member

Notes

Board's position

Kelly: Rare to be in the situation of being a 70 million (MM) USD company that runs a 14MM USD surplus with 100 MM USD in the bank. There might be things we're not funding properly. Board has 4 roles:

Hire, fire and manage staff
Put the right structures in place
Maintain a long-range plan
Meet their fiduciary responsibilities

WMF has been historically taken its Fiduciary responsibilities seriously, resulting in great results and a secure cash balance. We can do better, but should recognize that we're lucky.

Jaime: Do we trust the process? People are very attentive to the fact that it's donor money. This creates a narrative that is fundamental to creating the surplus. We must be careful with our choices because of the transitions we're going through. Individuals in WMF work very hard to describe what they're doing and get input from community. There are fundamental things about reporting and philosophy of finances, but [??]. Have been in companies with very difficult situations, and we don't have those limitations, and we can help and grow the movement.

Christophe: New to board. We have choices, which is lucky. This is very different from the situation in a for-profit company. It's important that the money is well-spent and that we know where the money goes. Our future will be further secured through the endowment. Been in transition for a long time. Spending has happened, without a complete strategy on where to spend. This discussion has been taking place in the last few days. Kelly has a strong mandate from the board to make these decisions. Lots of work ahead, in a good situation, and ready to make decisions.

Endowment

Lisa: The purpose of the endowment exists in the context of the WMF's vision and mission, to provide knowledge "in perpetuity". WMF has an annual budget and a reserve. The funding is cyclical, and should be used for rainy days as well as for the ongoing expenses. The endowment is being set up to support the projects forever. It's a fund that will produce investment income that will provide base level support for the projects. It's not intended to replace annual fundraising, but in 10 years it might provide 5 million dollars per year that can support the projects indefinitely.

Kelly: The structure was set up in Jan. 2016. The board is finalising the legal structure between the endowment and the WMF now; and will soon start paying into the endowment.

Lisa: Many of you took part in the discussions on Meta. The endowment is being set up from:

Major donors (who have made commitments to support the WMF)
Planned giving (for example some recent large gifts from wills of deceased supporters, and a charitable remainder trust).

The WMF also recruited an outside board member Campbell-White, a successful venture capitalist to serve on the Wikimedia Endowment Advisory Board

Questions

How stable is the wider network of other WM affiliate organisations?

Kelly: Not enough time to comment.
Mike: FDC looks at the org budgets
Christian: Want to get a feeling of the chapters' situations. What does the board think of the network?
Maria: Affcom recommends approvals for affiliates. We don't track day-to-day finances, but if we get reports of mismangement, that goes through Affcom, and they may recommend defunding?
Christian: What about the WMF's feeling about the affiates?
Kelly: Dariusz on board is rep for FDC process, rigorous time-intensive process. Goal is to have a rigorous process around the funding. High level of trust leading to recommendation to be approved by the board. Detailed process, delegated to members. Mike: although FDC doesn't look at all entities.
Christophe: Management issue: are we sure there's no mismanagement? No. Is everything in place to manage it? Probably. Most have quite small budget in terms of the movement, so we have to balance the risk of mismanagement with the commitment to review. Comment personal: The second the WMF is financially OK, then the movement is. Not just where the money goes, but is it available. WMF is the steward of that money.

Movement's expectations

Mike: The WMF has now for the first time put its budget through the FDC process, but there is a gap between the expectations of what the affiliates vs what the WMF is producing. Hard to drill down into the details of the program (even by dept.) Categories are "program / non-program / staff". Mike would like to see more detail.
Kelly: A 70 Million org can't provide the same details as a 1 million affiliate.
Lorenzo: Total number of budget lines from WMF is lower than the affiliates' budgets.
Jaime: The affiliates provide more detail because they have more discrete actions, for example if they run an event, it would be detailed in the budget, and that's why the submissions are so detailed.
Christophe: WMF went through transition, and Christophe was going through the FDC process in WMFR. For a foundation going through so much in so little time, they did very well. WMF never went through the process before. Taking out the context, does it meet our expectations as FDC? Maybe not, but better than expected. What does that mean for next year? Jaime will have time now to get things into shape for the FDC. We might not still have the level of some affiliates, and we shold probably not, but the staff is working on this.
Kelly: Less qualitative/descriptive, but more detail on the numbers?
Jaime: We have an opportunity now to clarify the expectations and clarify how we'll owrk together to serve the movement. Don't agree that more detail is the answer. Rather discrete information in a form that can be consumed. Some of the other budgets are an accounting exercise. We need to do this together to add more colour and collaboration. Many people don't realise what it would cost to put more detail into the report, and this is non-program funding. Will need to work with movement to agree on what's needed. Jaime tried to go 3 levels below what he considered to be the formal requirement, and if this is not enough, still very willing to take on the challenge to give the required detail.

Recommendation

Increase the detail on the WMF's FDC submissions