Content Partnerships Hub/White paper/5. Ensuring financial sustainability for the work

Developing a Thematic Hub in the Wikimedia Movement

Insights from Wikimedia Sverige's exploratory work to form a first thematic hub

White Paper

1. Why Wikimedia Sverige initiated the work to become a Thematic hub	2. Purpose and structure of the White Paper	3. Growing and reorganizing the current organization
4. Finding support internally and externally	5. Ensuring financial sustainability for the work	6. Final remarks

Ensuring financial sustainability for the work

Background/context

The Wikimedia Foundation has successfully developed a fundraising capacity that each year, to date, secures ever larger amounts of funding. The Foundation is today well resourced and has established an endowment to ensure financial stability over time.

On the other hand, most Wikimedia affiliates, including Wikimedia Sverige, lack long term funding or any significant savings. The affiliates have instead been heavily dependent on the Annual Plan Grant mechanism from the Wikimedia Foundation, which provides funding on a yearly basis (Wikimedia Sverige and Wikimedia Österreich were once given the opportunity to experiment with a 2-year grant).

A few affiliates in Europe are the exception as they, due to tradition or local legislation, have had the right to organize fundraising banner campaigns on Wikipedia. As such they have significant local fundraising ability. Wikimedia Sverige has not been one of these, but is in the process of establishing new alternative fundraising capabilities.

What Wikimedia Sverige instead has been successful with over the years has been project grant applications (with over 40 project grants awarded, not including successful grant applications to the Wikimedia Foundation, securing millions of USD for the work with free knowledge). The success with grant applications has allowed Wikimedia Sverige to grow its staff and initiatives over the years. Project grants are excellent for innovation and for staying nimble, but project grants do not provide long term stability nor a clear path forward for the organization (as adjustments of e.g. staff composition, organizational structures and goals are needed to fit the demands and requirements of the funding body).

This dependence on project grants has forced Wikimedia Sverige to develop the organizational capacity needed to absorb funds at uneven intervals and to deliver program activities with the resources secured through project grants as well as heavy reporting, according to the demands of funders, and to keep very detailed financial accounts. Significant resources for capacity building in the organizational capacity have been invested over many years. The ability to absorb large funds without losing one’s identity, and being able to deliver what is expected by both the funder and the Wikimedia community, is a skill that takes time and effort to master.

With an ambition to take on a larger international role in the movement, by providing much needed infrastructure for content partnerships, the need to secure funding ongoingly is more important than ever. There is a need for significant seed capital to make the change not just possible, but efficient and provident. Furthermore, long term maintenance must be provided if the initiative is successful and Wikimedia Sverige indeed starts providing infrastructure to other Wikimedia affiliates. Infrastructure cannot be allowed to fail when measures to secure funding can be developed from the start.

Wikimedia Sverige’s experience with grant applications can allow it to expand the work in new and innovative ways much faster than would otherwise be possible. In other words, the grant applications, if designed well, can supplement the construction and maintenance of the core infrastructure with new features which would otherwise not be built.

Other types of funding opportunities, such as localized fundraising, can further add possibilities and over time reduce the need for support from the Wikimedia Foundation. Arguably, if funding is done at a local level where the local context, language, culture, etc. is taken into account, it is likely to lead to a more targeted approach that could yield better results with a smaller effort. What the optimal level of localization is will have to be continuously evaluated and refined, based on a number of factors. An even stronger case can be made if an active sharing of approaches, content, research data and strategies are shared between all affiliates working with local fundraising and with the Wikimedia Foundation. Local fundraising has the potential to increase the global revenue and to free up funds for emerging regions or projects, for more experimentation and the establishment of new programs.

Sweden is a wealthy country with significant opportunities for securing funding for both national and international work. Wikimedia Sverige believes that working to organize local fundraising in a wealthy country is a responsibility in order to free up the amount of globally resources available to the global community over time, and to help reduce the risks associated with having the majority of the Movement's funding coming from a small team at the WMF. Local fundraising also ensures equity as the current structure, with Wikimedia affiliates and volunteers receiving grants from the WMF, has created a significant difference in power and opportunity – the need for more equity has been highlighted in the strategic recommendations.

What has been done

Initially the focus was very centered on ensuring a path for how the Wikimedia Foundation could provide the core funding needed to establish a technical team in Sweden. This team, according to the idea, would build software for content partnerships, and provide other capabilities to support the Wikimedia movement across the world with content partnerships. Core funding is expected to be needed to ensure long term maintenance of built tools and to provide opportunities for further fundraising. Wikimedia Sverige’s goal from the start has been that the size of the core funding should be reduced over time in favor of securing external funding.

As core funding was expected, Wikimedia Sverige halted the work of applying for project grants to be able to focus on utilizing the expected core funding from the Wikimedia Foundation as efficiently as possible. The logic was that if grant applications were successful there was a risk that they could derail the efforts as the newly funded projects would need to be staffed and initiated in parallel with establishing the hub. This was a sound choice in theory, but when COVID-19 pandemic struck the perceived risks to the WMF's annual fundraising increased. The WMF leadership decided to take a very cautious approach and halt all increase in spending, including the expansion of work done by Wikimedia Sverige. This led to a drastic shift in focus where a new interim project with Wikimedia Sverige and Wikimedia Foundation had to be envisioned and developed from scratch in March to May 2020.

One important part of the preparatory work was to develop recommendations for how the Thematic hub could ensure long term sustainability through different fundraising opportunities. Some, but not all, of the ideas could also be generalized and used by other Wikimedia affiliates aiming to develop their organizational capabilities sustainably. Wikimedia Sverige invested significant time and effort to establish the foundations for its own fundraising capability.

To grow the capacity around local fundraising, we knew we would have to do a lot of preparatory work. Especially if we wanted it to be successful both short and long term, and to ensure that donor data and more was handled the best way possible. The focus between 2018-2020 was therefore on establishing financial routines and methodologies needed for efficient fundraising. When this was in place the next step was to have this confirmed through external quality assurance (in Sweden that is called a 90-account, a type of indicator for the donors of how charities perform), including work on preparing for the more detailed reporting which is expected of serious fundraising organizations. In parallel, Wikimedia Sverige also worked on establishing internal policies e.g. a fundraising policy, an investment policy and an expansion of the privacy policy to prepare the organization for a larger focus on local fundraising.

With the sudden postponement of the core funding expected in 2020, Wikimedia Sverige found itself in a problematic and risky situation. The transformation of the association had been underway for a long time and many hard choices had been made along the way regarding things such as hiring priorities and of potential projects and partnerships. Opportunities for funding had not been developed into applications as the core funding had been promised (the increase of funding from WMF was to be substantial, but the exact numbers were still to be confirmed) and was considered to be certain. After lengthy negotiations the association was offered a continuation of the 2019 funding to keep the organization afloat. The stated intention being that the core funding would be made available in mid-2021 instead, if the fundraising efforts of the Wikimedia Foundation were successful.

The work with project grants in Sweden were then scaled up significantly. The grants applied for were chosen strategically to support the development of Wikimedia Sverige’s capacities. Even though such restricted grants would not be offering the shortest path possible, any progress in the right direction was deemed better than no progress at all.

Future work

To develop new capabilities that are of importance to the entire movement, long term core financing needs to be secured. The team needs to be large enough to allow for specialization, and the work must be ongoing. There needs to be enough funding available not only to build new tools, but also to research, maintain and disseminate knowledge about them and to ongoingly compile feedback which will inform what problem needs to be solved both short and long term.

In order to secure this, the funding must be stable and flexible, and there should be a clear path to adjust the funding away from grants. Wikimedia Sverige is continuing the discussions with Wikimedia Foundation and the wider movement on how this can be achieved and is hoping to develop a structure for funding which can be used also for other affiliates scaling their efforts in the short term (in the long term a more robust funding structure needs to be developed).

The work done around grant applications will continue as an integral part of the work with developing the plans for the future Thematic hub. E.g. identifying funding opportunities that could cover parts of the costs of things like establishing a larger technical team, to develop capacity building etc. The grant applications are also a valuable tool to attract new partners and initiate in-depth discussions with them. For example, a number of UN agencies have stated their interest to develop grant applications with us, and have argued that it will strengthen the in-house support that they need to continue deepening their involvement with the Wikimedia movement.

Local fundraising opportunities discussed here do not necessarily imply that all Thematic hubs must eventually become financially self-sustaining, as this will depend on the context in which they are established. There might be a need to fund an entity on a permanent basis if local fundraising is not possible. However, the goal should be to consistently work, and invest, to ensure that the funding which is available thanks to global fundraising initiatives (i.e. the banner on Wikipedia) is not entrenching inequalities by preserving existing structures and inequalities where only privileged entities have opportunities, instead of developing the full potential of the movement.

Work to develop a new stream of funding from Face2Face (F2F) fundraising has been a focus this year and discussions have been ongoing with the Advancement team at the Wikimedia Foundation. Wikimedia Sverige launched a set of experimental events in the autumn of 2020, and if successful the intention is to significantly increase the local fundraising work in the future. This is still experimental, but the association hopes to secure support from the Annual General Assembly to continue scaling the work being done in this area over the coming years. For this exploratory fundraising work four additional staff members working part-time were hired on short term contracts, future experiments may include a mixture of staff and volunteers. This work will continue in 2021–2022.

Sweden is a wealthy country, and Wikimedia Sverige believes that the chapter should work to secure more local funding. When successful, the local fundraising in Sweden is intended to support both national and international work, including resource allocation to support other free knowledge organizations, thereby providing stability to the organization. We hope to continue both discussions and experimentation on how the fundraising campaigns can be connected and strengthen each other and how (if at all) donor data can be shared.

One area we are keen on investigating further is how other Wikimedia chapters can support the work by co-financing some aspects of it. E.g. how can we cover costs around an exchange program? How can support (e.g. with money or staff time) be given for development of different tools or with organization of international events? If so, how much should the affiliate who pay be able to influence priorities? How do we ensure that organizations with fewer funds still have a strong voice?

Lessons learned and key takeaways

• Lesson learned: The structure of the funding offered has a significant impact on the execution of a project. Multi-year funding is crucial for the organization to be able to focus and be as productive as possible. Frequent re-negotiations are very costly and create uncertainties. When an agreement is about to reach its end date a new agreement should always be completed in a timely manner (months before the old one expires). The need for clear and early communication is equally true should there be no intention of replacing the agreement.
  • Key takeaway: In the short term grants can be used to convince movement actors to take on the challenges with a change process. However, grants are really not a funding mechanism suitable to empower a Wikimedia affiliate as it creates a dependency and not an even partnership.
  • Key takeaway: A multi-year funding commitment is crucial in order to mitigate the risk to the organization undergoing the internal changes needed to take on a larger role. Short term, or improperly secured, funding poses a risk. The reason for this is that the organization needs to take on extra costs as it starts to transform, and cannot revert to its old fundraising models on short notice during this period.
  • Key takeaway: Ensure that multi-year contracts can be offered to be able to provide stability for staff who are otherwise likely to be looking for more stable job opportunities. Experienced staff leaving is an effective way to lower the speed of transformation possible and adds costs with e.g. hiring and staff training as well as other risks.
  • Key takeaway: Should funding suddenly be lost or significantly reduced, then drastic, and potentially crippling, action must be taken to ensure that the organization survives. Thus rather than being a boon to the global community it might instead all but lose one of its ambitious member organizations.
  • Key takeaway: Before long term funding has been secured one should be wary about prematurely hiring new staff. Although this caution slows down the organizational transformation it protects the organization from financial risk should the funding be delayed or canceled (e.g. as happened due to COVID-19 in this case).
• Lesson learned: There is a financial risk associated with adjusting an organization to a new structure and it is crucial funding is provided to bridge the gap. Securing funding locally is hard and takes time to be developed in a sustainable way. Experimentation is needed, especially if no similar organization, acting in the same cultural context, can be used as a blueprint.
  • Key takeaway: Dedicated investments are needed. The funding needed initially is high as fundraising is strictly regulated and e.g. fundraising systems, methods and communications need to be developed.
  • Key takeaway: It is worth noting that similar work will have to be done in any case in an organization that strives to have a large and active membership base. The cost of having significant duplication of work between affiliates and the Advancement team at the Wikimedia Foundation can therefore not be avoided, even if local fundraising is not prioritized.
  • Key takeaway: Coordinating with other Movement actors with fundraising experience about different models and experiences can reduce the threshold and save time and money.
  • Key takeaway: Tried experiments, whether successful or not, are useful as inspiration to other organizations. But one should not expect the results to be the same when implemented in a different cultural context.
• Lesson learned: Working to secure project grant applications has the potential to bring more value than just funding.
  • Key takeaway: Other actors want to work with an organization that can help to provide funding for them.
  • Key takeaway: Building a strong reputation and good relationships with funders is key to success. This takes time and effort and as external actors usually have a limited understanding of how Wikimedia affiliates are connected to each other there is a real need to coordinate around these contacts. Especially if it is likely that other Wikimedia organizations might reach out to them. This will help to avoid creating confusion and mistrust amongst the international funders that might like to support the Wikimedia movement.
  • Key takeaway: The grant application process is in itself a powerful tool to get new partners or deepen the relationship with existing ones. The application provides you with a reason to take contact with an organization and provide them a positive offer. You are not simply asking for content but providing them with an opportunity. In the process of developing the application you have to understand each other well, which is important long term. Especially organizations within a specific field hear about us when they see that we apply for the same funding as them.
  • Key takeaway: If project grants are a key piece of the funding it will increase experimental development and avoid stagnation.
• Lesson learned: Scaling up different types of funding capabilities takes time and should not be rushed. The Wikimedia movement is at this point in time not cash-strapped, and investing in mid-sized affiliates does not prevent the investment in small-sized affiliates as they will need time to grow.
  • Key takeaway: As the upfront costs are large and investments of this type are long term and take time to pay for themselves the investments should not happen if, or rather when, the Wikimedia movement eventually has financial struggles, but when we are in a good financial state.