2011-12 Fundraising and Funds Dissemination process/Final recommendations from Sue
In January 2012, the Wikimedia Foundation Board of Trustees passed a resolution asking me to develop for it a recommendation for fundraising and funds dissemination practices for the Wikimedia movement, that would align with the guiding principles it simultaneously released. Throughout January, I developed draft recommendations to the Board on meta, which engendered a lot of discussion among community members. The Board discussed my recommendations at its February meeting, after which it released some further thinking, and further discussions were held with movement players. The text below is my final set of recommendations for the Board, which I am delivering today, and which will be discussed throughout March, prior to the Board voting on or around March 30.
What will happen now: For the next several weeks, the Board will be discussing these recommendations. At this point, I have formally submitted the recommendations to the Board, so they won’t change substantially (unless it’s as a result of discussions I have with the Board). However, I would be very pleased to hear if anything in the recommendations is ambiguous or otherwise confusing, because I would like to fix anything like that before the Board votes. I would also be happy, and I think the Board would be happy, to see people’s reactions before the Board votes. I doubt there’s much new to say about payment-processing, although anyone who does think there’s something new to say is welcome to say it. I think there is lots to say, on other topics.These may look like independent recommendations, but they really aren’t. This is a single set of interdependent recommendations, numbered to make it easier to discuss them. I don’t expect that the Board will approve some and reject others. I expect the Board will probably discuss and edit them individually, but with an awareness that they are linked. -- Sue Gardner
Recommendations: Funds Dissemination
We acknowledge and affirm that all funds given to the Wikimedia movement are given in support of our global projects, in response to the value created by the global Wikimedia movement. Therefore, all funds raised via the Wikimedia projects should be considered to be movement money, not the property of a particular organization or stakeholder. The Wikimedia Foundation Board of Trustees is the body accountable to the global movement for providing the infrastructure and organizational framework supporting our mission: it seeks to share that responsibility more broadly with others, because it believes that a broader and more inclusive decision-making process for funds dissemination will increase the quality of the funding decisions that we make. We believe this general orientation is consistent with our mission, vision and values.
In acknowledgement of the above, the Wikimedia Foundation will, in its annual planning process, set a revenue target that includes the total of all funds raised via the Wikimedia project sites, and will create an annual plan that divides the funds into three types:
- core operations expenditures by the Wikimedia Foundation for the purposes of running the sites and fulfilling other core responsibilities,
- funds set aside for operating reserves, to safeguard the Wikimedia Foundation’s ability to continue core operations in the event of unanticipated expenses or a shortfall in future revenues, and
- funds set aside for dissemination to movement entities, including individuals, chapters, other entities, and the Wikimedia Foundation itself, for additional activities that support pursuit of the Wikimedia mission.
This revenue target and funds allocation will be approved by the Wikimedia Foundation Board of Trustees, the body deemed by the global movement as responsible for providing the infrastructure and organizational framework supporting our mission.
To support a broader and more inclusive decision-making process for funds distribution, the Wikimedia Foundation will create a volunteer-driven body (working title: the Funds Dissemination Committee, or FDC) whose sole purpose will be to make recommendations to the Wikimedia Foundation for funding activities and initiatives in support of the mission goals of the Wikimedia movement. All funds raised via the Wikimedia project sites will be distributed via the recommendations of the FDC, with the exception of Wikimedia Foundation core operating costs and the operating reserve as described above.
Guiding principles for the work of the FDC will be as follows:
- Protect the core: Core activities that ensure the continuity of the projects need to be funded first;
- Impact. Funds should be allocated in ways that support mission work, agnostic with regard to where the money was raised;
- Transparency and stability. Decisions about funds allocation must be made transparently, in accordance with published guidelines and processes. The model must enable each entity to carry out financial planning to support efforts to be sustainable;
- Decentralization. Funds must be allocated in ways that support decentralized programmatic activities for furthering our mission;
- Responsibility and accountability. Funds must be allocated in ways that enable the Wikimedia movement to confidently assure donors that their donations will be safeguarded appropriately, and that spending will be in line with our mission and with the messages used to attract donors;
- Collaboration and openness. Funds must be allocated in ways that are collaborative and open, and which respect the diverse and international nature of the Wikimedia movement. 
There are many decisions yet to be made about the FDC. Here are the decisions that have been made, so far.
- The FDC will be a diverse body of 5-7 people from across our movement (which may include paid staff) with appropriate expertise for this purpose;
- Being a member of the FDC will require a significant time commitment, and may involve in-person meetings;
- Wikimedia Foundation staff will support and facilitate the work of the FDC, with the goal of preserving FDC time as much as possible for decision-making;
- It is expected that there will be three major types of funding requests, that will each be handled differently:
- annual funds allocations for qualified chapters and partner organizations;
- restricted grants for individuals and entities;
- reimbursements for individual volunteers.
- The primary work of the FDC will be to allocate funding to category 1: annual funds allocations for qualified chapters and partner organizations;
- The FDC will also allocate funding to categories 2 and 3 (restricted grants and reimbursements), which will be dispersed via Wikimedia Foundation staff-led processes. Those processes, which will distribute smaller sums of money, will be supported by a revamped, improved version of the Wikimedia Foundation’s current Grants Advisory Committee.
- Success of the FDC will be assessed based on the following:
- Proportion of FDC recommendations (in both number and dollars) accepted and executed upon by the Wikimedia Foundation;
- Total amount of money given out;
- Fund-seeker satisfaction (that the FDC process is understandable, that the FDC members are fair, responsive, approachable and have the necessary expertise to carry out their responsibilities, that decisions are made in a timely fashion);
- Stakeholder satisfaction (that key stakeholders see the process as effective in helping to advance the mission).
An effective FDC will be extremely valuable to the Wikimedia movement, but building it will be difficult and time-consuming. It will require considerable project management, consultation and facilitation resources as well as legal and financial expertise, and it will need to be constructed in a way that supports iteration. The Wikimedia Foundation Board of Trustees requests that its Executive Director free up sufficient resources to construct the FDC, as follows:
- The staff will lead the development of the FDC, under the oversight of the Wikimedia Foundation Board of Trustees;
- To help the Board oversee the development of the FDC, including assessing its progress at key stages, the Board will create an advisory committee, which will be constituted as follows:
- It will consist of 2-3 members of the Wikimedia Foundation Board of Trustees, its Executive Director, and 2-3 key stakeholders selected by the Wikimedia Foundation Board of Trustees;
- It will be responsible to the Board of Trustees for overseeing the work of getting the FDC up-and-running, evaluating it while it’s in pilot mode, and recommending improvements to the Board based upon its evaluation. It will not have decision-making authority, except as delegated by the Wikimedia Foundation Board of Trustees;
- It is a temporary body, which will likely be dissolved by the Board in the winter of 2014. The goal will be to dissolve it once the FDC’s first full year of existence has been completed and evaluated;
- Following dissolution of the advisory committee, the Wikimedia Foundation Board of Trustees will determine whether or not to continue the FDC.
- The staff lead for the development of the FDC, and the key liaison with the advisory committee, will be the Wikimedia Foundation’s Chief Global Development Officer;
- The CGDO will be supported in his work by Bridgespan, the consulting firm that supported Wikimedia in developing its 2010-15 strategy plan;
- The CGDO will submit to the Wikimedia Foundation Board of Trustees in June 2012 a preliminary plan containing i) a description of how the FDC will function in its final state, and ii) a preliminary transition plan for rolling it out, including partial rollout in 2012-13 and full rollout for 2013-14, and a process for evaluating, reviewing and making refinements at several key stages. Following Board feedback, the preliminary plan will be finalized and execution will begin in the fall of 2012.
All fundraising activities by entities using the Wikimedia trademarks are bound by the following guiding principles:
- Consistency with mission, vision and values. All Wikimedia fundraising activities must be conducted in a manner that's consistent with our overall mission, vision and values. They must not create unnecessary legal exposure for the projects, or otherwise unduly interfere with our ability to achieve our mission.
- Minimal cost and minimal disruption. All Wikimedia fundraising activities must aim to raise the maximum possible amount of money from donors while minimizing administrative costs as much as possible (in order to reserve the largest amount of money possible for programmatic activity), while causing minimal disruption and annoyance for users of the projects.
- Transparency: All Wikimedia fundraising activities must be truthful with prospective donors. We need to tell people what we intend to use their money for, before they donate. And we need to report in a timely fashion on how it was actually spent.
- Responsibility: All Wikimedia fundraising activities must ensure funds received are safe from fraud or misuse as determined by existing third-party standards for appropriate financial controls, and must adhere to relevant laws and regulations.
- Internationalism: Our movement is international in scope, and our fundraising practices must support the easiest possible transfer of money internationally in support of the movement's priorities.
- Independence: We prefer a fundraising model in which we are supported primarily via the many-small-donors model, because this is the model that best supports our independence.
- Flexibility: We do not need to adhere to a single monolithic model for fundraising: multiple donation streams are fine.
- Sustainable donor relations: We must safeguard donor privacy and avoid slowing the "donate now" flow.
- Good faith: The Wikimedia movement assumes that all movement participants are acting in good faith, with regards to each other's actions and intentions.
All movement entities will be free to fundraise outside of the Wikimedia project sites, in ways that are consistent with the guiding principles for fundraising laid out by the Wikimedia Foundation Board of Trustees. Fundraising via avenues such as membership dues, foundation or government grants, in-kind donations, major gifts and conference fees is a good path for financial sustainability for the Wikimedia movement, it supports chapter independence from the Wikimedia Foundation, and it supports growth in revenue for the movement overall. Funds raised outside of the Wikimedia project sites will not be put into the FDC pool, and will not be disseminated by the FDC.
All donations received from visitors to Wikimedia project sites will be received and processed by the Wikimedia Foundation.
Alternate recommendation #3
It is not clear whether payment-processing donations to the Wikimedia project sites should be centralized or not: there are compelling arguments in favour of centralization, and there are also compelling arguments against it. This is complicated by the fact that each chapter is different and each country is different, and that our circumstances, and our understanding of those circumstances, change and evolve over time. The Wikimedia Foundation does not believe the information available to us makes a clear, compelling case for or against full centralization of payment processing. Although some valued community members believe strongly that centralizing payment-processing would be better for the movement overall, others believe the opposite. The Wikimedia Foundation Board wants to acknowledge also that developing payment-processing capacity requires a major investment of time and money, and that changes to payment processing practices cause significant disruption to all parties. Overall, who should process payments is a difficult issue: it’s complicated, there is no obvious right answer, and people’s positions vary significantly.
Therefore, the Wikimedia Foundation Board of Trustees will not fully centralize payment-processing. Instead, we ask that going forward, the Executive Director make decisions about whether chapters can payment-process Wikimedia project donations on a case-by-case basis, using the best currently-available information evaluated against the criteria the Board has laid out in its public statements of October 2010, August 2011, and January 2012. Payment-processing should be limited to chapters that meet the criteria, and to where chapter payment-processing will add value to the global campaign that justifies the required investment of additional time and money from both the chapter and the Wikimedia Foundation.
In 2011, four chapters payment-processed. In 2012, as many as four chapters may payment-process, depending whether the Executive Director believes they meet the Board’s criteria and whether they and the Wikimedia Foundation are able to successfully negotiate a 2012 agreement. We ask the Executive Director not to grant the ability to payment-process to any additional chapters beyond the four that payment-processed in 2011, until the 2015 campaign. By 2015, we will have a few years of experience with the FDC and with other movement changes designed to improve transparency and accountability. At that point, we can revisit this issue.
- ↑ (Rationale: These guiding principles are taken directly from the Board’s Guidelines for Funds Distribution, as released January 2012, here: http://wikimediafoundation.org/wiki/Resolution:Developing_Scenarios_for_future_of_fundraising)
- ↑ (Rationale: These guiding principles are taken directly from the Board’s Guidelines for Fundraising, as released January 2012, here: http://wikimediafoundation.org/wiki/Resolution:Developing_Scenarios_for_future_of_fundraising)