IRS tax related information/2020 Wikimedia Foundation Form 990 Frequently Asked Questions
What is a Form 990 and what is its purpose?
The Form 990 is the annual informational document required by the Internal Revenue Service (IRS) for non-profit organizations in the United States. The purpose of the filing is to provide information to the IRS and the public for evaluation purposes; this is in addition to our public financial reports and our annual audit performed by KPMG.
The Form 990 is the IRS’ primary tool for gathering information about non-profit organizations and promoting financial compliance. The IRS collects information such as compensation and governance to help ensure compliance with US tax requirements.
What time period do the financial statements cover?
Tax authorities refer to it as the 2020 return because the fiscal year period that the return refers to began in 2020. A fiscal year is the 12 month period around which an organization builds its budget plans and reporting. For the Wikimedia Foundation, that is the 2020–2021 fiscal year – which covers activities from July 1, 2020 to June 30, 2021. The financial statements cover a comprehensive range of financial activities during that time period meant to give the IRS and public an overview of the organization’s financial status and conduct.
An exception to the July-June fiscal year setup is information related to the compensation of our officers, key employees, highest paid employees and independent contractors, which is instead based on the calendar year 2020 – so January 2020 to December 2020.
When did you file the 2020 Form 990, and where can I find it?
The 2020 Form 990 was filed with the IRS on May 16, 2022, and has now been posted on the Wikimedia Foundation website. It will also eventually propagate to other websites such as the ones belonging to the Foundation Center, Guidestar, and many others.
Who is responsible for filling out the Form 990 for the Wikimedia Foundation?
The Form 990 is the responsibility of the management of the Wikimedia Foundation. KPMG provides guidance, helps create the Form 990 in the proper IRS format and reviews the final product for accuracy and completeness.
What is the process for completing and reviewing the Form 990 for the Wikimedia Foundation?
As discussed above, the Wikimedia Foundation accounting and management staff work to provide data to KPMG. KPMG then provides a first draft of the Form 990 to the Foundation. There may be several drafts. Once Wikimedia Foundation accounting staff and management have prepared a “final draft,” it is presented to the Wikimedia Foundation Audit Committee for a detailed review. Once the Audit Committee approves it, it is given to the Wikimedia Foundation Board. The Wikimedia Foundation Board has a period of time to ask questions and then the Form 990 is officially filed with the IRS by KPMG.
What are the due dates for filing the Form 990?
The Form 990 is due on the 15th of the 5th month following the fiscal year-end, so in our case, November 15. However, the IRS grants a six-month extension to anyone who requests it, thus moving the deadline this year to May 16, 2022.
Why does the Foundation request the extension? Can the Form 990 be filed earlier?
The Form 990 includes financial information that is not finalized until the Foundation’s financial audit is finalized, which is typically in October each year. It would be less efficient to try to work on the Form 990 before those numbers are finalized. The Form 990 also has additional information requirements to the audited financial statements and requires consolidation with KPMG tax advisory services.
It is best practice to request the extension from the IRS so that the Foundation can aim to be as efficient as possible with its release of the Form 990 (and other important financial documents) without compromising the accuracy of its contents. This timeline is consistent with the timelines of other comparable organizations.
The Foundation, however, seeks continuous improvement and will evaluate whether the time frame can be shortened in future years.
What are your legal responsibilities for posting the Form 990?
By law, we must submit the full Form 990 to the IRS, and if members of the public request, we must also provide suitable copies for their review. As part of the Wikimedia Foundation’s commitment to accountability and transparency, and to make it easy for people to find it, we post the Form 990 as a PDF on the Wikimedia Foundation website.
This return is 60 pages long – can you give a quick overview of how it is organized?
The Form 990 consists of the core return form with parts numbered from Part I to Part XII.
- Part I (Summary) provides a snapshot of the core form, including the organization’s mission, activities and current and prior year's financial results;
- Part II is for the signature of the Wikimedia Foundation officer verifying the accuracy and completeness of the information in the Form 990;
- Part III is a summary of the main program service accomplishments (i.e., what are the main focus areas of our work);
- Part IV includes a checklist to determine which additional schedules need to be completed outside of the core form;
- Part V includes statements regarding tax filings and compliance;
- Part VI includes questions/statements re: governance, management and disclosure;
- Part VII includes compensation;
- Part VIII includes revenue information;
- Part IX includes the functional expense statement;
- Part X includes balance sheet information;
- Part XI includes the reconciliation of net assets; and
- Part XII includes the financial statements and reporting method.
Additional schedules that the Wikimedia Foundation completes include:
- Schedule A – Public Charity Status and Public Support (this includes the test to make sure that we properly considered a 501 (c)(3) public charity as opposed to a different type of charity);
- Schedule C – Political Campaign and Lobbying Activities;
- Schedule D – Supplemental Financial Statements including reconciliation of audited revenue and expenses vs revenue and expenses per the Form 990;
- Schedule F – Statement of Activities Outside the U.S. (This includes operational activities as well as grants or assistance to organizations and /or individuals outside of the United States);
- Schedule G – Supplemental Information Regarding Fundraising;
- Schedule I – Grants and Other Assistance to Organizations and Individuals in the United States;
- Schedule J – Compensation;
- Schedule M – Noncash Contributions
- Schedule O – Supplemental Information (this includes information on process and policy and continuation of items that don’t fit completely on the standard form pages such as the full mission statement which is asked for on page 2 but wouldn’t fit in its entirety there); and
- Schedule R – Related Organizations and Unrelated Partnerships.
How can the Form 990 be used to measure the Foundation’s health?
Charity Navigator is an assessment organization that evaluates hundreds of thousands of charitable organizations based in the United States. Charity Navigator's ratings are based on the financial information each charity provides annually in its Form 990. Here are some metrics that are included in Charity Navigator’s evaluation and how they would be calculated using this year’s Form 990:
- Working capital ratio: Determines how long a charity could sustain its level of spending using its net available assets, or working capital. The Foundation’s working capital ratio is 2.2 years. This is within the healthy range for nonprofit organizations and signifies that the Foundation could sustain its operations for 2+ years using its net available assets.
- Program expense ratio: This ratio is calculated by dividing program expenses by total expenses (average of most recent three 990s) and is designed to reflect the percent of its total expenses a charity spends on the programs and services it exists to deliver. The Foundation’s program expense ratio is 74% and is within the healthy range for nonprofit organizations.
- Liabilities to assets: This ratio is a percentage calculated by dividing a charity's total liabilities by its total assets and is an indicator of an organization’s solvency and/or long term sustainability. The Foundation’s liabilities to assets ratio is 3.8% and is within the healthy range for nonprofit organizations, as Charity Navigator awards the highest score to organizations with a liabilities to assets ratio of less than 5%.
The page numbers used are based on the page number in the bottom right corner of each page in the Form 990 PDF.
On page 1, Part I, Summary, line 6 the total number of volunteers is listed as 311,000 – where does this number come from?
This number is the estimated number of monthly average editors in the fiscal year of the report, as tracked and reported by our Product Analytics team.
On page 1, Part I, Summary, line 8, Contributions and grants increased by approximately US$34.4 million from the prior year. What is causing this increase?
Our annual plan budget increased from the prior year, and we raised additional funds to meet that commitment. The increase can be primarily attributed to the increase in the number of donations, approximately 41% more than FY19-20.
More information on our fundraising activities can be found in our Fundraising Report for FY2020-2021.
On page 1, Part I, Summary, line 5, what staff are included within the total number of individuals employed in the calendar year 2020?
Per IRS requirements, this is required to be the number of individuals that were issued W-2s in the calendar year. Thus, the total shown is the number of US-based full-time and part-time employees employed during the calendar year. It does not include non-US-based workers, as well as contractors which may be hired part-time or for specific assignments, as those individuals are not issued W-2s from the Foundation.
On page 1, Part I, Summary, line 15, what is included within the category “Salaries, other compensation, employee benefits”?
This category includes salary, benefits, retirement, wellness, and payroll taxes for full-time and part-time staff members in the US and outside of the US employed by Wikimedia Foundation or its Employer of Record. These costs as well as salaries vary significantly by geography. This number does not include fees paid to contractors, vendors, or consultants. Please also note that the amount shown is for the fiscal year (July 1, 2020 – June 30, 2021) while other information in the Form 990 is as of the calendar year (January 1- December 31, 2020).
On page 1, Part I, Summary, line 15, Salaries have increased by approximately US$12.2 million from the prior year, what is causing this increase?
This increase represents the addition of new staff as well as our annual compensation adjustments for existing staff. This is consistent with the growth outline in our approved annual plan to support our programmatic priorities.
The Wikimedia Foundation's compensation practices reflect our desire to compensate people for their work in a manner that is equitable, reasonable, and consistent with our values and culture. The primary mechanism for compensation is base pay, supported by strong benefits and paid time off allotments, and a commitment to professional development. As a donor-funded nonprofit, the Wikimedia Foundation does not provide bonuses, but it does typically offer annual cost of living adjustments.
In setting the salaries for all of our paid positions for the 2020–2021 fiscal year, our Talent & Culture department uses a set of salary ranges specific to job roles and levels which are determined and updated using data from the Mercer salary survey. Pay is also based on the location of the staff, which allows the Foundation to maintain a diverse international workforce with competitive local market salaries. The Board of Trustees also uses this information and comparative data from the Form 990s of other nonprofits organizations when discussing executive salaries.
The largely technical and high-skill nature of some of our work requires competitive wages to recruit and retain the best talent and compensate them fairly for their expertise and commitment. We believe that the Wikimedia Foundation continues to pay competitively, but within the average range for comparable organizations and roles.
The increase in line 4a was driven by the increase in salaries, representing the addition of new staff as well as our annual compensation adjustments for existing staff.
Line 4b was less than the prior year primarily due to a large increase in grantmaking and program activities in 2019–2020 to enable us to fund future work. In the fourth quarter of fiscal year 2019–2020, we were able to use our budget underrun to "pay forward" grantmaking and program development commitments the year ahead in order to provide funding certainty for our grants programs in an uncertain time. We expensed $10M in our fiscal year 2019–2020 that reflected a one-time increase for future grants. Included in this $10M is $5.5M to enable increases to our fiscal year 2020–2021 Annual Plan Grants as well as $4.5M to the Wikimedia Knowledge Equity Fund.
On page 3, Part IV, line 4 is marked “Yes” for lobbying activities, why?
The IRS defines “lobbying activities” as “all activities intended to influence foreign, national, state, or local legislation.” In the 2020–21 fiscal year, the Wikimedia Foundation continued to support the public policy efforts of the Wikimedia movement, including activities to promote and defend Wikimedia's position on copyright, free expression, and legal rules that permit community governance. Activities included providing testimony on copyright and fair use in Mexico in coordination with Wikimedia Mexico, writing on the EU Digital Services Act in coordination with the EU Free Knowledge Advocacy Group, submitting comments on the Privacy Act in Australia, and submitting letters and comments on multiple copyright reform proposals in the United States. We have outlined our expenditures on lobbying activities for the fiscal year in Schedule C, pages 21-23.
On page 3, Part IV, line 10 is marked “No” for endowments or quasi endowments, why?
During the 2020–2021 fiscal year, the Wikimedia Endowment was established and managed by a separate legal entity (Tides Foundation) with its own separate Board and Advisory Board that has the authority to control and govern the Policies and Practices of the Endowment Funds. The Foundation and the Foundation’s Board do not have any direct or indirect ability to determine the direction of management and policies of the Endowment Funds. As such, per US accounting standards, which the IRS follows for the Form 990 reporting purposes, the Endowment Funds are not reported within the Foundation’s financial statements on our Independent Auditors’ Report and Form 990.
On page 6, Part VI, Section B, line 10a, the question “Does the organization have local chapters, branches, or affiliates?” is answered “No.” Why?
This question refers to entities that are not their own legal entities but rather extensions of the parent entity, in this case the Wikimedia Foundation. Wikimedia affiliates are independent organizations.
On pages 7-8, Part VII, Section A, there is a list of “current officers" which includes people who are no longer on the the board and staff but does not include current staff. Why?
The list is intended to reflect 2020–21 fiscal year and 2020 calendar year, which means it includes key staff who were present for all, or any part, of the calendar year, as well as board members active during the fiscal year from July 2020 through June 2021.
On page 7, Part VII, Section A, how do you determine which staff are listed here? Why is there a name I don’t recognize?
The requirements for inclusion on this list are staff who are officers of the organization, key employees (who have over $150,000 of reportable compensation) and the five highest compensated employees. The Form 990 is a legal document requiring us to put down the legal names of all reported individuals, which may or may not be the name they use routinely. The Wikimedia Foundation believes their preferred name is their real name, but the federal government of the United States does not always agree.
On page 10, Part IX, line 11b – what does the $1,919,969 in fees for legal services represent?
It relates to general outside legal counsel, trademarks support, human resources related counsel, and litigation. These are recurring activities and consistent with prior years.
On page 10, Part IX, line 25 – How does the expenses allocation among Program Service Expenses, Management and General Expenses and Fundraising Expenses compare to the prior fiscal year?
We continue to invest in programmatic activities as outlined in our approved annual plan. During this reporting period we invested 73% in Program Services, 14% in Management & General, and 13% in Fundraising which shows a slight decrease of 2% in Program Services and an increase of 2% in Fundraising as compared to fiscal year 2019–2020. The Better Business Bureau standard percentage benchmark for allocation to program services is 65%.
On page 27, Schedule D, Part XI, line 2b – what does donated services and use of facilities represent?
This related to pro bono litigation services for the Wikimedia Foundation v. NSA lawsuit, primarily from the American Civil Liberties Union (ACLU) and Cooley, LLP. It also included other pro bono legal services for the organization, as well as donated technical and hosting services.
What is the purpose of Schedule F, Statement of Activities Outside of the United States (begins at page 29)?
This schedule shows what activities the organization has outside of the United States and how much the expenses are related to those activities. Furthermore, the IRS asks us to break the activities down by region; for example, North America includes Canada and Mexico (but not the U.S. since this schedule is focusing outside of the U.S.), East Asia and the Pacific includes Australia, South Asia includes India. Expenses include payments for services such as bandwidth, contractors, grants to organizations and individuals, etc. The IRS also asks about Fundraising activities. Through our online donations, we receive donations from every region that the IRS lists. We don't show expenses in those regions related to Fundraising because we do not pay individuals or organizations to fundraise in regions outside of the U.S.
Is Wikimedia Enterprise included in the Form 990?
Wikimedia Enterprise is a part of the Foundation for federal tax purposes (see schedule R in the Form 990) and thus Wikimedia Enterprise activity would be included within the Foundation’s Form 990. Wikimedia Enterprise launched in October 2021 so there is no revenue reported within this year’s Form 990.