Wikimedia Foundation Audit Committee/2020-04-15

Audit Committee Meeting

April 15, 2020

11:30 am PDT - 18:30 UTC

Participating Remotely WMF:

Amanda Keton, Amy Vossbrinck, Jaime Villagomez, Janeen Uzzell, James Baldwin, Julian Singh, Katherine Maher, Michael Snow, Nataliia Tymkiv, Raju Narisetti, Shani Evenstein Sigalov, Tanya Capuano, and Tony Le

Participating Remotely KPMG:

Chad Franks and Shalini Saidha

Agenda:

• Approval of Meeting Minutes

• FY 18-19 Form 990 (KPMG Presentation)

• Coronavirus Aid, Relief, and Economic Security Act (CAREs Act)

• FY 20-21 Budgetary Scenario Planning (Work in Progress)

• Next Meeting

Approval of Meeting Minutes

Raju Narisetti moved to approve; Tanya Capuano seconded. Unanimous approval.

FY 18-19 Form 990 (KPMG Presentation)

KPMG presented the FY18-19 to the Audit Committee. Shalini Saidha, KPMG described the purpose of the Form 990 and the relevant sections in the Form 990.

Purpose:

• A filing requirement to comply with federal law (Internal Revenue Service “IRS”) to maintain the tax-exempt status and avoid penalties

• Informs the public – The Form 990 is a public document. Potential donors and grantors can, and many routinely do, look at an organization's Form 990 before making decisions about charitable giving. The media and nonprofit-watchdog groups also review Forms 990 like Charity Navigator and GuideStar.

Highlighted relevant sections discussed include:

1. Compliance with the IRS reporting requirements by filling out all required schedules

2. Financial details - Functional Expenses

3. Governance

4. Public Support Test

5. Excise Tax

6. Lobbying Activity

7. Compensation

The major takeaways:

• WMF is in compliance with the Form 990 instructions

• WMF meets all the requirements as outlined on the Form 990 with respect to The Governance, Management & Disclosure section

• WMF does not have any activities that would trigger an excise tax

• WMF’s lobbying activities are well below the allowable threshold of $1M established by the IRS

• WMF meets the Public Support Test as a Public Charitable Organization

• The functional expenses have been consistent - 74% Programmatic, 14% General & Administrative and 12% Fundraising. WMF’s overall score and rating on the Charity Navigator website is 98.14% based on the last fiscal year Form 990, which is a result of the high scores for both financial performance metrics and the accountability and transparency practices.

Tanya moved that the Audit Committee approve the 990, Raju seconded, approval was unanimous. The 990 will be shared with the Board and filed before the due date which the IRS has extended the filing date to July 15 due to the Coronavirus.

Shalini left the meeting

Coronavirus Aid, Relief, and Economic Security Act (CAREs Act)

Staff provided context and analysis of the two programs under the CAREs Act that support small businesses and nonprofits who are adversely impacted by the COVID-19 pandemic. The anticipation is that COVID-19 could have significant negative impacts on WMF and other Movement organizations especially in its ability to fundraise.

Paycheck Protection Program (PPP): A guaranteed loan that may be forgiven, if qualified, to support 8 weeks of payroll costs, rent, and utilities following the date of the loan.

Employee Retention Credit: A provision for employer tax credits for qualifying wages. This program is designed to incentivize employers to retain staff who are unable to provide services. It was proposed that Staff continue its efforts to clarify the criteria and sensibility of these two programs under the CAREs act. Tanya moved to support; Raju seconded. Agreement was unanimous. [Note1]

FY 20-21 Budgetary Scenario Planning (Work in Progress)

Staff provided the Audit Committee a briefing regarding its responsive, budgetary scenario planning work. This effort, in response to the threat of COVID-19 to WMF, is an organizational wide effort led by the office of the CFO in conjunction with the full C Team and their departmental delegates. WMF is moving forward prudentially by evaluating budgetary scenarios that reflect and respond to high degree of future economic and global uncertainty. This work includes fundraising revenue sensitivities and analysis, impacts to Movement and WMF activities and review of WMF’s financial reserves.

Discussion:

The Audit Committee and Staff discussed the significant uncertainty confronting the world and the Audit Committee were appreciative of the foundation’s extensive, prudent and in-depth analysis. The scenarios will be presented to the Board on May 22, after input from the Audit Committee.

AP Timeline Update Proposal

In response to challenges presented by COVID-19, it has been determined that WMF annual planning will be postponed to a future date. While Staff discussed potential start dates, a new timeline will be presented at the May 22nd Board meeting. The delay of annual planning will extend the timeline to the beginning of FY20-21. Next AC meeting in July.

Respectfully submitted, Amy Vossbrinck

Notes:

1. Audit Committee Discussion on Paycheck Protection Program (PPP)

a. On April 29, 2020, the CFO and Deputy General Counsel discussed with the Audit Committee Chair and the Executive Director the merits of proceeding with procuring the PPP loan. After the discussion, it was agreed that WMF would not be proceeding with the PPP loan. This was shared with the full Board and received unanimous endorsement.