2011-12 Fundraising and Funds Dissemination process/Board FAQ

Preamble

This Q&A about the final Board fundraising & funds dissemination resolutions was written and edited by several members of the Wikimedia Board in a good faith effort to communicate transparently. In the interest of getting this out quickly, we didn't vote on the final version and so this isn't necessarily 100% the view of all Board members. It's meant to be helpful, and hopefully it is. Do you have more questions? Want clarification? Please post on the talk page and we'll do our best to answer.

Overview

Q What is the upshot of the Board's decision here? What have you decided?

A We have decided that only the four chapters (Wikimedia Germany, Wikimedia France, Wikimedia CH and Wikimedia UK) who payment processed in 2011 can continue to do so, if they meet the published criteria, and if they reach a new fundraising agreement with the Wikimedia Foundation. No other chapters will payment process before 2016. In late 2015, the board will begin to revisit the overall framework for fundraising and payment processing, so that any new decisions can be made in time for the November 2016 fundraising campaign.

We have also asked the WMF Executive Director to begin building a community-driven, globally representative Funds Dissemination Committee, which will make funding recommendations for Wikimedia movement entities. We expect this FDC to be developed over the next several years and to play a major role in allocating funds across our movement.

Q How is this different from how fundraising and funds dissemination has been handled in previous years?

A The biggest change from previous years is probably related to funds dissemination. In previous years, the staff of the Wikimedia Foundation, as well as a small number of payment processing chapters, were the sole entities making decisions about how money was spent in the Wikimedia movement. (In addition, in 2011 Asaf Bartov created the Grant Advisory Council, which made recommendations for grants from the Wikimedia Foundation to other movement entities.)

We have called for the creation of a Funds Dissemination Committee, which will hold responsibility for recommending how a significant proportion of the movement’s money is disseminated.

Also, over time the criteria for payment processing have become more numerous and more strictly enforced. That resulted in uncertainty about who could payment process and in what circumstances, which led to a certain level of anxiety and focus on payment processing as an expected recognition of chapter maturity. A moratorium on new groups payment processing was put in place until at least 2016. The purpose of the moratorium is to give everyone a cooling-off period and enable them to focus on other issues if they want, while giving the Wikimedia movement time to accrue experience in central payment processing and shared allocation that may make our decision-making easier when we begin revisiting the issue in late 2015.

Q What motivated these changes?

A The changes were motivated by concern that, for a number of reasons, having an increasing number of chapters payment processing might not be the right path for the Wikimedia movement. In Haifa in July 2011, we agreed that some changes to the fundraising and funds dissemination model were urgently needed to safeguard the Wikimedia movement against risk, and published an initial set of new requirements. As the discussion progressed in the eight months following, many additional types of issues were discussed and evaluated. These included fundraising efficiency and effectiveness, the importance of decentralization and what it means in this context, the practices of other internationally active non-profit organizations, the relative advantages offered to donors by different systems, a desire to be transparent and clear in our donor communications, the best direction for the energy of people and organizations, a desire to ensure movement entities could communicate effectively with donors, and so forth. It was not a simple conversation. Each participant weighted and prioritized the many different issues differently. The general goal, however, was and is to develop practices for fundraising and funds dissemination that would most efficiently and effectively provide sufficient funding for movement entities to do their work.

Q How did you make the decisions? What is the history here, and what was the process you used in deciding?

A We have been discussing this for a long time. In October 2010, we issued our first general set of fundraising principles. In August 2011, we issued a letter about improving our fundraising model, our design principles for doing so, and criteria under which an organization could directly payment process. This letter built on previous discussions among the WMF Audit Committee and with our outside auditors which had highlighted issues of financial accountability. The following month, we initiated a public consultative process, asking all stakeholders to contribute to the creation of draft guiding principles for the future of Draft Guiding principles with regards to fundraising and Draft Guiding principles with regards to funds distribution in the movement starting from 2012.

In January 2012, we passed a resolution releasing these guiding principles for fundraising and funds dissemination, and asking our Executive Director to develop recommendations consistent with those principles. Sue then drafted recommendations for us on Meta, which we then discussed at our February meeting. Later in February, several of us (Arne, Jan-Bart, Matt, Phoebe and Stu) attended a meeting in Paris with several dozen chapters representatives and Wikimedia Foundation staff. Sue delivered her final recommendations to us on March 9, which were commented on extensively on Meta. We have been discussing them, as well as looking at all of the community discussion and formal chapter responses to the letters, resolutions, and recommendations. In accordance with our published timeline, we made final decisions about fundraising and funds dissemination in our meeting last weekend in Berlin.

Q What happened in the Board's meeting? How was the decision on payment processing reached?

A We were initially split. Half leaned towards fully centralizing payment processing or limiting it to Germany, one wanted something similar to what was eventually agreed upon, and four wanted to enable additional chapters to payment process. This had not changed in the weeks prior to the Berlin meeting despite a lot of discussion, and it was not clear how we were going to break the deadlock. In the meeting, it became obvious that a position viewed by anybody as extreme was not going to achieve a majority. The five trustees who leaned towards more centralized payment processing, as well as two of the trustees who wanted a larger number of chapters to be able to payment process, agreed to compromise to break the deadlock. Full consensus was not possible, but seven people changed their individual positions. In contrast, the funds dissemination (FDC) part of the decision-making was fairly straightforward and uncontentious. There is much that remains to be resolved about the FDC, but the overall goal and the general direction are pretty clear.

Q. Did the Board pay attention to all of the suggestions and input from chapters and community members on this topic? If not, why even ask for feedback?

A. We read all of the chapter position statements that were submitted, as well as the feedback on meta and the lists. Specific wording suggestions (as synthesized by SJ) were taken directly from meta, including a large part of the final edit of the resolutions. We also have all had in-person discussions with chapters at Wikimania, the Paris finance meeting, and in other conversations; these talks were taken into account as well.

We had several rounds of discussion and straw polls to work towards consensus before our final vote. In our discussions of fundraising in the last three Board meetings, we considered a third option that was not in Sue's recommendations but that was submitted by chapters – that payment processing be open to more chapters than just the current four that are payment processing, and that there not be a cap on chapters that can payment process. Although we considered this option as a possibility right to the very end, it consistently failed to gain consensus or majority support.

We asked for community feedback because we believe that in this case, as in all Wikimedia issues, not only is it important to make sure that many diverse community views are heard, but also that we need community, chapter and stakeholder help to come to the best answer – we can't do it alone. Although we did not, in the end, agree with all of the proposals that were put forward, we discussed them actively. The carefully-worded statements submitted by chapters were quite helpful in raising additional issues that we discussed as well, though they did not often include specific proposals that we could vote on.

Q. I am part of a small chapter that has never payment processed. It seems like these discussions have really focused everyone's energy on the big chapters. Are you considering our needs as well?

A. Part of the reason we have spent so much time thinking about global fundraising and how best to do it is that we do want funds to be accessible to everyone – small chapters and projects not connected to a chapter should also have access to resources to build on good work, just as Wikipedia is open to everyone no matter where you live.

Q What is the vision behind these changes? How do you think they will shape the movement in 10, 20, 50 years?

A We believe that the most important part of these changes was the decision to establish the FDC. We hope that the FDC will represent a significant shift of input and influence in the Wikimedia movement, and will allow financial recommendations to be carried out by a larger and more diverse (including internationally) group of people than is currently the case.

The decision to put a moratorium on payment processing was a much more contentious one. We are not sure how the moratorium will shape the future of the movement in 10, 20, 50 years: it was a compromise for the time being as we learn more about movement fundraising, and develop an FDC. We expect that to shape the movement significantly, and to inform how we think about payment processing, influence and responsibility within the movement.

Fundraising and payment processing

Donor relations

Q I understand that the Board has decided to limit the number of chapters who may payment process, but I think it is important for me to communicate with the donors in my geographical area. Will it be possible for me to make use of donor information in order to mail them?

A We all share a desire to see donors welcomed into our community, and to see relationships developing between donors and their local communities. One topic the board discussed was how local communication with donors could happen independent of payment processing. Doing this effectively would require a change to our donor privacy policy. At present, a chapter can write a message that the Wikimedia Foundation can send to donors in their area, informing them specifically about the chapter's work and how to become a member or otherwise support the chapter directly.

Q What will be the rules of my communicating with these donors?

A consistent set of standards for the way movement entities should communicate with donors has not yet been developed. Internally, the Wikimedia Foundation follows several policies and best practices in order to maintain the best possible relationships with donors. These include not spamming, limiting how intrusive fundraising messages may be, and making sure that the messages given to potential donors are a truthful representation of the work to be done with the money raised. We should develop standards similar to these among all groups who directly communicate with donors, regardless of which Wikimedia movement group a donor communicates with.

Payment processing

Q Several years ago, it felt like the Wikimedia Foundation was encouraging chapters to payment-process in the annual campaign. But about 18 months ago, it felt like that started to change. Does the Wikimedia Foundation want the chapters to payment-process or not? If not, can you explain what changed your mind? If you do, why are you making it more difficult?

A This was a change in approach. It was brought about in part by auditors' concerns about accountability for donor funds. We needed to revisit the way that money was handled within the movement in order to make sure that we met the standards for accountability and effectiveness that are expected of us as a responsible organization. In examining this process, we also started to look at more fundamental concerns about the way money moved within Wikimedia and whether the model we used was really the best way to meet our shared goals.

The old model for distributing funds was decided with less of a focus on the long-range concerns of the relationships and responsibilities of the different groups within our movement. How to handle fundraising and funds dissemination is a question of the best use of our movement resources in order to fulfill our mission. To do it well, it requires that all parties within the movement can continue to get access to resources according to their capacity to use it effectively, regardless of how wealthy donors in their region are. It also requires that we all meet high standards of accountability while distributing the money fairly amongst the whole of the movement. Who actually processes the payments should be a fairly technical detail, and one that comes with a lot of overhead considering its limited value, and it is something we want to limit for the next several years in order to focus on other challenges. However, several responsibilities and rights of distributing money should be separated from the actual payment processing, and it is these concerns we hope to focus our attention on in the future. For example, decisions about how to disseminate the money, previously made by the WMF alone, are important to all of us and should be shared across the movement.

Q When the Board started to "raise the bar" in terms of requiring chapters to meet a high standard before they could payment-process, some people interpreted that to mean the Wikimedia Foundation did not trust the chapters, or that WMF felt the chapters were incompetent or irresponsible. Can you explain more about why the Wikimedia Foundation decided to raise the bar, and how it reflects on chapter leadership?

A Having a high standard of accountability is important for a well-managed organization no matter how competent, trustworthy, and responsible the people involved are. Requiring the chapters to meet a high standard in order to payment process does not mean that the Foundation distrusts the chapters or feel the chapters are incompetent or irreponsible. The Wikimedia Foundation has a duty to ensure that donor money raised through the sites is well raised, accounted for, and spent, and fundraising and funds handling is complex in many technical, legal, and regulatory ways. It is very difficult to do properly, especially in an organization that gets a lot of attention from the general public. A major public misstep would jeopardize both our public name and the outstanding achievements of our community as a whole.

Because of this duty and this attention, the Wikimedia Foundation and the chapters must meet the highest standards of fundraising--something more true today, when we are raising tens of millions of dollars, than six years ago, when a million dollars hardly seemed imaginable.

While local processing of donations offers some potential advantages, it also requires a great deal of overhead and additional paperwork from both the chapters and foundation, which often doesn't compensate for the reduced ability to handle more important mission-centered leadership opportunities. Many of us think that chapter leadership is better focused on work that more directly strengthens our projects and communities, including the work of developing the plans to spend significant resources and the mechanisms to properly steward those resources to help the entire Wikimedia community.

Q You say that movement entities are free to use the trademarks to fundraise as they see fit outside of the Wikimedia projects, as long as they adhere to the fundraising principles you have approved. Are there any restrictions on how the marks may be used under these principles? For example, can any chapter or partner organization open a merchandise shop, apply for grants anywhere in the world, or accept in-kind donations of any type?

A Our trademark policy states that “[a] Chapter is ... permitted to use Wikimedia Marks to engage in noncommercial fundraising (e.g., solicitation of donations and grants).” Use of the Wikimedia trademarks is subject to the conditions laid out in the trademark policy and the chapters agreement. For example, under the chapters agreement, a chapter must respect the visual guidelines for use of the marks, and must not engage in any illegal activity during its fundraiser (such as misrepresentation of the intended use of the funds). Similarly, a chapter's activity should not "negatively impact the work or image of the Wikimedia Foundation.”

A chapter may only use the marks commercially with explicit permission from the Wikimedia Foundation, which must be granted separately from the chapters agreement. This includes usage of the marks in a merchandise shop.

The FDC will independently review requests for grants. Relevant considerations will include how restricted the grants are, and how aligned the restricted uses are with our mission.

Q If I want to payment process in 2012, who do I talk to, when will the final decision be made, and who is responsible for making it? What is the process for making a decision?

A If you are one of the four chapters that currently payment process mentioned in the resolution (France, Germany, United Kingdom, and Switzerland), you should be discussing your participation with Barry Newstead. There will be a new fundraising agreement this year, capturing the updated fundraising criteria, and the final decision on payment processing will be made by the ED of the Wikimedia Foundation.

Q Sue's text on Meta mentioned a stop in Payment Processing chapters until 2015 and you now seem to have changed this to 2016, why?

A The intention of the original text was to restart the discussion in 2015, when we would have feedback from the first years of the FDC and from the strategic planning process. This would be in time for the fundraiser starting in 2016; this was clarified in the final text.

Budgeting and funds dissemination

Q You say that money donated via the Wikimedia sites is "movement money." What do you mean by that?

A We believe that the money that donors give to us is given to us as a whole (the movement). It is therefore money that we as a movement should distribute. That is why we are planning for an FDC, a body which will disseminate a large part of this money among all the players within the movement. Another part of it is reserved for core activities of the Wikimedia Foundation such as "keeping the servers running" and essential overhead.

Q You talk about dividing up the Wikimedia Foundation's expenditures into "core" and "non-core." What's the difference?

A We have spent some time discussing the difference between core and non-core, but have not fully reached a conclusion. Realistically, it will take some time to work through specifics and achieve consensus. However, our general direction is this: "core" is permanent spending, which will be required to maintain the sites and organizational infrastructure for as long as the projects are operating. Servers and bandwidth costs are obvious items to include in "core" spending. Additionally, "core" would include things like essential legal, accounting, HR, and governance spending, core software improvements, fundraising or equivalent revenue management, whatever measures are required to ensure our continued operation as a non-profit, and so forth.

Core spending does not mean the rock-bottom costs of operating the sites if we were having financial difficulties: it means the normal costs of operating big sites well. Non-core is anything time-based and intended to extend our ability to better serve the mission. It would include boots-on-the-ground work in India, Brazil, and MENA, as well the "deep community work" related to editor retention, the Global Education program, probably the Fellows, community convenings, Wikimania, projects such as Movement Roles, Controversial Content, or the FDC itself, and so forth.

Q Why is "core" Wikimedia Foundation funding, and the operating reserve, exempt from the FDC process?

A Since "core" funding is permanent spending intended to maintain the sites and organizational infrastructure, and "operating reserves" are intended to protect or safeguard core funding (i.e., ensure we always have this funding in place, including in the event of unanticipated expenses or a shortfall in future revenues), these are exempt from the FDC process. We campaign on "keeping Wikipedia free" and need to ensure we honor our commitment to doing this first.

The FDC, and defining a global budget

Q What is the primary purpose of the FDC?

A The primary purpose of the FDC is to disseminate funds to projects within the movement that further our mission.

Q How will the FDC be designed? How can I have input?

A The Board has tasked the ED with the process, and she has hired Bridgespan, a consulting firm, to help do so. Many things still remain to be developed. If you have specific questions or ideas, talk to Barry Newstead who will be the staff lead. We will likely set up pages on meta to consolidate discussion about the FDC.

Q Why are you using Bridgespan to help build the FDC?

A Because we do not have the capacity in the current staff to do all of the research and stakeholder work that must be done, and having an outside eye to help refine the concept will be helpful. Bridgespan in particular is a good fit, in part because they have worked with us before, on the strategy project; it would take a long time to bring a new group up to speed on the complexities of Wikimedia.

Q How will FDC members be appointed or selected? What kinds of criteria might be used?

A This is still being discussed. Sue and Barry will suggest a model for the initial structure, membership, and process by June 30. Like many other positions within the movement this position will likely require specific expertise and experience. For example, experience in evaluating non-profit grant requests, strategic planning, and approving project plans in a professional capacity. But the specific criteria haven't been set yet.

Q What is the point of building an FDC? Doesn't an FDC just duplicate the functions of the Wikimedia Foundation Board of Trustees?

A The FDC is a body planned to consist of community members and staff members. They will be able to focus on and develop expertise in programmatic aspects, better than the Board of Trustees, which is responsible more broadly for the governance of the Wikimedia Foundation.

Q Can anyone serve on the FDC? Isn't it a conflict of interest to have Wikimedia Foundation board members, the Wikimedia Foundation Executive Director, chapter board members, and/or other paid staff, on either the FDC or the advisory committee? Will anyone be excluded from the FDC for having a conflict of interest?

A Yes, these groups would have potential conflicts of interest. The process will not necessarily exclude highly experienced community and staff members from participating in the overall process simply because they have a conflict relating to some of the committee's work, but will take conflicts into consideration and find reasonable ways to deal with it when possible.

Aside from the obvious conflict of interests (like serving on the board of a chapter, being involved in one of the fund requests or personally benefiting from the allocation of a grant) there are other situations which could cause a conflict of interest. These will be dealt with on an individual basis. Rule of thumb: if you feel that there could be a conflict of interest, there probably is one, and please mention it if you are applying to the FDC.

Q You talk about an advisory committee that would help the Board of Trustees oversee the development and launch of the FDC. How will advisory committee members be appointed or selected?

A. We haven't decided yet how to construct the advisory board, but the initial members will likely be appointed.

Transition period, grants, and operating grants

Q This FDC sounds very complex and will take time to "get right", but meanwhile my chapter needs money to continue to do our work. How will that work?

A We realize that the next year will be very difficult for everyone. Not only do we have to set up the FDC but we have to make sure that everyone will be able to continue to do the things that further the mission we all share. The GAC and operating grants program are still up and running and will continue through the transition period. Suggestions are welcome about how to streamline the process. If you've got specific questions about your chapter's situation -- including special national situations, difficulties in transferring or receiving money, etc. -- please talk to the WMF.

Q Will the GAC continue to function in this time? I have new ideas which need funding now.

A Yes, absolutely. The GAC, or something like it, will also need to exist even when the FDC is up and running, to handle smaller and less complex grants. If you need funding for a project now, please talk to Asaf Bartov and the GAC about how to apply for a grant.

Q. My chapter has no money or source of fundraising and I think we will not be able to grow or develop without this. What should we do?

A. We want to support you. If you need money to develop your chapter and run programs, you should apply for a grant through the GAC. Grants offered through the GAC may be large or small depending on the activity that you want to do. If you are not sure how to get started, talk to Asaf Bartov. He and the other GAC members will help you figure out how to apply and help you edit and refine your application. You should have a plan for using the money you apply for, but you do not need to have all of the details perfect to get started with the grant application process--the GAC can help guide you through it.

Looking at previous successful applications will help you figure out what you should do in your own application. You should also consider talking to other chapters in your situation, and chapters that have gotten grants from the WMF or other sources, to ask them for suggestions and advice.

Q I have questions about annual operating grants – what happens to those in 2012? What's the timeline for submitting plans, and what will the evaluation process be? Does the FDC change how these grants will work?

A. We will definitely still have an annual operating grants program in 2012, and we encourage chapters who are ready to apply – as before, talk to Asaf Bartov for details about this program. While in future the FDC may change how annual grants for chapters are handled, we expect that there will be a long transition period. Part of our vision for the future is that there will be a robust and straightforward way for chapters to get annual operating funding.

Follow up

Q What do you hope will happen as a result of these new resolutions?

A We hope that people feel ready to move on to other movement topics for a while – to keep doing the amazing work of Wikimedia. We hope that Wikimedia fundraising continues to improve. And we hope that setting up the FDC will help us become a more truly community-led organization.

Q Many people, including board members, have characterized the fundraising and funds dissemination conversations as a waste of time or a distraction from programmatic work. If this is true, why has the board spent so much time on them?

A These discussions are important. Our incredibly fast growth has made is necessary for us to look at this carefully. At the same time we want to involve the movement in these discussions, and related research into our options, which takes time.

Q We've been talking actively on meta about fundraising and funds dissemination for about six months now. Does that stop now? Where will the conversation about the FDC take place? Where will conversations about payment processing happen?

A One of the intended effects of the resolution is to direct the energy being spent talking and thinking about payment processing toward topics that have a more direct effect on the health of the projects and the movement instead, and we hope that others are ready to do this along with us. The board does not plan to discuss the issue of payment processing again until 2015.

If you do want to share your opinions or discuss the resolutions, we have set up a talk page on meta; if you have questions you want to see publicly answered, you can post there or on the talk page of this FAQ.

There will no doubt also need to be much discussion of the FDC as it is designed; this is just beginning and we will work to involve everyone in the process.