Wikipedia:Wikipedia Signpost/2012-02-13/Special report

The Wikimedia Foundation Board of Trustees chair Ting Chen has published a letter to the members of the Wikimedia movement, stating what the Board intends to do with fundraiser money. This opened a new front in a war of words that had raged on Meta for weeks, as posts in a personal capacity by WMF's treasurer, Stu West on the foundation's mailing list and on his blog attracted waves of heated commentary.

The statement has brought to a head a complex set of issues that have been causing friction between the WMF and local chapters for at least a year. The disagreements appear to revolve around the extent to which WMF fundraising should be decentralised to the chapters, which currently operate under different tax-deductibility and donation laws. Each country has its own rules on how funds can be disseminated from the chapter to other organisations and countries, and in some cases it is messy to transfer locally raised funds to a foreign entity—in this case the WMF in San Francisco. Some chapters believe their cultural independence owes a lot to their ability to conduct fundraising and manage the proceeds in their own jurisdictions. Other Wikimedians have expressed disquiet at the proposed new "grant" system for disseminating donor funds.

Background
Historically, certain established chapters such as those of Germany, France and the UK have played the role of processing donor payments during the annual fundraiser under a revenue-sharing agreement with the Foundation (see the 2011 Fundraising Agreement for the specifics).

Following an August 2011 meeting in Haifa, the Board of Trustees issued a "Letter regarding fundraising accountability" in which it disclosed that US$4M of donor money (or 15% of the total) had been retained by 12 national chapters in the previous year's fundraiser. The letter went on to question the merit of the chapters, especially the recently established and less organised ones, receiving significant funds largely on the basis of the geographical distribution of donors rather than organisational need. It also found fault with the lack of consistency in the chapters' transparency, regulatory environment and use of funds; the letter announced the expansion of the Foundation's grants program and called for a new needs-based model of fundraising and fund dissemination.

In early 2012, at the board's request, Foundation executive director Sue Gardner issued a series of draft recommendations for a radical restructuring of fundraising, proposing that all proceeds of the annual fundraiser should be processed and retained by the Foundation, with chapters and other affiliate entities left free to raise their own money or to apply for funding from a newly established central Funding Dissemination Committee (FDC), staffed by community members.

In an article covering the developments for the Kurier, the president of the Wikimedia Nederland chapter Ziko van Dijk commented that chapters' role in fundraising had become "a question of prestige" in some cases, even though control rested with the Foundation in any respect – as chapters had to submit to it their budgets under the existing system. He assessed the likely impact of the proposed restructuring:

The February letter from the board
On February 9, chair of the WMF board Ting Chen published a letter on the foundation mailing list announcing the board's latest position on the issues at hand. The gist of the announcement was summarised in the subsequent discussion by Alice Wiegand (lyzzy), a member of board of Wikimedia Germany until July last year [minor corrections made]:
 * 1) Some chapters will still be able to fundraise; the criteria are not yet fixed and need discussion.
 * 2) The ability to fundraise should not be connected to any type of entitlement to the raised funds.
 * 3) Funds dissemination will be managed by a new body (the Funds Dissemination Committee; FDC); the details of how this will be realized are not yet fixed and need discussion.
 * 4) The points in the letter mark the main direction for the Board's discussions and decision on the matter.

Board member Phoebe commented, "... we do intend to discuss fundraising in Paris with everyone, we will receive Sue's final recommendations in early-mid March; and we will plan to take a final vote at (or perhaps just after) the Berlin meeting. ... it would be bad to talk about this for two days in the Board meeting and not report back to the community about where we were at."

The letter is reproduced below:

Dear members of the Wikimedia Movement,

As you are probably aware we have been discussing the the future of fundraising and fund dissemination for the Wikimedia Movement for almost 6 months now. After discussing fundraising and funds dissemination at this past meeting, the board has drafted the following statement. It our intention to discuss these matters in the coming weeks to come to a final decision mid March.

But first we would like to thank everyone who took part in the discussion so far and spent their valuable time providing us with their viewpoints which we have of course taken into account in our decision making process. We hope that you will continue to participate by giving feedback on this letter.

The board wants to create a volunteer-driven body to make recommendations for funding for movement-wide initiatives (Working title: Funds Dissemination Committee, FDC). The Wikimedia Foundation has decision-making authority, because it has fiduciary responsibilities to donors which it legally cannot delegate. The new body will make recommendations for funds dissemination to the Wikimedia Foundation. We anticipate a process in which the Wikimedia Foundation will review and approve all but a small minority of recommendations from the FDC. In the event that the Wikimedia Foundation does not approve a recommendation from the FDC, and the FDC and the Wikimedia Foundation aren't subsequently able to reach agreement, then the FDC can ask the Wikimedia Foundation Board of Trustees to request the recommendation be reconsidered.
 * Funds dissemination


 * 1) The FDC will be a diverse body of people from across our movement (which may include paid staff) with appropriate expertise for this purpose, whose primary purpose is to disseminate funds to advance the Wikimedia mission.
 * 2) The WMF staff will support and facilitate the work of the FDC.
 * 3) Proposals can range from one time smaller contributions for small projects from individuals to larger financing for operational costs of chapters or associations.

The board intends to evaluate this process together with the FDC and see if it is working.

Our thoughts on fundraising are less specific. We have come to the following two statements which are important
 * Fundraising
 * If and when payment processing is done by chapters, it should be done primarily for reasons of tax, operational efficiency (including incentivizing donor cultivation and relations), should not be in conflict with funds dissemination principles and goals, and should avoid a perception of entitlement.
 * The board is sharpening the criteria for payment processing. Payment processing is not a natural path to growth for a chapter; and payment processing will likely be an exception -- most chapters will not do so.

The Wikimedia Board of Trustees

NB: Please note that rather than spend a LOT of time on wording at this time, the board preferred to amend the above text if necessary when moving towards a resolution. This letter indicates our intent, and we may "wordsmith as needed" in our final resolutions.

Responses and discussion
It is becoming clearer that the Board has in mind at least a partial shift towards the distribution of worldwide donor funding on the basis of grants, whether by application by the chapters and others in the Wikimedia movement, or by centralised fiat. WMF treasurer Stu West says on his personal blog:

Former Wikimedia UK treasurer Thomas Dalton (Tango) was scathing in response: "I’m getting very tired of vague claims like this from the Foundation. We have had enormous and ever-increasing success with fundraising over the last few years. What has gone so terribly wrong? [Your point 3] is just complete nonsense. Giving chapters the option means letting them decide. If you decide for them, that is taking away options. ... It is very unclear if the economies of scale from centralisation are enough to counter the advantages to local fundraising (tax, desire of donors to suppose local organisations, local payment methods, etc.)."

Craig Franklin (Lankiveil), treasurer of the Australian chapter and a candidate for an upcoming chapter-appointed seat, said, "these sorts of changes will just push chapters into spending valuable time and effort looking for other sources of income. In essence, you are proposing to replace one set of problems with another set of problems. ... My fear is that by cutting off chapters from fundraising, they’ll end up wasting even more time trying to find other revenue sources, which will benefit no one."

Liam Wyatt (Wittylama), also a candidate for a chapter-appointed seat, told The Signpost he believes there are conflicting signals coming out of the Foundation – pointing to both financial "decentralising" and "centralising". "In that context," he says, "this FDC looks like a 'scapegoat solution' where the problems of the existing system are placed upon a new and undefined committee to own."

Pavel Richter (Pavel Richter (WMDE)), chief executive of the German chapter, told Stu West that "a localised fundraising model is more effective and more efficient than a centralised model", referring to the Wikimedia Deutschland proposal. Much of the angst among chapters appears to stem from differences in tax laws." The German chapter's Jürgen Fenn, speaking on his own behalf, said "tax deductability is a standard that makes a charity organisation notable and honorable in the eyes of donors. In this country, it is an absolute must for anyone who is willing to donate money. We will not contribute to other organisations. Period. There is a world outside the U.S. where people act according to different standards and think and decide differently." In reply, Stu West said, "my gut instinct is that no one makes a €20 donation because of tax deductibility. But we can and should do this analysis, understand the tradeoffs, and make an informed decision." Florence Devouard (Anthere), a former chair of the WMF Board and current vice-president (with responsibility for fundraising) of Wikimedia France, was more positive, although she was critical too. She told The Signpost, "I think the board took a good decision, but expressed it very poorly, which raises many doubts and unfortunately weakens the bold position they took. [The Board has] reiterated their desire for a somewhat decentralized organization, using a peer-reviewed system for funds allocations movement-wide. [It's commendable that they've chosen] this difficult path, which remains to be clearly defined."

One senior chapter member who preferred not to be named told The Signpost, "The German chapter has put forward a well-formulated and articulated model for fundraising and dissemination that's widely regarded by the chapters as viable and self-consistent." He was particularly annoyed by Ting Chen's statement that the Foundation "has fiduciary responsibilities to donors which it legally cannot delegate". He said, "this is self-serving circularity: you centralise the fundraising system, then you say you have a direct relationship to the donors and that it can't be legally delegated. These donors are the same that were just taken away from the chapters."

Stu West's fellow WMF Board member, Bishakha Datta, is skeptical about West's stance: "Because decentralization is such a core value of this movement, I believe we need a decentralized approach to the organizational part of this movement, including fund sharing. I signed on to the fundraising letter because I believe that the proposed Funds Dissemination Committee is a step in the right direction – it decentralizes one layer of financial decision-making. Despite your observation that distributed payment processing does not work, I believe the jury is still out on that one – there may be regions where it does make sense, regions where it does not work. Until there is clear evidence of one or the other, I do not believe we have the information we need to make a solid decision on this."

Stu West responded by pointing out what he sees as the inadequacies of the current system:

Discussion on the issues shows no sign of abating, as national chapters have become a locus of scrutiny and debate not only in the light of fundraising considerations, but amid fresh calls for restructuring Foundation-affiliated organisations and continuing debate over the allocation to chapters of seats on the Board of Trustees itself. The future of movement roles – and particularly the relationship between the Foundation and the chapters – promises to dominate much of the agenda in the coming year.