[Wikimedia-l] Re: Wikimedia Foundation Form 990 for FY 2019-2020 and FAQs now on-wiki

[Lisa Gruwell]

Hi Andreas-

A lot of the information you are looking for is addressed on the endowment
meta pages .  I
encourage you to ask your additional questions on the talk page
 where staff
regularly answer questions about the endowment.

Thank you,
Lisa

On Fri, Jul 23, 2021 at 5:20 AM Andreas Kolbe  wrote:

> Hi Tony,
>
> Thanks for your reply.
>
> Could you share the thinking behind setting up the Endowment in this
> Janus-like way, where it can be presented either as something that has
> nothing to do with the WMF or as something that is all about the WMF and
> its projects?
>
> Allow me to explain. You say on Meta,
>
> "The Wikimedia Endowment is established and held 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, in
> which the Internal Revenue Service (IRS) follows for the Form 990 reporting
> purposes, the Endowment Funds are not required to be reported within the
> Foundation’s financial statements on our Independent Auditors’ Report and
> Form 990."
>
> On the other hand, Meta also tells readers:[1]
>
> The purpose of the Wikimedia Endowment is to act as a permanent
> safekeeping fund to generate income to support the operations and
> activities of the Wikimedia projects in perpetuity. The Endowment has been
> established as a Collective Action Fund at Tides Foundation, a public
> charity with a 40-year track record of holding and managing charitable
> funds for nonprofit organizations. The Endowment was launched in January
> 2016 (on the 15th anniversary of Wikipedia) with the initial goal of
> raising $100 million to support the Wikimedia projects. The funds may be
> transferred from Tides either to the Wikimedia Foundation or to other
> charitable organisations selected by the Wikimedia Foundation to further
> the Wikimedia mission.
>
> Moreover,
>
> * It is WMF employees – exclusively so, I believe – who solicit donations
> to the Endowment. The WMF Staff and Contractors page[2] contains a
> department named "Major Gifts, Foundations and Endowment", listing an
> "Endowment Director", "Senior Endowment Development Officer" and so on.
> * In internal documents[3] measuring the performance of the WMF
> Advancement (fundraising) department, donations to the Endowment are
> included under "revenue" (but are not so included in the financial
> statements or Form 990).
> * There is an overlap between the Wikimedia Endowment Advisory Board and
> the WMF Foundation board.
> * You reserved the right when setting up the Endowment to have the entire
> amount returned to you, and are in fact planning to exercise that right in
> order to move the Endowment to a new 501(c)3 non-profit organisation.
> * The WMF has paid $30M to the Endowment over the past six years,
> declaring it as an expense, plus another $8.7M to the Tides Advocacy fund,
> also declared as an expense.
>
> So as I understand it, on the one hand you say – and I'm sure are legally
> quite within your rights to say – that you "do not have any direct or
> indirect ability to determine the direction of management and policies of
> the Endowment Funds" and that the Wikimedia Endowment is not held by a
> "related organization".
>
> On the other hand, one of your board members sits on the Endowment
> Advisory Board, the WMF employs an "Endowment Director", the money "may be
> transferred from Tides either to the Wikimedia Foundation or to other
> charitable organisations selected by the Wikimedia Foundation" (this does
> mean it cannot be transferred to anyone else, right?), and you are in fact
> planning to have the entire $100M returned to you to set up a new
> organisation to hold the money – all of which would seem to indicate that
> you have practically complete control over the fund (as donors would also
> expect).
>
> It certainly seems like the organisations – the WMF and the parts of Tides
> managing the Endowment and Tides Advocacy funds – are "related", as the
> question on the Form 990 puts it.
>
> I don't doubt that these two seemingly opposed views of the Endowment are
> legally reconcilable, but why set it up in such a counterintuitive way? In
> what way is it exemplary? How does it benefit the WMF, donors and the
> mission?
>
> Best wishes,
> Andreas
>
> [1] https://meta.wikimedia.org/wiki/Wikimedia_Endowment
> [2] https://wikimediafoundation.org/role/staff-contractors/
> [3]
> https://commons.wikimedia.org/w/index.php?title=File%3AWikimedia_Foundation_third_quarter_2020-2021_tuning_session_-_Advancement.pdf=9
>
> On Thu, Jul 22, 2021 at 11:54 PM Tony Le  wrote:
>
>> Hi Andreas,
>>
>> 

[Wikimedia-l] Re: Wikimedia Foundation Form 990 for FY 2019-2020 and FAQs now on-wiki

[Andreas Kolbe]

Hi Tony,

Thanks for your reply.

Could you share the thinking behind setting up the Endowment in this
Janus-like way, where it can be presented either as something that has
nothing to do with the WMF or as something that is all about the WMF and
its projects?

Allow me to explain. You say on Meta,

"The Wikimedia Endowment is established and held 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, in
which the Internal Revenue Service (IRS) follows for the Form 990 reporting
purposes, the Endowment Funds are not required to be reported within the
Foundation’s financial statements on our Independent Auditors’ Report and
Form 990."

On the other hand, Meta also tells readers:[1]

The purpose of the Wikimedia Endowment is to act as a permanent safekeeping
fund to generate income to support the operations and activities of the
Wikimedia projects in perpetuity. The Endowment has been established as a
Collective Action Fund at Tides Foundation, a public charity with a 40-year
track record of holding and managing charitable funds for nonprofit
organizations. The Endowment was launched in January 2016 (on the 15th
anniversary of Wikipedia) with the initial goal of raising $100 million to
support the Wikimedia projects. The funds may be transferred from Tides
either to the Wikimedia Foundation or to other charitable organisations
selected by the Wikimedia Foundation to further the Wikimedia mission.

Moreover,

* It is WMF employees – exclusively so, I believe – who solicit donations
to the Endowment. The WMF Staff and Contractors page[2] contains a
department named "Major Gifts, Foundations and Endowment", listing an
"Endowment Director", "Senior Endowment Development Officer" and so on.
* In internal documents[3] measuring the performance of the WMF Advancement
(fundraising) department, donations to the Endowment are included under
"revenue" (but are not so included in the financial statements or Form 990).
* There is an overlap between the Wikimedia Endowment Advisory Board and
the WMF Foundation board.
* You reserved the right when setting up the Endowment to have the entire
amount returned to you, and are in fact planning to exercise that right in
order to move the Endowment to a new 501(c)3 non-profit organisation.
* The WMF has paid $30M to the Endowment over the past six years, declaring
it as an expense, plus another $8.7M to the Tides Advocacy fund, also
declared as an expense.

So as I understand it, on the one hand you say – and I'm sure are legally
quite within your rights to say – that you "do not have any direct or
indirect ability to determine the direction of management and policies of
the Endowment Funds" and that the Wikimedia Endowment is not held by a
"related organization".

On the other hand, one of your board members sits on the Endowment Advisory
Board, the WMF employs an "Endowment Director", the money "may be
transferred from Tides either to the Wikimedia Foundation or to other
charitable organisations selected by the Wikimedia Foundation" (this does
mean it cannot be transferred to anyone else, right?), and you are in fact
planning to have the entire $100M returned to you to set up a new
organisation to hold the money – all of which would seem to indicate that
you have practically complete control over the fund (as donors would also
expect).

It certainly seems like the organisations – the WMF and the parts of Tides
managing the Endowment and Tides Advocacy funds – are "related", as the
question on the Form 990 puts it.

I don't doubt that these two seemingly opposed views of the Endowment are
legally reconcilable, but why set it up in such a counterintuitive way? In
what way is it exemplary? How does it benefit the WMF, donors and the
mission?

Best wishes,
Andreas

[1] https://meta.wikimedia.org/wiki/Wikimedia_Endowment
[2] https://wikimediafoundation.org/role/staff-contractors/
[3]
https://commons.wikimedia.org/w/index.php?title=File%3AWikimedia_Foundation_third_quarter_2020-2021_tuning_session_-_Advancement.pdf=9

On Thu, Jul 22, 2021 at 11:54 PM Tony Le  wrote:

> Hi Andreas,
>
> Thanks for the question. Please refer to the talk page on meta
> 
> for the answer as a similar question was posted there.
>
> Best,
> Tony Le
>
> On Tue, Jul 20, 2021 at 2:17 AM Andreas Kolbe  wrote:
>
>> Hi Jaime,
>>
>> Thanks!
>>
>> One quick question: In the Form 990, you answered "No" to the question,
>> "Did the organization, directly or through a related organization, hold
>> assets in donor-restricted endowments or in quasi endowments?", 

[Wikimedia-l] Re: Wikimedia Foundation Form 990 for FY 2019-2020 and FAQs now on-wiki

[Tony Le]

Hi Andreas,

Thanks for the question. Please refer to the talk page on meta

for the answer as a similar question was posted there.

Best,
Tony Le

On Tue, Jul 20, 2021 at 2:17 AM Andreas Kolbe  wrote:

> Hi Jaime,
>
> Thanks!
>
> One quick question: In the Form 990, you answered "No" to the question,
> "Did the organization, directly or through a related organization, hold
> assets in donor-restricted endowments or in quasi endowments?", and
> Schedule, Part V, "Endowment Funds", is left blank.
>
> Could you explain why the WMF is not required to report the – otherwise
> much-publicised – Wikimedia Endowment in the Form 990?
>
> Best,
> Andreas
>
> On Tue, Jul 20, 2021 at 4:42 AM Jaime Villagomez <
> jvillago...@wikimedia.org> wrote:
>
>> Hello everyone,
>>
>>
>> The Wikimedia Foundation has submitted our annual Form 990 for the Fiscal
>> Year 2019-20 to the US Internal Revenue Service
>>  (IRS) and
>> posted on-wiki[1]. The Form 990 is the annual financial reporting, known as
>> an “information return,” which the IRS requires nonprofit organizations in
>> the United States to file.
>>
>>
>>
>> In addition to posting the Form 990 on-wiki, we have also posted an
>> accompanying page with answers to frequently asked questions related to the
>> form and information we reported.[2]
>>
>>
>>
>> Here are a few key highlights on this year’s Form 990:
>>
>>
>>
>> -  The Wikimedia Foundation's total revenue for fiscal year
>> 2019-2020 was US $124.6 million. Our total expenses during this period were
>> US $112.2 million and our total net assets at the end of the fiscal year
>> were US $180.3 million.
>>
>> -  At the end of our fiscal year 2019-2020, our revenue exceeded our
>> expenses by US $12.5 million, which increased our operating reserve to
>> $179.7 million, or the equivalent of 19-20 months of expenses per the
>> fiscal year 2020-2021 annual plan
>> .
>> As reported under our prior Form 990, we have been maintaining the
>> operating reserve at 17-18 months.  Our goal is to have sufficient reserve
>> funds to conservatively provide at least 12-18 months of operating expenses
>> in order to mitigate against unforeseen risk, secure operational stability,
>> and ensure the overall financial health of the organization, in particular,
>> with the COVID-19 pandemic which brings a significant amount of volatility
>> and uncertainty for a majority of businesses, including non-profit
>> organizations. This principle is consistent with many other financially
>> stable, non-profit organizations that are rated by Charity Navigator
>> . With a stable and secure reserve,
>> we have the ability to fund specific Wikimedia Movement investment
>> opportunities that may arise.
>>
>> -  During the fiscal year 2019-2020, we continued to experience
>> growth in our fundraising revenue and success that was attributed to our
>> fundraising campaigns.
>>
>> -  We continue to invest in programmatic activities and evaluate
>> to ensure that our allocation percentage is at or above the standard
>> benchmark of 65%. During the fiscal year 2019-2020, we invested 75% in
>> programmatic activities, 14% in Management & General activities, and 11% in
>> fundraising activities. For fiscal year 2020-2021, we continued to maintain
>> our commitment to our programmatic activities and projected to invest above
>> the standard benchmark in our total spending.
>>
>> -  Our expenses increased due to the investment to support our
>> medium term plan and priorities, that are outlined in the Annual Plan
>> .
>> The major programmatic areas are to evolve our systems and structures and
>> to grow new contributors and content along with supporting a thriving
>> movement and global advocacy.
>>
>> -  Our Governance, Management, and Disclosure practices are
>> committed to maintaining best practices for non-profit charitable
>> organizations, we’ve achieved a score of 100% from Charity Navigator for
>> our accountability and transparency and meet the IRS requirements as
>> applicable.
>>
>>
>>
>> Through reports and discussions like these, the Wikimedia Foundation will
>> continue to strive to provide a responsible level of transparency and
>> accountability. I imagine there are other questions, and I invite you to
>> review the on-wiki FAQ[2], or post your questions on the discussion page
>> should you have any.
>>
>>
>>
>> Thank you to the Foundation's Audit Committee for their oversight and our
>> Staff for their work in developing this year's Form 990 and related
>> communications for filing and 

[Wikimedia-l] Re: Wikimedia Foundation Form 990 for FY 2019-2020 and FAQs now on-wiki

[Andreas Kolbe]

Hi Jaime,

Thanks!

One quick question: In the Form 990, you answered "No" to the question,
"Did the organization, directly or through a related organization, hold
assets in donor-restricted endowments or in quasi endowments?", and
Schedule, Part V, "Endowment Funds", is left blank.

Could you explain why the WMF is not required to report the – otherwise
much-publicised – Wikimedia Endowment in the Form 990?

Best,
Andreas

On Tue, Jul 20, 2021 at 4:42 AM Jaime Villagomez 
wrote:

> Hello everyone,
>
>
> The Wikimedia Foundation has submitted our annual Form 990 for the Fiscal
> Year 2019-20 to the US Internal Revenue Service
>  (IRS) and posted
> on-wiki[1]. The Form 990 is the annual financial reporting, known as an
> “information return,” which the IRS requires nonprofit organizations in the
> United States to file.
>
>
>
> In addition to posting the Form 990 on-wiki, we have also posted an
> accompanying page with answers to frequently asked questions related to the
> form and information we reported.[2]
>
>
>
> Here are a few key highlights on this year’s Form 990:
>
>
>
> -  The Wikimedia Foundation's total revenue for fiscal year
> 2019-2020 was US $124.6 million. Our total expenses during this period were
> US $112.2 million and our total net assets at the end of the fiscal year
> were US $180.3 million.
>
> -  At the end of our fiscal year 2019-2020, our revenue exceeded our
> expenses by US $12.5 million, which increased our operating reserve to
> $179.7 million, or the equivalent of 19-20 months of expenses per the
> fiscal year 2020-2021 annual plan
> .
> As reported under our prior Form 990, we have been maintaining the
> operating reserve at 17-18 months.  Our goal is to have sufficient reserve
> funds to conservatively provide at least 12-18 months of operating expenses
> in order to mitigate against unforeseen risk, secure operational stability,
> and ensure the overall financial health of the organization, in particular,
> with the COVID-19 pandemic which brings a significant amount of volatility
> and uncertainty for a majority of businesses, including non-profit
> organizations. This principle is consistent with many other financially
> stable, non-profit organizations that are rated by Charity Navigator
> . With a stable and secure reserve, we
> have the ability to fund specific Wikimedia Movement investment
> opportunities that may arise.
>
> -  During the fiscal year 2019-2020, we continued to experience
> growth in our fundraising revenue and success that was attributed to our
> fundraising campaigns.
>
> -  We continue to invest in programmatic activities and evaluate
> to ensure that our allocation percentage is at or above the standard
> benchmark of 65%. During the fiscal year 2019-2020, we invested 75% in
> programmatic activities, 14% in Management & General activities, and 11% in
> fundraising activities. For fiscal year 2020-2021, we continued to maintain
> our commitment to our programmatic activities and projected to invest above
> the standard benchmark in our total spending.
>
> -  Our expenses increased due to the investment to support our
> medium term plan and priorities, that are outlined in the Annual Plan
> .
> The major programmatic areas are to evolve our systems and structures and
> to grow new contributors and content along with supporting a thriving
> movement and global advocacy.
>
> -  Our Governance, Management, and Disclosure practices are
> committed to maintaining best practices for non-profit charitable
> organizations, we’ve achieved a score of 100% from Charity Navigator for
> our accountability and transparency and meet the IRS requirements as
> applicable.
>
>
>
> Through reports and discussions like these, the Wikimedia Foundation will
> continue to strive to provide a responsible level of transparency and
> accountability. I imagine there are other questions, and I invite you to
> review the on-wiki FAQ[2], or post your questions on the discussion page
> should you have any.
>
>
>
> Thank you to the Foundation's Audit Committee for their oversight and our
> Staff for their work in developing this year's Form 990 and related
> communications for filing and public disclosure.
>
>
>
> Best Regards and Be Well,
>
>  Jaime
>
>
>
>
>
> [1] - https://wikimediafoundation.org/about/financial-reports/
>
> [2] -
> https://meta.wikimedia.org/wiki/IRS_tax_related_information/2019_Wikimedia_Foundation_Form_990_Frequently_Asked_Questions
>
>
> Jaime Villagomez
>
> Chief Financial Officer
>
> Wikimedia Foundation 
>
> *Imagine a world in which every single human being can freely share in the
> sum of all