> We have a deep and stable financial position that will help us grow and protect us from any storm, and the trust in our projects has never been higher.
They earned 9 millions more than last year, from 120 millions to 129 millions, and spent 21 millions more, from 91 millions to 112 millions [1], with an increase of 10 millions in "awards and grants". The donations grew by 10 millions. If I read the financial statement correctly (feel free to correct me, I'm not an expert), they currently have 180 millions in assets, which means if donations stop they can't even last two years. I don't see how this is a "deep and stable financial position that will help us grow and protect us from any storm".
Edit: as tux3 pointed out in their comment [2] there is a Wikipedia Endowment. I think I can now agree on the "deep and stable financial position".
Indeed, and I'm not sure it would be a defensible position to just be stashing your donated funds into a gigantic rainy day war chest— the money is there to spend on growing and fortifying the service in other ways, so it should be spent.
The proper way for non-profits to do this is to start an endowment fund, which provides consistent residual income that can help fund operations. Usually by identifying specific large donors who would wish to be named in the fund.
Endowments and foundations are different things with different objectives. Many foundations may have endowments of their own, and may use them to issue grants to non-profits. From a legal and financial perspective though, there's a difference between a non-profit having an endowment itself which provides restricted funds for specific operational activities vs how foundations typically create and structure endowments for external giving.
Both concepts have been around for decades, so I don't think either is particularly disruptive.
My Japanese colleague told me with no humor, that I should never work for free, end of sentance. I was at the offices of $Giant_90s_NonProfit when a group from Japan was on tour of the two story office in San Francisco. They were full of energy and had questions, but someone told me the reason they sent a large and important group for the tour, is that they have no "non-profit" in Japan.
I suspect that the non-profit goodwill in the USA is changing a lot in the last year.
I think you do have to ask yourself if the need for the charity can outlast its time in the sun.
The Red Cross needs to stay frosty all the time. They get money every time there’s a disaster, but the money to deal with the current disaster needs to have already been spent before the checks clear. If we haven’t had a big disaster in a while, we all know there’s one coming, because they always come, and when that shoe finally drops it might be huge. But donations are down because nothing is blowing up.
We still need Wikipedia even if someone cures cancer. Because you don’t cure cancer, you cure a cancer, the moment you’ve cured two or three, an avalanche of money will arrive to fix the others. Money that might have gone to something else like the Red Cross, WWF, PP, Wikipedia, or really all of the above.
I think they are running a charity on hard mode. If I were feeding homeless people (any year except last year), I have a pretty good idea of what I have to accomplish and for how many people. I could run a pretty lean operation.
Meanwhile RC “has to” stash supplies 12 hours from everywhere in the world and then let most of them rot. Their overheads are huge, even before you get into any discussion of mismanagement.
You can Google to quickly get a bunch of different articles about how ineffective the Red Cross is; we don't need to recapitulate them all here, it's just a little funny that they were your example of an obvious recurring charity donation.
If I have a real point here, it's that people all have different definitions of what important charities are.
When I hear “Foundation” and “stable financial position” I think endowment.
They seem to be making the same mistake as the Mozilla foundation. You’re living on your nest egg instead of the interest. Spending 4 times as much as you should.
Is that enough to pay salaries and hosting costs? Sounds like the dividends will only cover 20% of their current expenses if they stop making grants. At it is it’s less than 10% of their burn rate.
That’s a very excellent start but I suspect someone will want to grow that later on. In fact they’re at 90% of their goal and less than 60% of their target date, so they could be looking for $150M as the stretch goal.
Donations are not a zero sum game but they aren’t terribly elastic either. Try as you might, every dollar you get as a donation is taking some of that money from someone else.
There will be times when Wikipedia is not sexy, but taken for granted. That’s when you need the endowment.
If Wikipedia becomes unfashionable to the extent it is highly dependent on its savings, it will no be longer valued for being Wikipedia (by definition).
It might be valued as an institution with modest economic power, which doesn't seem to me to add anything to the world that isn't already there.
2 years of all current spending as a cushion seems like plenty to me (for Wikipedia, which has not faced any unexpected financial shocks, even in 2020). If you can't navigate shocks and downward trends with that cushion, then you probably ought not to exist.
Only if you believe that market economies are always efficient.
Plenty of things have a huge impact on your life and yet nobody wants to pay for them. They're important, but they're not important. If you have an endowment, you don't have to keep wrestling with keeping the two in sync.
I think our perspectives are different because I'm thinking about what the board of Wikimedia might look like later: when it controls a bunch of money but is essentially dying as a service.
I imagine a political mess, of people trying to extract personal benefit from the remaining endowment.
No law of physics says they must continue pouring tens of millions into outreach programs if all revenue ceases. Hosting wikipedia is their one true cost and is relatively tiny compared to everything else they spend money on.
Hosting wikipedia accounts for roughly 2% of their total expenses. I've been donating annually, but it would be nice to have the option for the entirety of my donations go only to running wikipedia and none of it going to wikimedia's discretionary spending.
I do think it's hard to draw the line there, just because "running wikipedia" is kinda fuzzy and could mean different things to different people.
There's pure hosting costs (servers and bandwidth), then there's staff to maintain those servers, staff to handle legal issues around a large community-contributed project, staff to do moderation and other community-relations work, staff to improve the mediawiki software that wikipedia runs on, staff to manage administrative stuff for those other staff, etc.
There's room to debate which of these are necessary to "run wikipedia", and how much of each of them is needed, but it's a lot more complicated than just keeping the servers turned on. (And if you do think that the Foundation could be just-paying-for-hosting, you're implicitly hoping that some people are going to be donating their skilled-work for maintenance.)
That’s okay, if they go bankrupt, someone more competent could take over, and easily run Wikipedia on less than a tenth of their current budget. Look at their financials: Wikimedia Foundation is part jobs program, part grift.
I don't know why you're calling it grift. According to the definition a non-profit is not conducted or maintained to make a profit. I'm guessing most of us agree that Wikipedia is an asset to society and I'm hoping the people that work there get paid well. Why would I not want more people working at Wikimedia compared to something more detrimental to society like Facebook?
Because the people paid the to do (or pretend to do) useless busy-work in Wikimedia Foundation could instead be doing something productive elsewhere. The point here is that the resources in the society at large are not infinite, and if they are wasted at Wikimedia, it’s a real waste even if Wikipedia is otherwise a valuable thing worth of support.
Imagine you have a city, which has a non-profit foundation dedicated to maintaining and improving the city parks. The foundation has 20 people on payroll, $2M in annual spending on wages and materials, and is generally though to do exemplary job. In fact, people like it so much that they keep donating money to it, while the new directors of the park foundation use that money to advertise everywhere that they are starved for cash, and if every park goer donates just $10, they can meet their fundraising budget. After a few years, the revenue of the park foundation is $120M/year, they are still doing pretty good job maintaining and improving the park for $2M/year, and the rest is spent on C-level executive salaries, analyst reports, conferences, travel expenses, shovel R&D, and all kinds of stuff that the parks foundation doesn’t need to do, and which provides little benefit to the actual parks or park goers beyond the $2M they have always been spending, while enriching the employees and executives in the nominally non-profit organization. That’s roughly where the Wikimedia Foundation is today. I see this as profoundly bad state of affairs. I also find it pretty ironic that the goal of the nominally non-profit organization apparently seems to be to maximize the donations and the spend.
> compared to something more detrimental to society like Facebook?
Why would you compare it to Facebook? The choice is not better Wikimedia and Facebook. There are plenty of other projects that could use money better than either Wikimedia or Facebook.
It is anger at the collapse of every institution of our society, most of which have transformed away from their original purpose, and into sinecures for well-educated and well-connected professionals, who, under false pretenses, skim the surplus by lying about what they do, and shaming the productive masses into supporting them.
I admit that I'm also full of wishful thinking. I said that once they go bankrupt, someone more competent will take over, but there's no guarantee of that -- instead, it is highly likely that some other skilled and well-connected grifter will assume control, will keep the "crying Jimbo Wales" ads to shame people into giving them money they spend on salaries and travel expenses of people doing things that do not need to be done, and often things that Wikipedia community doesn't even want done.
I have to admit I was unaware until this thread that the call for urgent donations was despite this endowment and their expenses other than directly operating wikipedia.org.
If an individual had no desire to ever retire and was able to pay all of their bills for the next 2 years with no further paychecks and no adjustments to their lifestyle, I'd call that a pretty deep level of financial stability. Especially since in this case their income sources are somewhat diversified across people, unlike a single paycheck from an employer.
why did expenses rise by $21mm though? is the organization fortunate that donations rise fast enough to cover an annual increase in necessary spending, or does the spending grow as much as necessary to consume the donations?
WMF spent $52mm in FY 2014-2015. it spent $112mm in FY 2019-2020. is the core project really twice as expensive to run as it was five years ago?
if donations stop they can't even last two years. I don't see how this is a "deep and stable financial position that will help us grow and protect us from any storm".
It depends on the company and the industry.
One industry I worked in, six months was considered the minimum cushion.
In a post-COVID world, though, I bet a lot of those industries will increase their padding.
Do you know of many businesses which could sustain their operation without any revenue for two straight years?
If you do these are really inefficient businesses.
If you do however decide to say they non profits should do that, then what’s the point of having that money in non profits if you could just put that money in a savings account and supply the non profit every year?
They earned 9 millions more than last year, from 120 millions to 129 millions, and spent 21 millions more, from 91 millions to 112 millions [1], with an increase of 10 millions in "awards and grants". The donations grew by 10 millions. If I read the financial statement correctly (feel free to correct me, I'm not an expert), they currently have 180 millions in assets, which means if donations stop they can't even last two years. I don't see how this is a "deep and stable financial position that will help us grow and protect us from any storm".
Edit: as tux3 pointed out in their comment [2] there is a Wikipedia Endowment. I think I can now agree on the "deep and stable financial position".
[1]: https://upload.wikimedia.org/wikipedia/foundation/f/f7/Wikim...
[2]: https://news.ycombinator.com/item?id=26028968