[Foundation-l] 2010-11 Annual Plan Now Posted to FoundationWebsite

[Sebastian Moleski]

Hi Gerard,

On Mon, Jul 5, 2010 at 10:58 AM, Gerard Meijssen
<gerard.meijssen at gmail.com>wrote:

> Hoi,
> One of the reasons, for many the only reason for giving a\t the annual
> fundraising drive is exactly to provide money to maintain our
> infrastructure. Take that away and you take away the reason to give. Once
> people get it in their mind that we have reserves to pay for our
> infrastructure, they will remember this and not support us for our other
> goals.
>

In my experience, donor motivation is much more complex than that. While the
donor survey is still in preparation, anecdotal evidence suggests that
donors do not just provide donations to cover our infrastructure but also,
for example,

   - as a voluntary payment for using Wikipedia
   - as an act of charity to support education for people not typically
   provided with decent educational material (i.e. the economically
   disadvantaged)
   - as an act of appreciation for the work of thousands of volunteers

Setting up an endowment to cover part of the fixed costs of running the
Wikimedia projects is something that IMHO is definitely sellable to donors.
Check also the rationales given at the moment for not pursuing an endowment:
they are not related to donor motivation but rather to effort required,
opportunity cost involved, and funding sources cannibalized.

In general, I think the arguments made against pursuing a general endowment
are sound, at least for the moment. For an endowment to be meaningful, it
needs to be fairly big. Let's say that we want to cover half of the current
year's technology budget (about $1.65 million) and we can expect an annual
ROI of 5%. The endowment would have to be at least $33 million to cover
that.

That's not an impossible amount to raise, in general, but it's definitely
not easy. You would have to spread this out over several years considering
that our existing donor base doesn't yield that sort of revenue. So it might
take you, let's say, five years to get this together. Now it's 2016 and
you've got a $33 million endowment yielding $1.65 million payout. Yet, from
all we can tell at the moment, our tech budget won't be anywhere near $3.3
million in 2016 (it's already planned to be $9.8 million in 2011). So what
to do?

Personally, I think we should an endowment drive when we've found our
donation revenue, but also our operational spending to approximately level
off. We are in a period of rapid operational growth, which will end
eventually. When that happens, we will have a better understanding of our
own actual financial need as well as our worldwide fundraising potential.
Until then, let's focus on what has the most benefit at the least cost
which, as it turns out for the moment, is community giving.

Best regards,

Sebastian Moleski
President
Wikimedia Deutschland