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

Wed Jun 30 20:53:36 UTC 2010

Thanks everyone for your comments thus far (and for the thank yous too :)).

As we progress through accomplishing the goals of the strategic plan, we 
will have a better idea of what level our operating budget will need to 
be to make everything happen and be sustainable.  We will have done some 
experimentation with initiatives like geographic investments and the 
addition of more roles to support chapters.  We don't know what our 
optimal operating level will be and what fundraising level we can 
sustain.  We have made some predictions based on a lot of factors and we 
will be able to respond appropriately to new information, changes in 
circumstances, etc. as we progress through this fiscal year and future 
years.

For the endowment, Eugene really summed up the endowment issue well.  I 
want to point out that typically endowments do not fund the ongoing 
annual expenses of an organization.  A portion of the annual earnings on 
the endowment may be allocated to help support operations but it is 
usually a small percentage.  In the past, one could estimate 8-10% 
earnings each year and then allocate some to operations and roll the 
rest back to the endowment to continue to grow it.  Alas, these days, 
8-10% returns are hard to come by.  Just to put it into perspective, if 
we were to support a $20 million budget with 5% earnings from an 
endowment, we would need $400 million dollars.  Endowments can be very 
useful and we will continue to analyze this option for the future but it 
is unlikely that an endowment would ever provide our entire operating 
budget each year.

Veronique

susanpgardner at gmail.com wrote:
> Thanks Eugene! This is essentially what I would've written, had I gotten there first. So thank you.
>
> I will just add: everyone wants an endowment campaign -- the issue is not whether to do it; the issue is when to do it. We're still developing our pool of donors (especially the chapters, who are with the exception of the German chapter very new to fundraising), and we are still finding our voice when it comes to fundraising. Given that --and given that we have lots of work to do improving our service to readers, and donors are typically more motivated to fund necessary work, before they'll fund permanence -- that's why we're currently focusing on growing the number of donors.  Walking before running.
>
> And yes, Ziko, thanks for calling out the new revenue strategy: it's significant.  I am really grateful that hundreds of thousands of ordinary people are willing to fund the work we do: it's by far the best model for us from an ideological standpoint.  Most non-profits are in two completely unrelated businesses: the business of mission activity, and the business of revenue generation ----- we are lucky that for us, mission activity and revenue generation can be 100 per cent aligned.
>
> I am proud and happy about our new revenue strategy.  We're in an enviable position, in that we don't need to make unhappy compromises -- instead, we have the luxury of being able to focus on the actual mission work we're trying to get done :-)
>
> Thanks,
> Sue
>
>
> -----Original Message-----
> From: Eugene Eric Kim <eekim at blueoxen.com>
> Sender: foundation-l-bounces at lists.wikimedia.org
> Date: Wed, 30 Jun 2010 09:45:49 
> To: Wikimedia Foundation Mailing List<foundation-l at lists.wikimedia.org>
> Reply-To: Wikimedia Foundation Mailing List <foundation-l at lists.wikimedia.org>
> Subject: Re: [Foundation-l] 2010-11 Annual Plan Now Posted to Foundation
> 	Website
>
> On Wed, Jun 30, 2010 at 8:38 AM, phoebe ayers <phoebe.wiki at gmail.com> wrote:
>   
>> A small point -- I don't know who the "you" refers to here -- me? --
>> but when *I* ask for an endowment, it is not because I think the
>> current levels of support suffice; that's a different question. It's
>> because I don't want the long-term support for Wikimedia to be
>> dependent on our ability to fundraise increasingly large amounts from
>> year to year. Fundraising above and beyond such an endowment is fine
>> and good and necessary as well. I have heard that raising an endowment
>> was rejected by the strategy process because it was hard; I don't know
>> what that means, exactly, but raising an extra $20M in a recession is
>> hard, too.
>>     
>
> That was from me, and I obviously oversimplified my explanation in an
> attempt to be concise. Gerard and Ziko have already raised critical
> points that entered into the decision to focus on many small donors as
> an ongoing strategy. To expand on this, see this thread started by Sue
> a few weeks ago on strategy wiki:
>
> http://strategy.wikimedia.org/wiki/Talk:Strategic_Plan/Movement_Priorities#Revenue_sources_5703
>
> In regards to the endowment question, as you note, the motivation for
> an endowment drive is long-term sustainability and some level of
> protection from recession. The cost of doing an endowment drive is
> enormous. There is usually an 18 months ramp up time simply to start
> the drive, and you need a huge staff to manage it. That work comes at
> the expense of other work. Furthermore, endowment drives also
> typically court high wealth donors aggressively. We do that now, but
> that's not our focus, and I think that a lot of good things emerge
> from prioritizing many small donors.
>
> What the Financial Sustainability Task Force (with help from the
> Bridgespan Group) found was that:
>
> 1. Our revenue has grown significantly over the past few years,
> despite the recession and a tiny fundraising team that has not grown.
> This is because we aren't close to tapping our potential, and it also
> speaks to the fundraising team continually getting smarter in how it
> works.
>
> 2. When we compare Wikimedia Foundation to other similar nonprofits,
> it's clear that our potential revenue is much larger, again despite
> the recession.
>
> 3. In particular, our potential is huge in other countries besides the
> U.S., which several people have already pointed out in this thread.
> Courting donations in other countries has a lot of positive benefits.
> It helps strengthen our chapters, and it increases international
> participation and ownership into our projects.
>
> In summary, it's not clear that an endowment drive is a more effective
> sustainability strategy than our current model, and the opportunity
> cost would be much higher.
>
> If you look at the targets at:
>
> http://strategy.wikimedia.org/wiki/Strategic_Plan/Movement_Priorities#Goal:_Stabilize_the_Infrastructure
>
> you'll notice that the proposed financial goal is listed as the number
> of donors, not as a revenue figure. That speaks to the importance of
> getting many people to contribute, which I think jives well with our
> community's philosophy in general.
>
> =Eugene
>
>   