[Wikimedia-l] Fwd: Question: How much does administration in Chapters cost the Wikimedia movement?

[Fae]

> From: Ad Huikeshoven <ad at wikimedia.nl>
...
> The accounting standards give guidelines about what can be allocated to
> program costs, what should be included in fundraising cost and what are
> administrative cost. FDC entities are required to produce audited financial
> statements. The external auditor will review allocation of cost and
> transparency of explanatory notes.
>
> International charity guideline is to have
> program:fundraising:administrative cost ratios according to 75:10:15,
> noting the 10 and 15 are maximums. A source for these ratios is
> http://www.charitynavigator.org/index.cfm?bay=content.view&cpid=48
>

Hi Ad, it was good to chat with you in Milan.

I very much like the rule of thumb "75:10:15", this seems something we
can usefully work with to set our own targets.

I will take a look at SORP in the UK and ask for a small bit of advice
from our leading SORP expert (who is a trustee on our board) to see if
there is a standard good practice WMUK might follow, and then consider
the comparative models for other countries.

> Costs of evaluating impact of programs. Would you include those cost in
> administrative costs?

Yes, the 'cost of quality' would be an administrative cost, however
one conventionally counts the savings from quality improvement,
prevention, and the 'cost of non-quality' wherever they are found -
this would have to be a separate analysis were one looking to
rationalize a quality program. I doubt that the financial standards
you reference would detail exactly how these are reported or analyzed,
this could be something we might decide to point to a best practice
case, rather than laying down arbitrary rules.

> Could costs of impact evaluations be part of program
> cost. If not, why not? If yes, what is your rationale?

Yes, I would expect impact evaluation to be an essential required part
of any program plan. My rationale is that reporting back from any
funded program should be part of the work products defined in the top
level project plan breakdown. I would count this a basic good project
management. Unfortunately I see very few project plans that have
project briefs agreed with beneficiaries and review milestones (or
potential "kill points"), I see schedules but we lack work breakdowns
and product breakdowns aligned with resource plans. The good news is
that there is plenty of room at the top when it comes to setting best
practice in our movement. :-)

It is disappointing that no organization has readily come forward in
reply to my original question with their pre-calculated
"program:fundraising:administrative cost ratios" (I love this way of
conceiving of the ratio) it would be really handy to be discussing a
real case at this moment. I will have a bit more time in a couple of
weeks, at which point I will happily dig into the standards you have
linked to, and then pull these out of an example past report, if I can
find a good set of numbers in one of the large chapters (WMDE, WMUK?)
or even the WMF, so that we can discuss the meaningfulness of starting
to make this ratio a top level indicator for all our movement
organizations.

Note, for those of you that have approached my privately with worries,
I believe the value here will be the trend year by year in these
ratios, as comparing the proportionate cost of "administration" in one
unique organization to another would be impossibly fraught with
difficulties of context, organizational framework and varying
reporting standards. We are looking for better understanding and
improvement, not a witch-hunting campaign, or a race to the bottom.

PS as I was asked in Milan, I am not an accountant (!), though I do
have a background in exec level management.

Cheers,
Fae
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