[Wikimedia-l] Wikimedia (Foundation) endowment

[phoebe ayers]

On Thu, Mar 14, 2013 at 5:16 AM, Thomas Dalton <thomas.dalton at gmail.com>wrote:

> On 14 March 2013 13:00, Manuel Schneider <manuel.schneider at wikimedia.ch>
> wrote:
> > Thanks Andrew and Philippe for your explanation and links.
> >
> > So that is a plan to build a reserve of funds that is so big that the
> > operation can be funded by the capital's gain - interest, dividends...
>
> Yes, although "reserve" generally refers to money kept in case
> something goes wrong. An endowment would be a separate fund
> specifically raised for that purpose.
> ....
>
It doesn't need
> to fund the entire budget to be useful, though, and can be built up
> over time (eg. from legacies in people's wills).
>

Yes. In an university context, which is what I'm most familiar with (and
where endowments are very common in the U.S.), there is often a specific
"endowment campaign" to plan for and build the endowment that is separate
from normal fundraising -- for instance, you might have a dedicated team
that would work on the endowment, solicit wealthy donors, etc.

And in turn, the endowment is not meant to fund all expenses or to preempt
normal fundraising. It can fund some expenses, and provides long-term
stability for the organization. Endowments often come about when you either
have a very wealthy donor who is setting up a foundation, or when you have
a humanitarian institution that wants to be in business essentially forever
(as is the case with most universities).

There is complicated law and best practice around endowments that I don't
pretend to understand. I do know it's more complicated than setting up a
bank account and calling it the endowment fund, at least to do it well.
Having an endowment would ideally be a part of the WMF's strategic and
long-term financial plan, with some dedicated resources (i.e. staff time to
manage the fund and solicit donations) applied to it. And we would want to
be clear on what we wanted the endowment to do -- what its role would be
over time -- and how it would interact and perhaps affect annual
fundraising.

All that said, I strongly support the idea, on the principle that what we
do is important for the long-term and needs to be supported as such. We did
discuss the idea during my time on the board, a year or so ago, and it
sounds like it's coming up again, which is great!

-- phoebe

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