[Wikimedia-l] Wikimedia (Foundation) endowment

Dan Rosenthal swatjester at gmail.com
Mon Mar 18 08:27:49 UTC 2013

A couple of counterarguments for Ting:

1) (WMF does not need an endowment).  The crux of this argument is that the
WMF is not dependent on large grants, but from a widely spread grassroots
campaign of small donations. While it is true that this has worked for us
in the past, the WMF budget grows and gets bigger, and it is dangerous to
rely solely on donations. A year of underperforming donations, poor
fundraising, bad economy affecting users willingness to donate, etc., could
be disastrous for the WMF. An endowment is a long-term security blanket to
cover the WMF in situations when fundraising fails. Additionally, our
fundraising model is not perfect. Zack can correct me if I'm wrong on this,
but the annual fundraising drive is disruptive to people's experiences and
expectations. It serves as a reminder, but probably also serves to turn
some people off to further engagement in Wikimedia.  We've evolved from
staring at Jimmy-face year after year, and our campaigns keep getting
better, (thanks in no small part to work by Megan, Zack, Ryan, and the rest
of that team) but it would be best if we didn't have to run them at all. So
no, I dispute the premise that the WMF does not need an endowment.  It's
been well established that we can benefit from an endowment, and while
there are certainly drawbacks, sticking the status quo is not really
acceptable for this kind of innovative organization.

2) (Endowment poses extra risks and problems for WMF).  Yes, endowments
require money management. So does fundraising. Is it really so different
for us to have a team dedicated to overseeing and growing an endowment,
than for us to have a team that exists mostly to run tests on banners for
fundraising every year?   The comparison to banks is irrelevant. An
endowment is not a bank, it is not regulated as a bank, and it answers to a
different set of stakeholders than a bank does. The 2008 financial meltdown
was a catastrophic failure of management, oversight, ethics, on many sides.
Despite the AAA ratings from Moodys and other institutions, plenty of
people saw it coming and gave the dire warnings.  Actually, an endowment
acts as a hedge against this sort of thing. Careful wealth management can
limit the risk to the endowment from market shocks that fundraising cannot
avoid. For instance, high unemployment will, broadly speaking, hurt
fundraising which depends on disposable income.  Endowments don't rely
nearly as directly on end-consumers, their confidence, and their
job/financial security.

3) (Endowment counterproductive to vision). I disagree with this point as
well. The Wikimedia vision and culture is about getting information to
people, about sharing, about freedom of knowledge.  I wholly disagree that
the fundraising campaign is an effective way to propogate this culture. In
fact, it is antithetical to this culture. It is essentially an annual
hostage-taking of the WMF projects until we get our money. It means that
projects are not truly free -- they are not gratis because if enough people
don't donate, they will disappear, and they are arguably not libre because
they are under a constant existential threat.  If we want more people to
have access to Wikimedia projects which makes more sense -- removing the
risk of shutdown by employing an endowment that will ensure the freedom of
the projects in perpetuity; or to beg for money year after year, simply
because it reminds people that we exist?

Finally, it's a false dichotomy that we can't have both an endowment and do
fundraising. The endowment itself can do its own fundraising as needed,
which can serve the purpose of reminding people we exist, and continuing to
grow from a personal, grassroots level (rather than by large grants).

Frankly, without senior WMF staff buy-in, an endowment is dead in the
water. Even if the community designed and implemented one on their own,
it'd need support from all sorts of other entities (WMF legal, probably
WCA, etc.).


Dan Rosenthal

On Mon, Mar 18, 2013 at 10:20 AM, Ting Chen <wing.philopp at gmx.de> wrote:

> Hello dear all,
> at first thank you very much MZ for put this together. This is a quite hot
> topic both for the board election, which is coming soon again, and also on
> the board.
> The following is my personal opinion why WMF should not build an
> endowment. The rationale from me are the following three:
> 1. WMF doesn't need an endowment
> 2. An endowment poses extra risks and problems for the WMF
> 3. From some aspect an endowment is contraproductive for the WMF even if
> we ignore the risks.
> Let me explain in more detail:
> 1. WMF does not need an endowment.
> For most NGO and non-profit organizations, an endowment is a method to
> mitigate the risk of unconstant income and unsecure funding. With the
> endowment the organization is indepenmdant on the ever changing fundraising
> result or on its dependance on grants. The WMF is not facing these
> problems. The WMF is not dependant on one or few grants, and it is not
> dependant on some big donations. The fundraising model of the WMF is based
> on microgrants from hundreds of thousands of participants, and practically
> from every region of the world. This makes it less vulnerable for example
> on changing economic situations. This is especially the case since we are
> not exhausting our fundraising potential (and as I understand the current
> strategy, we are not planning to exhaust this potential), and we have a
> fairly good strategic reserve. For the year 2009 for example we were all a
> bit nervous on our fundraising result since at that time the financial
> crises began to seriously impack the world economy. But at that year we
> doubled our fund raising result, achieved our goal before the targetted
> fund raising deadline. This trend kept for the last few years, independant
> of the world economy. It proves the robustness of this fundraising model.
> In comparison to most other non-profit organizations we are in a lucky
> situation that this model works for us. It certainly does not work for all
> organizations. And because the model is robust and it works well for us, we
> should not simply do what everyone else does: try to build up an endowment.
> If we don't need it, we don't need it.
> 2. An endowment poses extra risks and problems for the WMF
> An endowment is a very big bunch of money. And if you have that money
> somewhere in your safe, it won't be any benefit. You need to invest it so
> that it get's return. An endowment is actually pretty similar like a bank.
> And as a bank, you need experts to take care of investment, of risk
> management, and all other things. Either you need your own experts
> (actually you always need your own expert at least for overseeing), or you
> need to buy experts. You need to trust him. Either way it means that you
> must pay the bill. And, the following is really my very personal and
> unprofessional opinion: There is no 100% security if you are a bank. Lheman
> Brothers were rated by all agencies as AAA until it went bancrupt. Even the
> United States Treasury Security is not as secure as it seemed to be. I
> trust the hundred thousand people who give us 10 to 100 dollars more than
> the few experts, when it comes to security. And the work "ethic" investment
> was already mentioned here in the list. I believe we can debate forever if
> investment in United States Treasury Security is ethic or not.
> 3. From some aspect an endowment is contraproductive for the WMF even if
> we ignore the risks
> I believe the Wikimedia projects represent a culture: the sharing culture.
> Even if it is not explicitely stated in our vision and mission, the
> Wikimedia projects are avant gards of this culture, and they get their
> strength from this culture. The annual fundraising campaign is one of our
> most effectful method to propagate this culture, even it is not designed
> so. I know many people, my colleagues, friends, people who use Wikipedia
> daily, but never think about how its service is maintained, until the
> annual fundraising campaign. Often it is at that time when people tell me:
> "Oh, I just see you are fundraising again, I am happy to make this
> contribution to show my support." Normally people never say this, until at
> the end of the year when our fund raising banner is on our project pages. I
> know for a lot of you the banners are annoying. But I also know that for a
> lot of people, who are not so involved in our projects, the banner is the
> reminder of our sharing culture. It is the time when they feel that they
> need to contribute something, and it definitively make them happy to do so.
> It makes them to feel also to be part of it. Our annual fund raising
> campaign is not thought to be a propaganda for the sharing culture, but in
> effect it is a very effective propaganda for it. And I believe it would be
> a los for all of us, if we don't have it any more.
> So far, my thoughts. As I said all my private opinions, and some of them
> certainly very primitive and unprofessional. I am happy to get feedbacks
> and critics and learn from them.
> Greetings
> Ting
> Am 14.03.2013 06:48, schrieb MZMcBride:
>> Hi.
>> I've started collecting notes about a possible Wikimedia or Wikimedia
>> Foundation endowment here: <https://meta.wikimedia.org/**wiki/Endowment<https://meta.wikimedia.org/wiki/Endowment>
>> >.
>> Any additional relevant links to past discussions or thoughts about this
>> idea are welcome on that page, its talk page, or this mailing list.
>> MZMcBride
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> --
> Ting
> Ting's Blog: http://wingphilopp.blogspot.**com/<http://wingphilopp.blogspot.com/>
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