[Wikimedia-l] Wikimedia (Foundation) endowment

[Nathan]

To return to the endowment again as the main topic, I think there are
some risks we need to consider in an endowment. In general I think
having an endowment is a good idea for a charitable institution, and
certainly the WMF needs a strategic reserve of some size to maintain
operations in the event of a crisis. But a lot of thought has to go
into the target size of that fund, the nature of its fundraising, how
or whether it is used, and what role (and of what prominence) it plays
in WM/WMF public relations.

There's a risk that the presence of a large endowment, or even a
campaign to raise funds for an endowment, could cannibalize or turn
off some donors. While I agree with Dan that there is something
undesirable in making each annual fundraiser a life or death event,
and essentially threatening our userbase with the end of the projects
if the fundraiser doesn't go well, it's also clearly true that this is
at least effective in raising money. There would at a minimum be a
need to recalibrate messaging if an endowment were established that
could carry the WMF through several years.

We should also consider how having an endowment might affect the
democratic nature of the WMF. (And before someone says
"NOT#DEMOCRACY!!" yes, I know). This is the flipside of making the
organization dependent on the annual fundraiser. While it's subject to
economic fluctuations, it also is held responsible for the value it
provides to user. If at some point the WMF loses the confidence,
interest or support of the greater community of readers, then the
organization will suffer as a result. But as an endowment becomes
larger, the influence of the community decreases and the independence
of management increases.

I'm not sure what the current target is for a reserve, but a good
starting point and middle ground between an endowment and a reserve is
to have a fairly robust target - say three years of operational
funding with a complete cessation of fundraising. In anything but a
nightmare scenario, that should give the WMF a solid cushion of at
least 5 to 10 years in the event of a major disruption in income, but
avoid some of the challenges of a larger endowment and related
campaign.

~Nathan