[Wikimedia-l] Mid-Year Financial Statements

[Garfield Byrd]

Thomas:

Our plans for the reserve are included in the "WMF Frequently Asked
Questions (FAQs) for the 2010-11 Audited Financial Statements":

*The cash balance has increased from $12 million to over $21 million. What
is the *
*Wikimedia Foundation's view on its increasing cash reserve?*
*
*
*The Wikimedia Foundation wants to have an appropriate amount of cash in
reserve.  *
*This is important for stability and the overall financial health of the
organization. *
*A nonprofit wants to ensure it has a sufficient amount of cash available
to it, so that it doesn't *
*face a crisis in the event that unforeseen costs arise, or that an
external or internal event hurts its ability to fund-raise.*
*Different non-profits have different levels of reserves: it is common for
young or very *
*small non-profits to have as little as a few months' spending available in
their reserve *
*fund and while others may have as much as three years' spending in theirs.
There is no *
*generally accepted consensus on what size of reserve is appropriate but
the Wikimedia *
*Foundation has been able to grow its reserve over time. The current
reserve represents *
*less than one year of funding, at our current spending level. We believe
that's *
*appropriate for a growing non-profit of our size and age, with our goal to
have one year *
*of operating funding available over time.*

Each of our annual plans, including the Wikimedia Foundation Annual Plan
for 2012 - 2013<http://upload.wikimedia.org/wikipedia/foundation/4/4f/2012-13_Wikimedia_Foundation_Plan_FINAL_FOR_WEBSITE.pdf>
on
page 54, show that the reserves of the Wikimedia Foundation are built up
intentionally consistent with the above statement. Any surplus from
operations are in addition to the planned growth in the reserves of the
Wikimedia Foundation.

Regards,

Garfield


On Mon, Mar 18, 2013 at 2:55 PM, Thomas Dalton <thomas.dalton at gmail.com>wrote:

> On 18 March 2013 20:00, Garfield Byrd <gbyrd at wikimedia.org> wrote:
> > Thomas:
> >
> > The Wikimedia Foundation is looking at its capacity to hire and is
> > reviewing how many positions we can hire next fiscal year.  We are
> working
> > overall to have a good annual plan that matches our outcomes, but with a
> > dynamic movement like this one, variance from plan is a part of the
> process
> > as we want to make sure we are spending money prudently and not just to
> > meet plan.
>
> In statistics we don't call it "variance" if it is always in the same
> direction - we call it "bias". A high variance is often unavoidable,
> but bias is generally a bad thing. You'll note, my question wasn't
> about changing the spending, it was about changing the planning
> process. You shouldn't spend money just to meet your plan, certainly,
> but you should plan as accurately as possible. Prudence should be
> explicitly allowed for in reserves or a "contingencies" budget, it
> shouldn't appear accidentally due to biased planning.
>
> > In addition, since unspent money goes into the Wikimedia Foundation
> > reserves, which we are still in process of building, we have some time to
> > calibrate the the annual planning process to the needs of the Wikimedia
> > Movement and the Wikimedia Foundation.
>
> Can you elaborate on your plans for the reserves? When I search for
> "reserves policy" on the foundation wiki, it doesn't find anything.
> That is extremely worrying...
>
> Reserves should be built up intentionally, not as a result of
> accidental underspends. Either you need the reserves, in which case
> you should plan to save the money, or you don't, in which case you
> should either spend the money or not raise it in the first place.
>
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-- 
Garfield Byrd
Chief of Finance and Administration
Wikimedia Foundation
415.839.6885 ext 6787
415.882.0495 (fax)
www.wikimediafoundation.org

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