Minutes/2011-08-03

The Wikimedia Foundation Board of Trustees Meeting Minutes '''August 3, 2011 Dan Panorama Hotel, Haifa, Israel''' Prepared By: James Owen, Executive Assistant & Board Liaison

Call to Order:
The Board of Trustees of the Wikimedia Foundation met for its regularly scheduled meeting on Wednesday, August 3, 2011 at 09:00 IDT at the Dan Panorama Hotel in Haifa, Israel.

Trustees present:


 * Ting Chen - Chair
 * Stu West - Vice Chair and Treasurer
 * Samuel Klein - Executive Secretary
 * Jimmy Wales - Founder/Trustee
 * Kat Walsh - Trustee
 * Jan-Bart de Vreede - Trustee
 * Arne Klempert - Trustee
 * Matt Halprin - Trustee
 * Bishakha Datta - Trustee
 * Phoebe Ayers - Trustee

Others present for all or part of the meeting:


 * Sue Gardner - Wikimedia Foundation Executive Director
 * Barry Newstead - Wikimedia Foundation Chief Global Development Officer
 * James Owen - Wikimedia Foundation Executive Assistant & Board Liaison

A quorum was determined, and the meeting was called to order at 09:07 by the Chair who presided over the meeting.

Welcome & Housekeeping Items
Ting formally welcomed the Board to Haifa and provided a brief outline of the meeting agenda. Samuel noted the March 2011 meeting minutes were approved by email. As is customary during the first meeting after the beginning of the fiscal year the Trustees signed the Foundation's Pledge of Personal Commitment and filed updated Conflict of Interest Forms.

In other business the Board granted the Executive Secretary rights to publish drafted meeting agendas in advance of regularly scheduled meetings. Publishing regular reports to the community on Board activities was also discussed, and a report on Board activities for May-June 2011 was approved and posted to Meta.

The Board determined the times and locations for their 2011-2012 regularly scheduled meetings as follows:
 * October 7-8, 2011, San Francisco, California, USA
 * February 10-11, 2012, San Francisco, California, USA
 * March 30-April 1, 2012, location to be determined by the Wikimedia Chapters Conference Location
 * July 11, 2012, Wikimania meeting, Washington, District of Columbia, USA
 * The Board agreed to hold dates in September, October or November 2012 for a possible meeting in India, to possibly coincide with a local Wikimedia India Conference.

Personal Activities Update
Each Board member was granted 2 minutes to provide their colleagues with a personal and Wikimedia-related work update. Formal minutes for this agenda item were not kept.

Officer Elections and Re-appointments
The Board of Trustees unanimously approved the results of the 2011 Community Board of Trustees Election and reappointed Kat, Ting, and Samuel to the Board of Trustees. Kat, Ting, and Samuel will serve their terms until September 2013 or until the first Board meeting after the next election to fill those positions, whichever comes first. (Resolution published at http://wikimediafoundation.org/wiki/Vote:Board_appointments_-_Community_Trustees,_2011)

The Board of Trustees elected the following Trustees to officer positions for the 2011-2012 year:
 * Ting - Chair of the Board of Trustees
 * Jan-Bart - Vice Chair of the Board of Trustees
 * Stu - Treasurer of the Board of Trustees
 * Phoebe - Executive Secretary of the Board of Trustees

The Board of Trustees confirmed committee assignments for the 2011-2012 year. Arne was appointed to the Board Governance Committee in place of Jan-Bart, who will cycle off of the committee effective August 2011. It was noted that others interested in committee work or changing assignments could discuss this with the relevant committee chair.

2011-2012 Board committee assignments are as follows:
 * Human Resources: Jan-Bart (chair), Kat and Ting
 * Audit: Stu (chair) and Ting (with CFO and external community support)
 * Governance: Matt (chair), Arne and Ting

Observer/liaison positions for community committees are:
 * Elections committee: Jan-Bart
 * Chapters committee: Samuel, Bishakha and Arne
 * Language committee: Samuel

For the coming year handling of internal logistics will be split: the Secretary will manage the voting process and reports, while logistics and administrative duties will be led by the Chair and Vice-Chair, and requests from committees should be tracked by the respective committee liaisons. Those driving a particular motion or resolution should also take responsibility for tracking that issue.

Election Follow-Up
Jan-Bart provided the board with his assessment of the 2011 Community Board of Trustees Election process. During this discussion Jan-Bart informed the board that this election received only slightly higher participation than in previous years, despite efforts to increase the number of voting participants by decreasing edit count requirements for suffrage. He also noted that the transfer of knowledge between the 2009 and 2011 election committees was minimal and had some impact upon the performance of the committee and its ability to meet deadlines. Having a standing election committee was discussed.

Future of the Wikimedia Foundation
Phoebe facilitated a discussion around the future of the Wikimedia Foundation; the discussion was not intended to make decisions or produce outcomes, but simply to allow Trustees a platform to voice their opinion on where the Foundation should be in 5-20 years. This was noted as a useful exercise that should be repeated at future meetings.

Some of the topic areas raised during the discussion included: the Foundation's role in the Wikimedia movement, the size and responsibilities of the Foundation, future strategic planning including evaluation of the strategic plan, maintaining decentralization while still protecting the movement's reputation and interests, project participation, community leadership and remaining a volunteer-driven movement, and the role the Wikimedia Foundation could play as an advocate in key issues involving transparency, the free content movement and the open Internet.

Further possible Board committees were also briefly discussed; proposals for new committees should go first to the Board Governance Committee. Matt noted that several proposals have been put forward to the Board Governance Committee around various governance topics, and the committee will send out a list of priorities for the year in the coming weeks.

Chapters & Fundraising Participation
Stu began the agenda item by outlining concerns raised and evaluated by the Foundation's Audit Committee regarding the Foundation's fundraising model. He explained that the Committee over the course of the year had evaluated key areas of risk for the Wikimedia Foundation, and that during the evaluation the Committee determined significant risk in the existing fundraising model when allowing Chapters to act as payment processors. (The term “payment processor” was defined as when a Chapter directly receives donations from the annual site-wide fundraiser).

Stu went on to explain that the Audit Committee expressed concern that the Foundation risks the possibility of not meeting its fiduciary responsibility to donors if they are unable to account for funds raised through the Wikimedia projects, which poses the risk of losing non-profit standing and/or damage to the Wikimedia/Wikipedia brand.

During his review of the existing concerns Stu referenced to a study conducted by Daniel J. Fusco & Company, LLC, who was engaged by the Wikimedia Foundation to provide an independent analysis of the revenue-sharing framework between the Foundation and its independent affiliates. Stu also made reference to a similar review conducted by the Foundation's independent auditors KPMG. Both documents reinforce the concerns brought forth by the Audit Committee and outlined recommendations to reduce risk through changing the existing fundraising framework.

Next, Barry Newstead presented the Board with a review of existing finances, reporting and transparency of Chapters involved in the 2010-2011 annual fundraiser. Barry's review addressed key areas of concern regarding Chapters' ability, in their current state of development, to implement the necessary systems needed to conduct spending at their current state of revenue growth and to create sustainable financial controls to protect their assets. Barry also addressed a concern that the existing fundraising model has the effect of directing a disproportionate amount of funding to wealthy countries in the Global North. Other problems include inefficient fundraising infrastructure spending and a disproportionate amount of volunteer energy going towards fundraising, and poor transparency related to missed reporting and reporting delays. Barry also noted that there are wide disparities between the chapters: in 2010-2011 of the 22 chapters that did not act as payment processors 12 chapters received no funding, and 10 received grants, while a few chapters that were payment processors accrued large surpluses.

Trustee discussion was divided into two parts: diagnosing the problem, then developing a solution. Concerns were raised over accountability to donors, communication and lack of reporting, the development of chapters as organizations, and the implications for the structure of the Wikimedia movement. Further discussion was had on how to best revise the fundraising model for the future, and it was decided that there was need for a short term and a longer term discussion.

In response to the concerns brought forth by the Audit Committee the Board drafted and released a letter (appended) to provide guidance to Foundation staff and Chapters with regard to improving the fundraising model. The letter was unanimously approved and released to the Wikimedia community within 24 hours of the conclusion of the Board meeting.

Adjournment
The meeting was adjourned by the Chair at 17:00 IDT.

Wikimedia Board of Trustees letter regarding fundraising accountability
At its July 2011 meeting, the Board had an extensive discussion on the topic of fundraising, chapters, financial controls, and accountability. The Board unanimously agreed to this letter to the community on the topic (published on Meta). - The Board of Trustees has recently reviewed our fundraising model and issues related to the way donor funds are received. This review followed detailed discussions among the Board's Audit Committee and with our outside auditors, which highlighted issues about the level of financial controls over donor funds that go directly to the chapters who act as payment processors. This review focused on the model established last year, under which donors in certain countries are exclusively directed to the local chapter during the annual fundraiser. In our 2010-2011 year, about $4M net went directly to 12 chapters, representing roughly 15% of the total funds donated to the movement.

There are several problems with this model, and with the current fundraising situation. Some chapters have received large sums of money early in their organizational lives, before they have built the capacity and financial controls to safeguard and best use those resources in pursuit of the mission. Some chapters have received many times their planned budget in a single fundraiser. Additionally, in some countries, transferring funds internationally has been limited by regulatory constraints.

There are also currently no movement-wide controls applied consistently to all entities that receive donor funds. Some chapters, despite being well-funded, have not reported in a timely way on their activities, their financial status, and their use of donor funds, or have had difficulties following the regulatory requirements of their countries.

This fundraising model has also contributed to significant resource disparity among chapters. Some of the largest fundraising chapters have revenue far greater than their stated need and capacity to spend, while other chapters receive revenue only from Foundation grants or have almost no revenue at all. The model also suggests that chapters are entitled to funds proportional to the wealth of their regions, which amplifies the gap between the Global North and South.

We need to improve our model to address these concerns and to improve the distribution of donor funds across the Wikimedia movement.

Design principles
Our design principles for improving the fundraising model are:


 * We are deeply committed to decentralized pursuit of our mission and to supporting the long-term sustainability of chapters and other movement partners.


 * Because of its role as operator of the websites, the Foundation has to be satisfied that any organization directly receiving donor funds will treat them with an appropriately high level of care and transparency.


 * An organization can directly receive donor funds as a payment processor if the following criteria are met:
 * There is sufficient money raised in the geography to merit the logistical effort.
 * The organization offers tax deductibility or other incentives to local donors.
 * Regulatory issues about any international funds flows are fully resolved.
 * The organization's current financial resources are not enough to fund proposed program work.
 * The Foundation can confidently assure donors to the chapter that their donations will be safeguarded, that our movement's transparency principles will be met, and that spending will be in line with our mission and with the messages used to attract donors.
 * The donation process should clearly disclose basic facts about the organization receiving the donation.
 * The Foundation is committed to a grants program to continue to provide funds to those who can most effectively pursue our mission.

Next steps
These concerns need to be substantially addressed prior to the start of the 2011 fundraiser. In particular, we expect all parties to live up to current fundraising agreements including full compliance with all reporting deadlines.

We appreciate that some chapters have already started working on their budgets assuming that they would participate as payment processors in the 2011 fundraiser, but may not be able to meet the new criteria outlined above. The Foundation will work with these chapters to follow through on the principles of the current Fundraising Agreement to provide the necessary funds to continue their programmatic work and to meet their operational needs.

The Foundation will significantly expand its grants program, and should work closely with the Audit Committee to continue improving the controls and disclosures around grants.