Financial reports/July 2007 to November 2007 Mid-Year FAQ

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FAQ for financial statements (July 2007 to November 2007)

What is the period of time covered by these statements?
The statements cover the period from July 1, 2007 until November 30, 2007: in other words, the first five months of Fiscal Year 2007-08.
Why are you releasing these statements? I thought you only did this annually.
The Foundation holds the value of transparency in high regard. This is one way we can keep the public aware of our ongoing expenses and budget activity. We are happy to publicize our financial information and plan to do it regularly.
Why do they cover five months instead of six, which would be more normal? (i.e., the first two quarters)
Yes, it would be more standard to release statements covering the first two quarters of Fiscal Year 2007-08. But, prior to these statements being released, neither the Board nor the Executive Director had seen financial statements since the release of the 2006 audited statements, which happened in September 2006. We decided it was more important to get some statements out relatively quickly, than to have six full months of statements. Therefore, the Foundation's accountant started developing these statements before she had closed the December books, which of course made it impossible to include December's numbers.
What is the purpose of these statements?
Financial statements provide an overview of basic information about an organization's financial position. Financial statements are normally read by a number of different audiences, including the management of the organization, board members, donors and others.
Who created these statements?
The statements were made by the accounting and financial staff of the Foundation for the Executive Director. The Executive Director in turn shared them with the board on February 1, 2008.
Is this the first time the Foundation has published financial statements (apart from its audited statements)?
Yes. Although the Foundation regularly releases its audited financial statements, this is the first time we've created mid-year financial statements. These interim statements complement our annual statement - providing an update through the fiscal year.
Are these statements audited?
No.
When will we see the next financial statements?
The Foundation is about to hire an accountant for its San Francisco office (the current accountant, in St. Petersburg, has agreed to stay on until the end of March, to ensure good knowledge transfer to the new person). The changeover in staff will create a small and unavoidable disruption, which will probably slow us down in our efforts to provide regular, accurate statements. The third quarter will end March 31, 2008, and we hope to have First Three Quarters statements ready for the end of June. Our CFOO however has not committed to this as a firm deadline, so it may shift a little, particularly if it takes longer than expected to hire the accountant.
Why are donations lower than anticipated?
They aren't. Donations are "lumpy" - we get a large volume of smallish donations during the online fundraiser, plus very large individual donations intermittently throughout the year, along with a small steady stream of smallish donations outside the fundraiser. We also are beginning to develop relationships with a few foundations and individual philanthropists. So, you can't really extrapolate too much from the numbers here - particularly since December was also a high-donation month, which is not reflected here, and the Foundation has, since the fundraiser, received a new commitment for 500K.
Is the Foundation having financial problems?
No. The Wikimedia Foundation has the same financial challenges as most 501(c)3s. It is always happy to receive donations; it keeps a careful eye on spending and aims to be frugal; it is not wealthy. In general, its financial situation is fine.
Will you have another online fundraiser in the spring?
We don't know yet: we'll see what our financial situation looks like.
It looks like you expected to make 1.3 m more in the fundraiser than you actually did. Is that true?
No. First of all, the financial statements only cover the period from July 1 until November 30. The fundraiser continued until January 6, and a lot of money came in during those final weeks. Also though, the Foundation never expected to make its entire operating budget during the online fundraiser; it has always supplemented the fundraiser with a few major donations that come in during other times of the year, as well as small amounts of business income. There was no fundraiser target, and the direct public support line item in the budget was constructed as being driven by costs. (In other words, the "direct public support" line item is a requirement rather than a prediction, and we always expected to need to stage additional donor cultivation activities in addition to the online fundraiser.)

Added by JayWalsh 03:11, 7 March 2008 (UTC)

Can you explain how depreciation of furniture and equipment positively impacts the organization's cash position?
Depreciation reduces income on the income statement but is not cash because you don't "pay" depreciation out. It is simply a method to spread expenses for large capital items in the financial statements over a period of time (a period that represents the useful life of the item). The actual purchase would be a cash event, i.e. you buy a server for $100,000, that affects cash for $100,000 but if you spread the expense over 5 years, the $20,000 doesn't affect cash because you already affected cash with the original purchase.
What is an Employee Receivable and what is 'allowance for doubtful employee receivables?'
Employee Receivable is a line item that describes moneys that are owed the Foundation from employees. Allowance for Doubtful Employee Receivables, in this case, is a means of accounting for another line item which will not be collected. In other words, for the purposes of this statement we will not expect to receive the revenues from the employee receivable line.