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<languages />{{DISPLAYTITLE:Wikimedia Foundation Investment Policy}}
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== {{int string|Purpose}} ==


<translate><!--T:2-->
'''Wikimedia Foundation Investment Policy'''
The purpose of the Wikimedia Foundation ("the Foundation") is to be the home of free-knowledge projects like Wikipedia. In order to serve this mission, the Foundation's investment portfolio is intended to provide both short-term and long-term financial support to the Foundation's current operations as well as its growth over time.


<!--T:3-->
'''March 5, 2014'''
For the purposes of providing for sufficient liquidity, managing investment risk, and optimizing investment returns within acceptable risk parameters, the following funds shall be created and held as separate investment pools:


<!--T:4-->
'''Author: Garfield Byrd'''
# Operating Fund
# Short-term Reserve Fund
# Long-term Reserve Fund


== Roles and Responsibilities == <!--T:5-->
'''Created for the Audit Committee of the Wikimedia Foundation'''
</translate>


=== {{minutes|string=audit committee}} ===
==Purpose of this Document==
The purpose of this document is to present to the Audit Committee a draft of an enhanced Investment Policy for the Wikimedia Foundation. This policy is designed to allow for the variety of investments needed to manage the range of funds currently being held and anticipated to be held by the Wikimedia Foundation. The overall concept for the investment strategy of the Wikimedia Foundation will not change with this proposal in that, per the existing investment policy, “preservation of principal and maintenance of liquidity shall be priorities over yield,” will continue to be a guiding principle.
This policy has undergone a legal and investment advisory review and I am requesting formal approval by both the Audit Committee and the Board of Trustees.


<translate><!--T:7-->
==Context==
The Board of a non-profit organization is ultimately responsible for its investments. The Wikimedia Foundation Board of Trustees ("the Board") has [[<tvar name="1">Special:MyLanguage/Committee:Audit Committee/Charter</tvar>|delegated to the Audit Committee]] ("the Committee") the fiduciary responsibility to oversee the Foundation's investment activities.
The goal of this enhanced investment policy is to address the question of how to invest the “Long-Term Reserve Funds” of the Wikimedia Foundation while, at the same time, preserving the current investment strategies policy and guidelines to govern the investment of funds classified by the Board Treasurer as “Operating Funds” and “Short-Term Reserve Funds”.
</translate>
* <translate><!--T:8--> The Committee shall monitor investment performance semi-annually.</translate>
* <translate><!--T:9--> The Committee shall review the Investment Policy Statement ("the Policy") periodically to ensure it is consistent with the mission of the Foundation and accurately reflects current financial conditions.</translate>
* <translate><!--T:10--> The Committee shall approve any changes in the Policy and notify the Board of those changes.</translate>
<translate>


=== Treasurer === <!--T:11-->
==Proposed Wikimedia Foundation Investment Policy==


<!--T:12-->
===Introduction===
The Committee authorizes the Foundation's Treasurer to implement the Policy, including executing investment transactions directly or via professional investment managers consistent with the "Delegations of Financial and Spending Authority" approved July 11, 2012 by the Board of Trustees which is incorporated into this Policy by reference.


<!--T:13-->
This statement of investment policy was adopted by the Board of Directors of the Wikimedia Foundation on April 25, 2014 to provide for the creation of, and guidelines for, the management of various funds held by the organization. These policies supersede any and all prior actions regarding investment policies.
It is anticipated that the services of investment managers and/or advisors may be sought to manage portions of the funds. The Treasurer is authorized to hire, fire, or replace investment managers and/or advisors with notification to the Chair of the Audit Committee. The Treasurer must approve allocation to securitized assets like mortgage-backed, commercial loan obligations, asset-backed securities, etc.
For the purposes of managing investment risk and to optimize investment returns within acceptable risk parameters, the following funds will be created and held as separate investment pools:
Operating Fund
Short-term Reserve Fund
Long-term Reserve Fund


==== Performance Monitoring ==== <!--T:14-->
===Procedures===


<!--T:15-->
The following procedures will be followed to ensure the investment policy statement is consistent with the mission of the Wikimedia Foundation and accurately reflects current financial conditions:
The Treasurer shall monitor and evaluate investment performance quarterly. The Treasurer shall report investment performance and provide a copy of the investment statement(s) to the Committee on a semi-annual basis. The Treasurer shall report annually to the Committee on the overall Environmental, Social, & Governance ("ESG") profile of the portfolio using publicly available ESG ratings, as appropriate.
The Audit Committee shall review this investment policy periodically.
The Audit Committee will recommend any changes in this policy to the Board of Trustees.
The Wikimedia Foundation Board of Trustees must approve any changes to this policy.
The following procedures will be used to determine the dollar amounts to be placed in the each of the various funds.
The Treasurer will manage the dollar amounts to be held in the Operating Fund, Short-term Reserve Fund and Long-Term Reserve Fund.


== Spending Policy == <!--T:16-->
===Delegation of Authority===


<!--T:17-->
The Board of a non-profit organization is ultimately responsible for its investments. The Audit Committee, acting as a committee of the Board of Trustees of the Wikimedia Foundation, authorizes the Treasurer to execute investment transactions directly or via professional investment managers consistent with the “Delegations of Financial and Spending Authority” approved July 11, 2012 by the Board of Trustees which is incorporated into this Investment Policy by reference.
The Foundation will use funds in the Operating Fund to meet the day-to-day financial obligations of the Foundation. The Foundation may withdraw funds from the Short-term Reserve Fund or the Long-term Reserve Fund, in line with approved spending in our annual plan and in line with maintaining [[<tvar name="1">Special:MyLanguage/Resolution:Setting Working Capital Reserve Target</tvar>|the working capital ratio established by the Board of Trustees]]. The objectives of the spending policy are to grow the purchasing power of the funds and to achieve a predictable distribution of funds to aid budgeting.
It is anticipated that the services of investment managers and/or advisors may be sought to manage portions of the funds. The Treasurer is authorized to hire, fire or replace investment managers and/or advisors with notification to the Chair of the Audit Committee.


<!--T:18-->
===Restrictions===
Any material withdrawal of funds from the Short-Term Reserve Fund or the Long-term Reserve Fund outside of approved spending in the annual plan or the normal expectations of adequate working capital ratio must be communicated to the Board prior to withdrawal and material use of funds.
In implementing this policy, the Treasurer or designated professional investment advisors may not buy securities on margin, may not incur debts of any other kind, may not leverage and may not sell securities short. Alternative investments such as hedge funds, private equity funds and private real estate funds could involve the use of margin, debt, leverage and short sales, but would be eligible for investment only upon explicit approval of the Board of Trustees on a case-by-case basis.


== Operating Fund == <!--T:19-->
===Duty of Care===
Assets shall be invested with care, skill, prudence, and diligence under the circumstances then prevailing that a prudent investor, acting in like capacity and familiar with such matters, would use in the investment of a like fund.


=== Investment Objectives === <!--T:20-->
===Operating Fund===


<!--T:21-->
====Purpose of the Operating Fund====
The purpose of the Operating Fund is to provide sufficient cash to meet the day-to-day financial obligations of the Wikimedia Foundation in a timely manner.
The purpose of the Operating Fund is to provide sufficient cash to meet the day-to-day financial obligations of the Foundation in a timely manner. The Operating Fund shall prioritize preservation of capital and access to immediate liquidity in order to minimize risk to operational financial needs of the Foundation.


====Investment Objectives====
=== Investment Guidelines === <!--T:85-->
</translate>
The investment objectives of the Operating Fund are: Preservation of Capital, Liquidity, and the optimization of the investment return within the constraints above.
{| class="wikitable"
| <translate><!--T:22--> Time Horizon</translate> || <translate><!--T:23--> Less than 3 months.</translate>
|-
| <translate><!--T:24--> Return Objective</translate> || <translate><!--T:25--> Target short-term Treasury market rates.</translate>
|-
| <translate><!--T:26--> Risk Tolerance</translate> || <translate><!--T:27--> The volatility of the Operating Fund should be similar to its benchmark.</translate>
|-
| <translate><!--T:28--> Liquidity Needs</translate> || <translate><!--T:29--> The Operating Fund should maintain high liquidity (short to ultra-short/weekly to monthly range) in order to support the Foundation's day-to-day operations.</translate>
|-
| <translate><!--T:30--> Spend</translate> || <translate><!--T:31--> The Operating Fund shall aim to reserve four-to-six months of expenses on a rolling quarterly basis. Due to the timing of cash flows, the Foundation may – at times – either lag or exceed this level of liquidity in its Operating Fund.</translate>
|}
<translate>


=== Asset Class Mix === <!--T:32-->
====Investment Guidelines====
</translate>
{| class="wikitable"
| <translate><!--T:33--> Cash & Cash Equivalents</translate> || <translate><!--T:34--> This allocation may be held in US Treasuries, savings accounts, interest-bearing money market accounts, or certificates of deposit at FDIC-insured commercial banking institutions.</translate>
|-
| <translate><!--T:35--> Money Market Indexed Funds</translate> || <translate><!--T:36--> These securities must be comprised of US Treasury-equivalent holdings. Underlying repurchase agreement ("repo" or "repos") exposure collateralized by US Treasuries is also permissible, where applicable.</translate>
|-
| <translate><!--T:37--> Public Fixed Income</translate> || <translate><!--T:38--> This Fixed Income allocation shall be comprised of direct obligations of the US Government, its agencies, and instrumentalities. Repos collateralized by US Treasuries are also permissible.</translate>
|-
| <translate><!--T:39--> ''Benchmark - to be based on asset mix and investment objectives''</translate> || <translate><!--T:40--> ''Bloomberg US T-bill 1-3 Month fixed income index.''</translate>
|}
<translate>


== Short-term Reserve Fund == <!--T:41-->
''Allowable Investments''


=== Investment Objectives === <!--T:42-->
The Treasurer will invest the Operating Fund as follows:
#Interest bearing savings account.
#Insured Certificates of Deposit at registered commercial banking organizations.
#Registered money market mutual funds.
#Checking accounts.
#Direct obligations of the U.S. Government, its agencies and instrumentalities.
#Repurchase agreements collateralized by U.S. Treasury obligations.


<!--T:43-->
''Maturity''
The purpose of the Short-term Reserve Fund is to improve the return on the funds held for expenditure beyond twelve months. The Short-term Reserve Fund shall prioritize preservation of capital and also aim to generate current income in line with its benchmark.


=== Investment Guidelines === <!--T:44-->
The maturities of investments for the Operating Fund shall be 12 months or less.
</translate>
{| class="wikitable"
| {{tunit|22|Time Horizon}} || <translate><!--T:45--> 2.5 to 3.5 years.</translate>
|-
| {{tunit|24|Return Objective}} || <translate><!--T:46--> Target 2.5- to 3.5-year Treasury market rates and target total return (net of fees) in line with its benchmark.</translate>
|-
| {{tunit|26|Risk Tolerance}} || <translate><!--T:47--> The volatility of the Short-term Reserve Fund should be similar to its benchmark. This Fund is anticipated to be the least volatile segment of the consolidated Foundation portfolio.</translate>
|-
| {{tunit|28|Liquidity Needs}} || <translate><!--T:48--> The Short-term Reserve Fund should maintain intermediate-term liquidity, in line with the time horizon mandate.</translate>
|-
| {{tunit|30|Spend}} || <translate><!--T:49--> The current portion of the Short-term Reserve Fund may contribute to the Foundation's ongoing Operating Fund needs.</translate>
|}
<translate>


=== Asset Class Mix === <!--T:50-->
====Reporting====
</translate>
The Treasurer will provide a copy of the investment statement(s) to the Chair of the Audit Committee on a quarterly basis with reports available to the Board of Trustees upon request.
{| class="wikitable"
| {{tunit|33|Cash & Cash Equivalents}} || <translate><!--T:51--> This allocation may be held in US Treasuries, savings accounts, interest-bearing money market accounts, or certificates of deposit at FDIC-insured commercial banking institutions.</translate>
|-
| {{tunit|35|Money Market Indexed Funds}} || <translate><!--T:52--> These securities must be comprised of US Treasury-equivalent holdings. Underlying repurchase agreement ("repo") exposure collateralized by US Treasuries is also permissible, where applicable.</translate>
|-
| {{tunit|37|Public Fixed Income}} || <translate><!--T:53--> The Fixed Income portfolio will consist mainly of investments in investment-grade marketable bonds (USD-denominated). Permissible securities may be issued by US Treasury, domestic US organizations, non-US corporations, non-US governments ("sovereign" bonds), and multinational organizations ("supranationals" like World Bank), municipalities ("munis"), commercial paper, and repos collateralized by US Treasuries.</translate>
|-
| {{tunit|39|''Benchmark - to be based on asset mix and investment objectives''}} || <translate><!--T:54--> ''Bloomberg 1-3-year Government Credit fixed income index.''</translate>
|}
<translate>


=== Other Guidelines === <!--T:55-->
===Short-term Reserve Fund===
</translate>
# <translate><!--T:56--> Prior approval by the Foundation's Treasurer is required before allocation to securitized assets like mortgage-backed, commercial loan obligations, asset-backed securities, etc.</translate>
# <translate><!--T:57--> With the exception of U.S. Government and agency securities, fixed income issues of a single issuer and its affiliates (ownership stake of 20% or more) shall at time of purchase constitute no more than 5% of the market value of the Short-term Reserve Fund portfolio.</translate>
# <translate><!--T:58--> Maturity (using preferred metric of expected maturity) of any individual holding shall not exceed six years. Weighted average duration of the portfolio shall be aligned with the Time Horizon of the Short-term Reserve Fund.</translate>
<translate>


====Purpose of Short-term Reserve Fund====
== Long-term Reserve Fund == <!--T:59-->
The purpose of the Short-term Reserve Fund is to meet the expenses occurring as a result of unanticipated activities and to improve the return on the funds held for expenditure for up to five years.


====Investment Objectives====
=== Investment Objectives === <!--T:60-->


<!--T:61-->
The investment objectives of the Short-term Fund are:
The purpose of the Long-term Reserve Fund is to aid growth of invested assets and maintain the portfolio's inflation-adjusted purchasing power over a long-term. The Long-term Reserve Fund shall prioritize long-term growth while avoiding excessive risk. This Fund shall also aim to achieve returns in excess of the rate of inflation plus spending over a long-term (greater than 7-10 years).
#Preservation of capital.
#Liquidity.
#The optimization of the investment return within the constraints above.


====Investment Guidelines====
=== Investment Guidelines === <!--T:62-->
</translate>
{| class="wikitable"
| {{tunit|22|Time Horizon}} || <translate><!--T:63--> Up to 4.5 years for fixed income while greater than 7 years for equities.</translate>
|-
| {{tunit|24|Return Objective}} || <translate><!--T:64--> Target total return (net of fees) in line with its blended benchmark.</translate>
|-
| {{tunit|26|Risk Tolerance}} || <translate><!--T:65--> The volatility of the Long-term Reserve Fund should be similar to its benchmark. This Fund is anticipated to be the most volatile segment of the consolidated Foundation portfolio.</translate>
|-
| {{tunit|28|Liquidity Needs}} || <translate><!--T:66--> The Long-term Reserve Fund shall be comprised of highly liquid assets while also aiming to minimize asset turnover (i.e. holding assets over a long term to promote investment growth and return).</translate>
|-
| {{tunit|30|Spend}} || <translate><!--T:67--> The current portion of the Long-term Reserve Fund may contribute to the Foundation's ongoing Operating Fund needs.</translate>
|}
<translate>


=== Asset Class Mix === <!--T:68-->
''Allowable Investments''
</translate>
{| class="wikitable"
| {{tunit|33|Cash & Cash Equivalents}} || <translate><!--T:69--> This allocation may be held in US Treasuries, savings accounts, interest-bearing money market accounts, or certificates of deposit at FDIC-insured commercial banking institutions.</translate>
|-
| {{tunit|35|Money Market Indexed Funds}} || <translate><!--T:70--> These securities must be comprised of US Treasury-equivalent holdings. Underlying repurchase agreement ("repo") exposure collateralized by US Treasuries is also permissible, where applicable.</translate>
|-
| {{tunit|37|Public Fixed Income}} || <translate><!--T:71--> The Fixed Income portfolio will consist mainly of investments in investment-grade marketable bonds (USD-denominated). Permissible securities may be issued by US Treasury, domestic US organizations, non-US corporations, non-US governments ("sovereign" bonds), and multinational organizations ("supranationals" like World Bank), municipalities ("munis"), commercial paper, and repos collateralized by US Treasuries.</translate>
|-
| <translate><!--T:82--> Public Equities</translate> || <translate><!--T:72--> The Equities portfolio will consist mainly of investments in public equities. Designed to be the principal contributor toward achieving the growth target, the Equities portfolio is likely to be the most volatile asset class and may include areas like Emerging Markets.</translate>
|-
| <translate><!--T:83--> Alternatives</translate> || <translate><!--T:73--> The Alternatives portfolio will consist mainly of hybrid real estate investments, via publicly traded REITs. This allocation may be a source of heightened volatility, but such volatility may not exceed that of the Equities portfolio.</translate>
|-
| <translate><!--T:84--> ''Blended Benchmark - to be based on asset mix and investment objectives''</translate> || <translate><!--T:74-->
''35% Bloomberg 1-5-year Government Credit fixed income index.
''65% S&P 1500 equity index.''</translate>
|}
<translate>


=== Other Guidelines === <!--T:75-->
The Treasurer will invest the Short-term Fund as follows:
</translate>
# <translate><!--T:76--> Prior approval by the Foundation's Treasurer is required before allocation to securitized assets like mortgage-backed, commercial loan obligations, asset-backed securities, etc.</translate>
# <translate><!--T:77--> With the exception of U.S. Government and agency securities, fixed income issues of a single issuer and its affiliates (ownership stake of 20% or more)) shall at time of purchase constitute no more than 5% of the market value of the Long-term Reserve Fund portfolio.</translate>
# <translate><!--T:78--> Maturity (using preferred metric of expected maturity) of any individual holding shall not exceed eleven years. Weighted average duration of the portfolio shall be aligned with the Time Horizon of the Long-term Reserve Fund.</translate>
<translate>


== ESG Investments == <!--T:79-->
#Domestic fixed and variable rate bonds, notes and bills issued by the U.S. Government or its Agencies.
#Domestic fixed and variable rate bonds and notes issued by U.S. domiciled corporations, non-U.S. based corporations and governments and multinational organizations (e.g. World Bank, IADB, EDB).
#Instruments issued by foreign issuers may be denominated in U.S. dollars or foreign currencies.
#Mortgage-backed securities (MBS) issued by U.S. government agencies or government sponsored enterprises (i.e. GNMAs, FNMAs, FHLMCs) or by corporate issuers, collateralized mortgage obligations collateralized by otherwise eligible mortgage-backed securities (“CMOs”), interest only (IO) and principal only (PO) securities are also eligible.
#Asset-backed securities (“ABS”).
#Taxable or tax-exempt municipal bonds and other municipal fixed income issues.
#Cash equivalent instruments including registered money market mutual funds, U.S. Treasury bills, bank certificates of deposit, time deposits or similar depository funds and commercial paper.
#Repurchase agreements collateralized by U.S. Treasury obligations.


<!--T:80-->
''Diversification, Credit Quality, Maturity and Other Guidelines''
The Foundation shall first prioritize its risk/return requirements and operational obligations. ESG factors, in addition to many other factors, may have an impact on investment performance over the long term. The Foundation may consider ESG ratings when analyzing and selecting investments, and the Treasurer shall report annually to the Audit Committee on the overall ESG profile of the portfolio using publicly available ESG ratings, as appropriate.</translate>


'''{{resolution|string=Approved}} {{dateT|month=02|day=27|year=2024}}'''
#While there is no restriction on the credit quality of individual holdings, the weighted average credit quality of the fixed income holdings as a whole should be at least investment grade, that is, BBB- or better (Standard and Poor’s) or Baa3 or better (Moody’s) or the equivalent.
#With the exception of U.S. Government and Agency securities, fixed income issues of a single issuer and its Affiliates (defined below) shall at time of purchase constitute no more than 5% of the market value of surplus cash.
#Derivative securities such as but not limited to MBS, ABS and CBOs shall not contain underlying leverage.
#For purposes of diversification restrictions, “affiliates” are companies in which one company has an ownership stake of 20% or more in the other company and/or vice versa.

''Maturity''

The Short-term Fund shall have a weighted average maturity of three years or less with no restriction on the maturity of any single security in the Short-term Fund.

''Reporting''

The Treasurer will provide a copy of the investment statement(s) to the Chair of the Audit Committee on a quarterly basis with reports available to the Board of Trustees upon request.

===Long-term Reserve Fund===

====Purpose of Long-term Reserve Fund====
The purpose of the Long-term Reserve Fund is to provide secure long-term funding for the mission of the Wikimedia Foundation. The assets of the Long-term Reserve Fund shall be managed in such a way as to facilitate the organization's goals and objectives as outlined by the Board of Trustees.

====Investment Objectives====

In order to meet its needs, the investment strategy of the Long-term Reserve Fund is to emphasize total return; that is, the aggregate return from capital appreciation and dividends, interest and other income.

Specifically, the primary objective in the investment management of the Long-term Reserve Fund shall be:

#Long-term growth of capital - To emphasize the long-term growth of principal while avoiding excessive risk. Short-term volatility consistent with the volatility of a comparable market index is anticipated, though management should strive to contain it.
#Preservation of purchasing power - To achieve returns in excess of the rate of inflation plus spending over the investment time horizon in order to preserve the purchasing power of the assets of the Long Term Reserve fund. Risk control is an important element in the investment of Trust assets.

====Investment Guidelines====

''General Principles''

#Investments shall be made solely in the interest of the Wikimedia Foundation and the Long-term Reserve Fund.
#Investment of these funds shall be so diversified as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to diversify in such a manner. The Wikimedia Foundation may employ one or more investment managers of varying styles and philosophies to attain the Long-term Reserve Fund's objectives.
#Cash is to be employed productively at all times by investment in short-term cash equivalents to provide safety, liquidity and return.

''Specific Investment Goals''

The goal of any investment manager(s) selected to invest the assets of this fund shall be to meet or exceed the market index selected and agreed upon by the Treasurer that most closely corresponds to the general principles stated above and the specific assignment of the investment manager.

''Allowable Assets''

The Long-term Reserve Fund requires that all investment assets be invested in marketable securities, defined as securities that can be traded quickly and efficiently for the Long-term Reserve Fund, with minimal impact on market price. It is generally expected that the Treasurer will invest the assets in funds of accounts managed by third party investment firms, and will not be involved in the day-to-day buying and selling of individual securities.

# Cash Equivalents
## Treasury bills.
## Registered money market funds.
## Commercial paper.
## Banker's acceptances.
## Repurchase agreements.
## Certificates of deposit and time deposits.
# Fixed Income Securities
## Domestic fixed and variable rate bonds, notes and bills issued by the U.S. Government or its agencies.
## Domestic fixed and variable rate bonds and notes issued by U.S. domiciled corporations, non-U.S. based corporations and governments and multinational organizations (e.g. World Bank, IADB, EDB).
## Instruments issued by foreign issuers may be denominated in U.S. dollars or foreign currencies.
## Mortgage-backed securities (MBS) issued by U.S. government agencies or government sponsored enterprises (i.e. GNMAs, FNMAs, FHLMCs) or by corporate issuers, collateralized mortgage obligations collateralized by otherwise eligible mortgage-backed securities (“CMOs”), interest only (IO) and principal only (PO) securities are also eligible.
## Asset-backed securities (“ABS”).
## Taxable or tax-exempt municipal bonds and other municipal fixed income issues.
## Cash equivalent instruments including registered money market mutual funds, U.S. Treasury bills, bank certificates of deposit, time deposits or similar depository funds and commercial paper.
## Repurchase agreements.
#Equity Securities
## Stocks issued by domestic corporations and/or foreign corporations are eligible for investment, including instruments enumerated below.
## Convertible notes and bonds.
## Preferred stocks.
## American Depository Receipts of non-US companies (ADRs).
## Global Depository Receipts of US and non-US companies (GDR).
#Real Estate Securities
## Real estate investment trusts - domestic and/or foreign.
#Registered mutual funds or privately offered funds that invest in securities that are otherwise allowed in this statement.
## To ensure marketability and liquidity, equity investments shall be executed through nationally recognized exchanges such as the New York Stock Exchange, NYSE MKT, NASDAQ or similarly recognized foreign exchanges.

====Performance Reporting====
The Treasurer will provide a copy of the investment statement(s) to the Chair of the Audit Committee on a quarterly basis with reports available to the Board of Trustees upon request.

Latest revision as of 20:34, 11 April 2024

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Purpose

The purpose of the Wikimedia Foundation ("the Foundation") is to be the home of free-knowledge projects like Wikipedia. In order to serve this mission, the Foundation's investment portfolio is intended to provide both short-term and long-term financial support to the Foundation's current operations as well as its growth over time.

For the purposes of providing for sufficient liquidity, managing investment risk, and optimizing investment returns within acceptable risk parameters, the following funds shall be created and held as separate investment pools:

  1. Operating Fund
  2. Short-term Reserve Fund
  3. Long-term Reserve Fund

Roles and Responsibilities

Audit Committee

The Board of a non-profit organization is ultimately responsible for its investments. The Wikimedia Foundation Board of Trustees ("the Board") has delegated to the Audit Committee ("the Committee") the fiduciary responsibility to oversee the Foundation's investment activities.

  • The Committee shall monitor investment performance semi-annually.
  • The Committee shall review the Investment Policy Statement ("the Policy") periodically to ensure it is consistent with the mission of the Foundation and accurately reflects current financial conditions.
  • The Committee shall approve any changes in the Policy and notify the Board of those changes.

Treasurer

The Committee authorizes the Foundation's Treasurer to implement the Policy, including executing investment transactions directly or via professional investment managers consistent with the "Delegations of Financial and Spending Authority" approved July 11, 2012 by the Board of Trustees which is incorporated into this Policy by reference.

It is anticipated that the services of investment managers and/or advisors may be sought to manage portions of the funds. The Treasurer is authorized to hire, fire, or replace investment managers and/or advisors with notification to the Chair of the Audit Committee. The Treasurer must approve allocation to securitized assets like mortgage-backed, commercial loan obligations, asset-backed securities, etc.

Performance Monitoring

The Treasurer shall monitor and evaluate investment performance quarterly. The Treasurer shall report investment performance and provide a copy of the investment statement(s) to the Committee on a semi-annual basis. The Treasurer shall report annually to the Committee on the overall Environmental, Social, & Governance ("ESG") profile of the portfolio using publicly available ESG ratings, as appropriate.

Spending Policy

The Foundation will use funds in the Operating Fund to meet the day-to-day financial obligations of the Foundation. The Foundation may withdraw funds from the Short-term Reserve Fund or the Long-term Reserve Fund, in line with approved spending in our annual plan and in line with maintaining the working capital ratio established by the Board of Trustees. The objectives of the spending policy are to grow the purchasing power of the funds and to achieve a predictable distribution of funds to aid budgeting.

Any material withdrawal of funds from the Short-Term Reserve Fund or the Long-term Reserve Fund outside of approved spending in the annual plan or the normal expectations of adequate working capital ratio must be communicated to the Board prior to withdrawal and material use of funds.

Operating Fund

Investment Objectives

The purpose of the Operating Fund is to provide sufficient cash to meet the day-to-day financial obligations of the Foundation in a timely manner. The Operating Fund shall prioritize preservation of capital and access to immediate liquidity in order to minimize risk to operational financial needs of the Foundation.

Investment Guidelines

Time Horizon Less than 3 months.
Return Objective Target short-term Treasury market rates.
Risk Tolerance The volatility of the Operating Fund should be similar to its benchmark.
Liquidity Needs The Operating Fund should maintain high liquidity (short to ultra-short/weekly to monthly range) in order to support the Foundation's day-to-day operations.
Spend The Operating Fund shall aim to reserve four-to-six months of expenses on a rolling quarterly basis. Due to the timing of cash flows, the Foundation may – at times – either lag or exceed this level of liquidity in its Operating Fund.

Asset Class Mix

Cash & Cash Equivalents This allocation may be held in US Treasuries, savings accounts, interest-bearing money market accounts, or certificates of deposit at FDIC-insured commercial banking institutions.
Money Market Indexed Funds These securities must be comprised of US Treasury-equivalent holdings. Underlying repurchase agreement ("repo" or "repos") exposure collateralized by US Treasuries is also permissible, where applicable.
Public Fixed Income This Fixed Income allocation shall be comprised of direct obligations of the US Government, its agencies, and instrumentalities. Repos collateralized by US Treasuries are also permissible.
Benchmark - to be based on asset mix and investment objectives Bloomberg US T-bill 1-3 Month fixed income index.

Short-term Reserve Fund

Investment Objectives

The purpose of the Short-term Reserve Fund is to improve the return on the funds held for expenditure beyond twelve months. The Short-term Reserve Fund shall prioritize preservation of capital and also aim to generate current income in line with its benchmark.

Investment Guidelines

Time Horizon 2.5 to 3.5 years.
Return Objective Target 2.5- to 3.5-year Treasury market rates and target total return (net of fees) in line with its benchmark.
Risk Tolerance The volatility of the Short-term Reserve Fund should be similar to its benchmark. This Fund is anticipated to be the least volatile segment of the consolidated Foundation portfolio.
Liquidity Needs The Short-term Reserve Fund should maintain intermediate-term liquidity, in line with the time horizon mandate.
Spend The current portion of the Short-term Reserve Fund may contribute to the Foundation's ongoing Operating Fund needs.

Asset Class Mix

Cash & Cash Equivalents This allocation may be held in US Treasuries, savings accounts, interest-bearing money market accounts, or certificates of deposit at FDIC-insured commercial banking institutions.
Money Market Indexed Funds These securities must be comprised of US Treasury-equivalent holdings. Underlying repurchase agreement ("repo") exposure collateralized by US Treasuries is also permissible, where applicable.
Public Fixed Income The Fixed Income portfolio will consist mainly of investments in investment-grade marketable bonds (USD-denominated). Permissible securities may be issued by US Treasury, domestic US organizations, non-US corporations, non-US governments ("sovereign" bonds), and multinational organizations ("supranationals" like World Bank), municipalities ("munis"), commercial paper, and repos collateralized by US Treasuries.
Benchmark - to be based on asset mix and investment objectives Bloomberg 1-3-year Government Credit fixed income index.

Other Guidelines

  1. Prior approval by the Foundation's Treasurer is required before allocation to securitized assets like mortgage-backed, commercial loan obligations, asset-backed securities, etc.
  2. With the exception of U.S. Government and agency securities, fixed income issues of a single issuer and its affiliates (ownership stake of 20% or more) shall at time of purchase constitute no more than 5% of the market value of the Short-term Reserve Fund portfolio.
  3. Maturity (using preferred metric of expected maturity) of any individual holding shall not exceed six years. Weighted average duration of the portfolio shall be aligned with the Time Horizon of the Short-term Reserve Fund.

Long-term Reserve Fund

Investment Objectives

The purpose of the Long-term Reserve Fund is to aid growth of invested assets and maintain the portfolio's inflation-adjusted purchasing power over a long-term. The Long-term Reserve Fund shall prioritize long-term growth while avoiding excessive risk. This Fund shall also aim to achieve returns in excess of the rate of inflation plus spending over a long-term (greater than 7-10 years).

Investment Guidelines

Time Horizon Up to 4.5 years for fixed income while greater than 7 years for equities.
Return Objective Target total return (net of fees) in line with its blended benchmark.
Risk Tolerance The volatility of the Long-term Reserve Fund should be similar to its benchmark. This Fund is anticipated to be the most volatile segment of the consolidated Foundation portfolio.
Liquidity Needs The Long-term Reserve Fund shall be comprised of highly liquid assets while also aiming to minimize asset turnover (i.e. holding assets over a long term to promote investment growth and return).
Spend The current portion of the Long-term Reserve Fund may contribute to the Foundation's ongoing Operating Fund needs.

Asset Class Mix

Cash & Cash Equivalents This allocation may be held in US Treasuries, savings accounts, interest-bearing money market accounts, or certificates of deposit at FDIC-insured commercial banking institutions.
Money Market Indexed Funds These securities must be comprised of US Treasury-equivalent holdings. Underlying repurchase agreement ("repo") exposure collateralized by US Treasuries is also permissible, where applicable.
Public Fixed Income The Fixed Income portfolio will consist mainly of investments in investment-grade marketable bonds (USD-denominated). Permissible securities may be issued by US Treasury, domestic US organizations, non-US corporations, non-US governments ("sovereign" bonds), and multinational organizations ("supranationals" like World Bank), municipalities ("munis"), commercial paper, and repos collateralized by US Treasuries.
Public Equities The Equities portfolio will consist mainly of investments in public equities. Designed to be the principal contributor toward achieving the growth target, the Equities portfolio is likely to be the most volatile asset class and may include areas like Emerging Markets.
Alternatives The Alternatives portfolio will consist mainly of hybrid real estate investments, via publicly traded REITs. This allocation may be a source of heightened volatility, but such volatility may not exceed that of the Equities portfolio.
Blended Benchmark - to be based on asset mix and investment objectives 35% Bloomberg 1-5-year Government Credit fixed income index.

65% S&P 1500 equity index.

Other Guidelines

  1. Prior approval by the Foundation's Treasurer is required before allocation to securitized assets like mortgage-backed, commercial loan obligations, asset-backed securities, etc.
  2. With the exception of U.S. Government and agency securities, fixed income issues of a single issuer and its affiliates (ownership stake of 20% or more)) shall at time of purchase constitute no more than 5% of the market value of the Long-term Reserve Fund portfolio.
  3. Maturity (using preferred metric of expected maturity) of any individual holding shall not exceed eleven years. Weighted average duration of the portfolio shall be aligned with the Time Horizon of the Long-term Reserve Fund.

ESG Investments

The Foundation shall first prioritize its risk/return requirements and operational obligations. ESG factors, in addition to many other factors, may have an impact on investment performance over the long term. The Foundation may consider ESG ratings when analyzing and selecting investments, and the Treasurer shall report annually to the Audit Committee on the overall ESG profile of the portfolio using publicly available ESG ratings, as appropriate.

Approve: February 27, 2024

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