Task force/Recommendations/Financial sustainability
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Recommendation in a nutshell:
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This is a recommendation as submitted by the financial sustainability task force. Please provide input and suggestions on Talk:Task force/Recommendations/Financial sustainability 1 |
Note
As the FSTF considered financial sustainability, we focused on two issues as important backdrop for weighing alternatives:
- Impact on community health -- A critical part of evaluating any fundraising alternative is understanding its impact on community health. Some alternatives (e.g. advertising) could provide significant additional funds to pursue our mission but may negatively affect community participation and health. As a result, we viewed each alternative through both the lens of funding it can provide but also the potential reaction of the community.
- Trends in spending levels -- We focused on financial sustainability in the context of our current Foundation spending levels, roughly $10 million a year. Should we elect to pursue initiatives that significantly increase mission-related funding needs, we may have to revisit fundraising alternatives and priorities. We recommend that follow-up research into financial sustainability look both at the "steady state" case but also investigate sustainability in the context of more aggressive pursuit of the mission.
Income
- Question
What revenue streams could support the Wikimedia Foundation in an on-going, long term and sustainable manner?
- Process
The FSTF considered each of the 10 different funding models outlined in the Bridgespan report as well as other potential sources of revenue such as advertising/sponsorship, earned income and gifts-in-kind (such as donations of computer hardware and bandwidth).
In general there was a lack of concrete information about three key issues:
- potential revenue from the different approaches to raising funds
- hard data on the impact they might have on the community of editors and users that form the core constituency of the Wikimedia's projects
- the actual amount of money required by the foundation depends to a certain extent on the recommendations from the other strategic task forces
This lack of information is addressed by the third of the strategic recommendations.
- Strategy
Wikimedia should continue to build upon the proven success of fund raising by soliciting donations of money from individuals and institutions as the primary source of revenue.
Further, the FSTF felt that Wikimedia should actually expand this kind of fund raising because:
- it has proved consistently successful over the last few years
- the community of editors and users generally accept it as the principal source of income for the projects
- with 230,000 contributors worldwide in the most recent fundraiser, it is well diversified and lower risk than most other alternatives
- there would seem to be a lot of untapped potential in this sort of fund raising when compared to other non-profits; estimates range from 2 to 10 times the current level based on the huge number of users as well as the relatively high profile of Wikipedia in different parts of the world
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This is a recommendation as submitted by the financial sustainability task force. Please provide input and suggestions on Talk:Task force/Recommendations/Financial sustainability 2 |
Growth
There is still a lot of room for growth across all the projects funded by WMF. This growth inevitably means the costs will rise and more funds will be required to cover these costs.
- Question
What changes or investment would be needed to pursue increased revenue streams?
- Strategy
Wikimedia should increase the resources devoted to fund raising from donations in order to generate more income:
- spending on fund raising thus far is relatively low when compared to other non-profits. Wikimedia's fund raising efforts cost approximately 10% of the revenue generated. Some non-profits spend as much as 33% of their income on generating donations. The Task Force recommends not exceeding a level of 20% and recognizes that Wikimedia is different from most other non-profit organisations because it does not currently have to spend a significant amount of money on advertising or promotion
- growing capacity is the key to successfully collecting lots of small donations from a large number of people and institutions
- increased investment in fund raising would allow the fund raising team to explore and test different approaches to achieve their targets. For example:
- trialling campaigns based on segmentation of donors (i.e.: targeting corporate donations, wealthy individuals, charitable foundations, governmental funds)
- increasing the awareness of WMF’s status as a non-profit organization with a global impact
- testing different messages to see if the average amount donated can be increased
- money should also be allocated for the recruitment and training of fund raising staff at the different Chapters around the world.
N.B: Investment in personnel will need to be reviewed once the results of Movement Roles Task Force are published.
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This is a recommendation as submitted by the financial sustainability task force. Please provide input and suggestions on Talk:Task force/Recommendations/Financial sustainability 3 |
Additional sources of income
- Question/Problem
Ongoing financial sustainability should not depend on one single source of income
- Strategy
Wikimedia should continue with and/or explore the following types of revenue sources - these could be pursued both so as to diversify revenue sources and to enable Wikimedia to operate at a level (if it so chooses) that could not be sustained by small donations alone.
Sources that should be continued and expanded include:
- Licensing /royalty agreements-this has been relatively uncontroversial as it has been well managed and WMF has been careful to enter into mission-friendly agreements
- Corporate support while WMF receives in-kind donations from companies, and sponsorship towards Wikimania, there is room for more traditional sponsorship opportunities and more corporate giving
Other sources of income that should be researched are:
- Tiered donor membership levels. These would encourage users to "pay" for their use, similar to the way that National Public Radio (in the USA) and public broadcast television stations raise funds. Content is freely available, but if you use, like it and can afford it, you can "join" at various levels and receive a nominal "gift". This could include donors who agree to make a regular, i.e. monthly, donation
- Government funding. It might be possible to pursue this at country levels, via Chapters, there is probably more potential in European countries than anywhere else in the world. This would probably need someone to take charge of this kind of fund raising, probably based in Europe, and this would depend on the recommendations published by the Movement Roles Task Force
- Advertising and commercial sponsorship. Almost all websites are funded by advertising, anecdotally it would seem that many users of Wikipedia think that it is already takes advertising. However the received wisdom is that the most of the community of active editors are strongly against advertising on Wikipedia and adding advertising to wikipedia pages would drive away many editors. However, there has never been any proper research into this so it remains an on-going, ill-informed, and therefore distracting debate. The FSTF suggests that a research study be commissioned to:
- gauge the attitudes to and possible impact of advertising on different Wikipedia's editorial and user communities
- look at the impact that advertising might have on other sources of income (for example: it would seem likely to reduce the number of individual donations, but might raise the number of people interested in paying for an "advert free" subscription).
- The objective should be to collect data that would allow both sides of the advertising argument to be better informed; with the ultimate objective being to determine a final resolution on this issue. The FSTF recognizes that this is somewhat contentious proposal but believes that more information is critical to informed opinions and that a clearly defined research study is the best way to move the debate forward constructively.
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This is a recommendation as submitted by the financial sustainability task force. Please provide input and suggestions on Talk:Task force/Recommendations/Financial sustainability 1 |
Longer term stability
- Question
Should an endowment for Wikimedia be created and if so, for what purpose?
- Strategy
An endowment fund would seem to have some advantages to the longer term financial stability of the WMF. Lessening the risks of sudden and unpredicted changes in other fund raising activities.
It should be pursued for a specific purpose (i.e. an endowment for supporting the annual bandwidth costs, or an endowment to support the development of Wikipedias in specific languages or areas of the world). Having an endowment with a specific purpose rather than simply contributing to WMF running costs will be less controversial and is likely to make it easier to collect funds for.
The impact of creating such a large endowment on other areas of fund raising, particularly efforts by local Wikipedia Chapters and small donations by individuals and institutions, should be investigated.
(N.B: normally only the earnings of the endowment fund are “spent” each year (a ballpark amount for earnings is 5%. So in order to have $5MM available each year, the endowment would need to be about $100MM), the endowment fund itself remains untouched, only accessible under very specific and probably grave situations.)
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This is a recommendation as submitted by the financial sustainability task force. Please provide input and suggestions on Talk:Task force/Recommendations/Financial sustainability 1 |
Outline
- Question/Problem
Ongoing financial sustainability
- Strategy
Wikimedia should establish an investment committee to appropriately manage and safeguard its funds.