Revenue sources

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There's been some discussion here about revenue targets for Wikimedia, including that the chapters' revenue should grow. I think that's good, and I want to raise a revenue sub-issue here, and share some of the thinking that the staff and board of the Wikimedia Foundation have been doing.

Essentially, it's our view that it is not just important that we bring in revenues: it is also important that we consider the sources of that revenue, and the effects of different sources on our activities.

We are increasingly planning to focus on "community giving" (small gifts, online, from individuals), and we intend to --relatively speaking-- deemphasize major gifts, foundation grants, and earned income (business development income).

Here's why. We believe that the many-small-donations model does the following:

  • It aligns fundraising with the rest of the Wikimedia movement: it's global, and it empowers ordinary people;
  • It enables the organization to stay focused on its own mission and strategy rather than being pulled by large funders' needs and desires -- basically, it enables independence;
  • It creates the correct incentives: Wikimedia should be accountable and responsive to readers;
  • The “small donor” focus reduces the risk that donors will inappropriately grow to become more valued by the organization than editors;
  • It's highly efficient and effective: by far the most scalable model;
  • It's highly stable and predictable -- it minimizes our risk;
  • It's a highly replicable and transferable model: it enables the Wikimedia Foundation to help equip chapters to fundraise.

We believe major gifts has the potential to provide transformative and permanent funding (e.g., an endowment), and, that it makes sense to have some support for major gifts in general. We believe that foundation grants provide credibility, and that some foundations also provide useful non-financial connections and support. Therefore, we will continue to seek unrestricted and conditional grants. As a matter of general practice, we will no longer accept restricted grants other than those currently in the pipeline.

And we believe that business interests in general are not normally very aligned with ours – but we also believe that certain types of deals have potential to tap into market energy that could significantly accelerate our work. Therefore, we plan to reorient business development away from revenue generation, and towards the goal of increasing reach, particularly in the Global South.

I'd be curious for people's comments on this, and I'd also be curious to have a longer conversation about the chapters' role in fundraising -- particularly if there are chapters people here :-)

20:57, 15 June 2010

Wow. This is exactly what I feel, only expressed far better than my effort.

It is very reassuring to see that even at the highest level in the organisation there is this understanding of why small donors are important.

Thank you.

21:44, 15 June 2010
Edited by 0 users.
Last edit: 10:48, 18 June 2010

I think your statement reflects an evolution in understanding that every organization can only experience by actually trying it out. In other words: we would not have known what costs and benefits are associated with different legitimate revenue sources but for actually experimenting with them. The conclusion--to emphasize on small donors in mass market--is a sound one that I strongly support. It has by far proven to be the most successful, most strongly growing, and least distorting source of revenue for Wikimedia Deutschland out there. From what I know, that experience has been shared with other chapters engaged in fundraising.

There is something inherently local about small donations though rooted in local giving culture, local laws (e.g. tax-deductibility), local expectations of disclosure, etc. A natural conclusion than is that, for this model to succeed, fundraising ought to be done on a local level, for example by the local chapter or--where chapters are not (yet) existent or able to fundraise--another local organization supporting the Wikimedia movement.

Adding the responsibility to drive revenues for the whole movement necessarily has an impact on the nature of chapters and how they are operating. With it comes much stronger pressure to professionalize as professionalization is a prerequisite to handling (substantial amounts of) money, especially if it is attached to a strong regulatory framework as non-profit status typically requires.

10:48, 18 June 2010

Well, this is of course correct that many things we can only learn by trying out, but it does not mean we should not anticipate the effect. Fro instance, we may want to try putting ads on Wikipedia articles, and this would bring a lot of revenue, but many editors (including myself) would instantly leave. I am not sure this is the best way of trying it out.

21:15, 20 June 2010

This is great news. My only bone to pick is that I don't have a bone to pick. I just hope you guys have done the math to know you can pull it off :)

23:03, 20 June 2010