The Wikimedia Board just published a letter to the community following-up on our ongoing discussion around fundraising and funds dissemination. As the Wikimedia Foundation Board’s Treasurer, its Audit Committee Chair, and its Trustee most responsible for oversight of financial matters, I think it’s appropriate that I share some of my personal views which led me to support the letter.
This is a difficult, complicated issue. But, how our movement focuses volunteer time and donor dollars is incredibly important. To help form my views on the issue, I’ve read hundreds of pages on meta, closely followed the statements made by Wikimedia Deutschland, Wikimedia Italia, Wikimedia UK, Amical Viquipèdia, Iberocoop, and others, and enjoyed dozens of hours of vigorous debate with my fellow community members.
Independent, decentralized effort is core to our success
First off, let me say that I believe our movement will succeed most quickly if we can build and support high-impact decentralized independent organizations. We have so much opportunity ahead of us, and we share such an ambitious vision, that it’s going to take many many people and many many organizations to get it done. Just as we have found a way to use decentralized editors to build our amazing projects, we can use decentralized organizations to support them.
As a global movement, independence is complicated. Geographic chapters, for example, are independent legal entities. Yet the Foundation has been entrusted with some important assets of our movement, in particular the trademarks and associated web sites. So in their work as partners to the Wikimedia movement, chapters must depend on the Foundation for use of the trademark, the servers, software and hosting.
The one thing that isn’t complicated is that real independence flows from successful programmatic work. Have a goal. Articulate it well to attract people and financial resources. Pursue it effectively. Get results. Repeat. That’s the best (only?) source of true independence. That what all organizations in our movement should aspire to do.
Distributed payment processing is a tactic, not an objective
Second, let’s talk about payment processing. Distributed payment processing is one of the tactical approaches our movement can use to collect donations. As I understand the history, we pursued it starting about five years ago because our movement just didn’t have centralized capabilities to raise money in different countries.
But in the years since, we have built extraordinary success combining centralized payment processing with distributed localization and messaging.
We’ve also learned more about distributed payment processing and the overhead and legal challenges it raises at scale. To do it right, and legally, given the amount of donor dollars we raise today, is expensive both in terms of money and time. Each payment processing organization would have to install new servers to comply with privacy requirements, deal with local and international regulators, find and pay for insurance, hire attorneys with specialized experience in fundraising laws, hire staff to deal with payment processing, and incur a higher auditing burden.
I believe we’re now at the point where distributed payment processing is no longer the right choice for our movement.
There’s nothing inherently wrong with distributed payment processing. It can offer some benefits. Maybe in some very specific circumstance, it will make sense. In which case let’s do it.
But distributed payment processing is not a goal or destination for our movement. It’s a tactic. And because we worked together incredibly hard as a movement, we now have a better alternative in the combination of centralized payment processing with distributed localization and messaging (see Zack’s commentary on meta with lessons from the 2010 and 2011 fundraisers for some perspective on the foundation/community cooperation on this).
Such a shift does not change the independence dynamic. I have heard the concern that distributed payment processing gives chapters more independence compared to grants. I think this is completely incorrect. Depending on the other parts of our movement to send page views for a chapter to payment process offers no more independence than depending on other parts of our movement to send a grant.
Of course there are open issues. We need to figure out how to best build relationships with donors. We need to build and make effective the community driven grant process. And some Chapters may want to build fundraising capabilities outside of grants from the annual fundraiser. I’m confident we can sort through the these issues together.
Fundraising should not be a priority
Third, let’s talk about distraction. I am comfortable with the idea that our decentralized model will lead to some inefficiency. But what I’m not comfortable with is distraction.
As a movement, we have figured out fundraising. We have developed an almost magical formula where a centralized technical system and message testing infrastructure, combined with highly committed local volunteers, allows us to raise more money than we can practically spend right now on our mission. We are not in a situation any more where money should be a driver of anything. Our fundraising capabilities are now way ahead of our capability to, for example, attract and retain high quality editors.
And that has been my biggest problem with distributed payment processing. It has taken time, attention and energy away from programmatic work like supporting the editing community, liberating content, etc. The idea that some chapters are considering hiring as their first employee someone to do fundraising is in my personal opinion completely the wrong move both for that organization and for our movement. We need to build capabilities around program work, editor support, content liberation, etc. Not around a skill set which our movement has already mastered.
I don’t necessarily blame chapters who instinctively focus on fundraising. It’s natural to focus on the concrete things you can understand and measure. And a few years ago when many chapters first started, money was a big issue so fundraising is ingrained in these organizations. But fundraising is yesterday’s problem. IMHO, every chapter should have as its top priority supporting the editing community, and in particular attracting and retaining great editors. Maybe content liberation and local government/press relations are next. Fundraising is way way down the list.
Impact is what matters
Fourth and finally, I believe mission impact must be the sole driver of funds dissemination. The more impact a chapter or partner organization is having, the more funds it should get. Our prior model for payment processing, which in some cases gave a fixed or guaranteed percentage of funds raised within a geography to the local chapter, is not only wrong but has created a dangerous culture of entitlement. We need to allocate resources based on where they can have the most mission impact, not based on where they are raised or based on who feels a perceived right to those funds.
Change is a part of our success
I am deeply sympathetic to frustrations at the changes to our fundraising model over the past year. However, our organization is evolving incredibly quickly. I often say that “What worked for us yesterday will not work for us tomorrow.” Nothing stands still in our movement. We have to constantly reevaluate decisions. And when a change makes sense, we have to make it. Now that our movement attracts over $30 million a year of donations, a different reality applies to us from a legal, regulatory, and operational standpoint. There’s nothing we can do to stop that — unless we want to be less ambitious about pursuing our vision and return to raising $2 or $3 million a year.
Just to reiterate, these are my personal views and instincts as of the time of writing. The WMF Board of Trustees continues to have an active debate on these issues, and I continue to work through them in my own head. Answering your comments and questions really helps me do that, so please review the various comment threads and add your own thoughts. I will do my best to reply. I will also be at Wikimédia France’s Finance Meeting and look forward to more discussions there.
UPDATED on 2/9 to better articulate my views on the distributed payment processing section. See comments for discussion. Also updated 2/13 to tighten wording and add link to Zack’s great analysis. Thanks to commenters for great feedback.