Why I supported the Board letter on fundraising

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.

 

86 thoughts on “Why I supported the Board letter on fundraising

  1. Thomas Dalton

    “Second, let’s talk about payment processing. Distributed payment processing is an experiment we’ve tried for the past few years. We all thought it would make sense. The lessons we’ve learned though is that it doesn’t.”

    Could you please elaborate on that? I’m getting very tired to vague claims like this from the Foundation. We have had enormous and ever-increasing success with fundraising over the last few years. What has gone so terribly wrong? There have been a few issues that needed to be sorted out, but from where I’ve been standing everything seems to have gone very well.

    Please give details of the problems you have observed and perhaps we can fix them.

    “But distributed payment processing is not a goal or destination for our movement. It’s a tactic we experimented with for a few years. It didn’t work out. And how it’s time for us to move on.”

    That’s not what the board’s letter says. The board’s letter says the bar that chapters have to get over in order to fundraise should be raised and raised to a point where only a minority of chapters will be able to reach it. It doesn’t say chapters fundraising should stop.

    You all need to stop being so vague and contradictory all the time. This is a controversial issue and you don’t all agree. That is fine. When you can’t reach a consensus, you need to have a vote and go with the majority decision.

    What you’re doing at the moment is just not coming to a decision and making statements that are sufficiently vague that each board member can pretend it says something they agree with. This is a recurring theme and it doesn’t work. The WMF board needs to grow up and actually make some decisions.

    Reply
    1. stu Post author

      Thomas, thanks for your comment. I’d be happy to elaborate.

      To your first question, correlation does not equal causation. Yes we’ve had amazing success in fundraising. And yes we have been doing distributed payment processing. There is correlation between the two. But distributed payment processing was not the cause of our fundraising success. If it were, we would have had success ONLY in those countries doing it. And yet we have had success everywhere.

      Don’t get me wrong. I think local involvement, localization, message testing, and volunteer commitment have a huge extraordinary impact. But I don’t think it particularly matters who settles the financial transaction.

      On your request for details, and asking about what went wrong, my concern is mostly opportunity cost. I don’t think payment processing adds much, but I do believe it is a HUGE distraction. We have some really hard tasks ahead of us as a movement. But fundraising is not one of them. I just don’t think Chapters should have to spend time on things that aren’t important. Secondarily (to me thinking high level though not our lawyers) there’s also a whole range of legal, regulatory and logistical issues, like cross-border funds flow or privacy regulations, that will be very expensive to get right. I think Geoff is going to walk through some of these at Wikimedia France’s conference next week.

      On your comment about what the board letter says v. what I say, yes these are my opinions. Personally, i believe chapter payment processing of donations from wikipedia.org and the other projects should stop, with the sole exception being corner cases where it makes sense for very tactical / operational reasons. In some years there may be none, in some years one. That’s the general direction I believe is the right answer for our movement.

      Chapters of course have the option to fundraise independently. I think there is great value and discipline that can come from the fundraising process – honing your message, communicating it clearly, dealing with all the logistics. As I mention in the post, I just happen to think that’s a comparatively poor use of time for any chapter. We have all the money we can spend as a movement. I believe chapters should instead spend the time supporting the editing community, liberating content, etc.

      On being vague and contradictory, I would have thought a long-time Wikipedian like you could recognize the slow, painful, ugly process of a consensus-building. In my day job I’m a highly decisive guy. I can make any decision — any decision — in 5 seconds. So yes of course we could just fight it out in one Board meeting, come up with a fragile 6-4 solution, and ram it through. But that would be a horrible answer for our movement. There are many parties to this process, and all views deserve to be heard (even those as petulant as “The WMF board needs to grow up and actually make some decisions”).

      But I agree we need to reach resolution at some point, and that is why we are targeting a decision in mid-March so that we can use the Berlin meeting as the transition from the discussion phase to the implementation phase. Another six weeks of back-and-forth on the issue may be painful, but this is just too important an issue to rush.

      Reply
      1. Craig Franklin

        Hi Stu,

        While I appreciate what you are saying with regards to opportunity cost, do you think that this approach is going to solve that? I propose that rather than concentrating on the stuff we want them to concentrate on, these sorts of changes will just push chapters into spending valuable time and effort looking for other sources of income.

        In essence, you are proposing to replace one set of problems with another set of problems. I think one of the reasons that people get upset about these sets of proposals is that being a part of the fundraiser is a fairly sure-fire method of raising some money. You put the effort in, and you’ll get something out. Whereas other methods of fundraising may or may not have a payoff. My fear is that by cutting off chapters from fundraising, they’ll end up wasting even more time trying to find other revenue sources, which will benefit no one.

        Now, you will no doubt tell me that the Board’s vision is a situation where chapters can come up with a plan, present it to the new FDC, and get it funded (thus not having to worry about revenue raising), but my experience has been that the previous attempts by the Foundation to come up with a machinery for funding chapters have met with, at best, mixed success (and in many cases the effort involved in getting a grant approved exceeds that of responsibly fundraising). This proposal is an improvement, but the devil will be in the detail and it must be a bona fide effort to share the bounty around the movement, not a cynical way to paint a thin veneer of community involvement over a centralised distribution model. Please don’t disappoint us!

        Reply
        1. stu Post author

          Thanks for your comment, Craig.

          You predicted one of my responses! To use your words, yes I want to replace a situation where distributed payment processing “is a fairly sure-fire method of raising some money. You put the effort in, and you’ll get something out” with a situation where a community-driven grants process “is a fairly sure-fire method of raising some money. You put the effort in, and you’ll get something out.”

          The reasons I prefer a grants process, to reiterate again, are 1. it distributes funds around our movement based on an assessment of impact rather than based on arbitrary splits, 2. it can be more efficient for our movement as a whole by reducing duplicated effort on bureaucracy and distraction from program work, 3. it gives chapters the option of not focusing on fundraising and 4. it helps avoid the whole host of legal/financial control problems we discussed back in our Haifa letter.

          I totally appreciate the challenges of a new system. Grant-giving has got to be efficient and truly-reflective of our movement principles, as you say nicely a “bona fide effort to share the bounty around the movement.”

          But I will turn your last sentence right back at you. The whole logic behind the Funds Dissemination Committee (or FAC or whatever it wants to be called) is that the Foundation is taking a step back so the community can drive the process. I’ve heard a lot of concern about the Foundation having too much power. I totally respect that view. This is a way to try and balance things out. So in the end we’re all in this together. All of us in the movement need to work really hard on this, and make it a success, so that we don’t disappoint ourselves.

          Talk to you on the Audit Committee call next week.

          Reply
          1. Thomas Dalton

            “The reasons I prefer a grants process, to reiterate again, are 1. it distributes funds around our movement based on an assessment of impact rather than based on arbitrary splits”

            Everyone has agreed that fundraising and fund dissemination should be completely separate, so that point is irrelevant.

            “2. it can be more efficient for our movement as a whole by reducing duplicated effort on bureaucracy and distraction from program work”

            It is very unclear if the economies of scale from centralisation are enough to counter the advantages to local fundraising (tax, desire of donors to suppose local organisations, local payment methods, etc.). I suspect that, at least after chapters have had time to learn, the advantages will be worth the extra cost.

            “3. it gives chapters the option of not focusing on fundraising”

            That is just complete nonsense. Giving chapters the option means letting them decide. If you decide for them, that is taking away options.

            “4. it helps avoid the whole host of legal/financial control problems we discussed back in our Haifa letter.”

            Yes, it does, but it is far from the only way to do that. The WMF manages to meet its legal and financial obligations while fundraising, doesn’t it? Why can’t chapters?

            So, that’s 4 reasons, all invalid. If those are your real reasons, then you seriously need to do some more thinking. If you have thought about things properly, then I can only conclude that you have other reasons for wanting to do things this was. What are they? (Actually, there is one other conclusion I could come to – that you’re an idiot. I don’t think that’s the case, though.)

            Reply
            1. stu Post author

              “you’re an idiot”

              And that is the point where I stop engaging.

              Thomas, you are passionate about this, and have IMHO some good things to say. It’s a shame to see you waste all that by marginalizing yourself. Our movement needs your best thinking / articulation / communication here, not comments like this.

              Reply
              1. Thomas Dalton

                I sincerely hope you were being an idiot when you wrote that because if you were intentionally quoting me out of context in order to claim the moral high ground because you know you can’t contest my arguments on their merits, then you have completely lost my respect.

                On the assumption that you were being an idiot, I will explain it to you: I didn’t say you were an idiot. I said the only alternative conclusion I could draw is that you were an idiot and that I didn’t think that was the case. That means I was explicitly saying that you weren’t an idiot. I now withdraw that.

                Reply
      2. Thomas Dalton

        Stu, I am well-trained in statistics, so I am perfectly aware that correleation does not imply causation. Lack of correlation, on the other hand, does imply lack of causation (unless there is some amazing coincidence that exactly cancels out the effect). You are the one making a positive claim here (that chapter’s fundraising causes problems), not me, so the burden of proof is on you. I have asked you to provide evidence of the correlation that must exist if your causal claim is valid. You have yet to do so.

        If your main reason for saying chapters shouldn’t fundraise if because you think they should be doing other things with their time instead, then frankly that is none of your business. Chapters have their own boards (and members) that decide on their priorities. You are welcome to offer advice on what you think they should be doing, but you should absolutely not be trying to impose your will on them.

        Reply
        1. stu Post author

          Thanks for your comment, Thomas.

          I don’t think my point was focused on a positive claim that the chapter’s fundraising causes problem. What I was trying to express is my opinion that distributed payment processing is not the right answer for our movement any more and that we should shift to a model that combines centralized payment processing with distributed leadership in localization and messaging. See my above reply to Craig for another attempt to summarize why.

          Now, separately, I do think that the distributed payment processing model as implemented over the past few years, with its fixed splits of revenue, does cause real problems. See the Haifa letter for details.

          I totally respect the perspective that how chapters spend their time is, as you elegantly say, none of my business. As independent organizations, Chapters are of course free to do whatever they want.

          But i actually totally disagree that is none of my business. All of us in our movement have a passion for our vision and a desire to achieve it. How do we spend our time? How do we organize? How can we be most effective? These are questions we all have a stake in.

          And more importantly these are questions that none of us can figure out alone. I believe the best solution will come if we work together, helping one another, criticizing at times, brainstorming solutions. Not if one part of our movement tells another that it’s “none of your business.”

          Reply
          1. Thomas Dalton

            The Haifa letter has no details. You said that “The lessons we’ve learned though is that [distributed payment processing] doesn’t [work].” (Although, I notice you seem to have edited your blog post to remove that statement – do you no longer believe it is accurate?)

            If we have learned such lessons it must be because something has gone wrong. What has gone wrong? Specific details, please.

            As for the “none of your business” thing – I specifically said you were welcome to offer advice. You are trying to do more than just advise, though. You are trying to force chapters to follow your priorities. That is not acceptable.

            Reply
            1. stu Post author

              On how I’m trying to articulate my views on distributed v. centralized payment processing, please see my note at the top of the post, and my responses to Arne and Florence.

              Reply
              1. Thomas Dalton

                I’ve seen all your notes. None of them contain any details on anything that has gone wrong with decentralised fundraising. You claim we have learnt lessons that it doesn’t make sense – what has taught you that? It’s a simple question.

                Reply
  2. Pavel Richter

    Hi Stu, you write: “Distributed payment processing is an experiment we’ve tried for the past few years. We all thought it would make sense. The lessons we’ve learned though is that it doesn’t.”

    Could you support this statement with some data? I agree with you that fundraising (and I still call it that, because in my view, “payment processing” is about donations, while “fundraising” is about donors) should not be a goal in itself for chapters (or the WMF, for that matter). But as I have argued in the Wikimedia Deutschland proposal, our own experience, as well as that of every single international non-profit that I know of shows that a localised fundraising model is more effective and more efficient than a centralised model.

    Thanks,

    Pavel

    Reply
    1. stu Post author

      Pavel, thanks for your comment. I’d be happy to elaborate.

      First, let me be clear exactly what I mean when I say “payment processing” and “fundraising” because I think you and I may be using the words differently.

      I am opposed to a system of distributed payment processing. I don’t think it makes sense anymore for chapters to invest in the legal, regulatory and operational overhead to collect the payments raised from visitors to wikipedia.org and our other projects. Such efforts are IMHO redundant bureaucracy, and the benefits (e.g. tax deductibility) don’t outweigh the costs.

      On the other hand, I think it is incredibly important to have local volunteers (and chapters) be a part of our global fundraising efforts. I believe increasing local involvement is one of the key drivers of the success of our global campaign over the past few years. I want us all to continue investing in that. (By the way, when you refer to a “localized fundraising model”, this is what I think of and yes I agree it’s important).

      Now, if Chapters want to go and actually fundraise — find potential donors, go through the process of soliciting them, etc. — there are clearly benefits. It’s a great way to get better at telling your story, to identify fellow travelers to our movement, etc. But it’s a matter of focus. Spending time fundraising, when you are part of a movement that has more money than it can spend, is IMHO a poor use of resources.

      When Wikimedia Deutschland was founded, fundraising was critical. As Arne has described it to me, it’s a core part of the mission and DNA of the organization. That’s because, at the time, our movement didn’t have a lot of money or even the ability to collect donations in many countries. But now our movement does have the money it needs, and it has developed that capability. We don’t need to focus on fundraising as much. All of us should shift our focus to higher impact things like finding new editors, supporting existing editors, liberating content, etc.

      Happy to take more questions. I think you’re on the attendee list for the Wikimédia France event — I look forward to talking more then.

      Reply
      1. Jürgen Fenn

        Stu, just to make this clear: When you say the benefits (e.g. tax deductibility) don’t outweigh the costs would you please take into account that in this country, e.g., tax deductability is a standard that makes a charity organisation notable and honorable in the eyes of donors. In this country, it is an absolute must for anyone who is willing to donate money. We will not contribute to other organisations. Period. There is a world outside the U.S. where people act according to different standards and think and decide differently. Our movement has to pay tribute to this fact.

        Reply
        1. stu Post author

          Thanks for your comment, Jürgen. I like your gravatar.

          I totally appreciate your comment that standards vary by country and culture. And yes I do not want to try and apply a U.S. standard everywhere. The Spendwerk report is really interesting to me. So yes, I can see a situation where tax deductibility is so important, and such a sign of credibility, that it might materially affect donations. That’s why I think we need to sort this out on a case-by-case basis.

          That said, my gut instinct is that no one makes a €20 donation because of tax deductibility. But we can and should do this analysis, understand the tradeoffs, and make an informed decision.

          To me the analysis has to include a review of opportunity cost. How much distraction from really important program work is caused by a focus on developing local payment processing systems/bureaucracy/compliance? It’s meaningful, and every minute spent to develop local payment processing capabilities is a minute not spent on supporting and developing the editing community, liberating content, etc.

          Reply
    2. Dimce

      + “payment processing” is about donations,
      + “fundraising” is about donors

      I agree that a localised fundraising model is more effective and more efficient than a centralised model.

      Reply
      1. stu Post author

        By your definitions above, Bence. I think we’re in agreement. I think there’s a lot of value in messaging and even donor relations having significant local leadership. But I don’t think there isn’t an inherent reason to have payment processing and the related bureaucracy be duplicated by every partner organization. Especially if we achieve the goal Liam nicely described in his comment below of “funds dissemination being agnostic to where the money is raised.” Am I reading your comment right? If you don’t mind, take a look at my reply to Liam below — I think it captures my thinking more clearly than what I’ve said before. I’d appreciate knowing what you think.

        Reply
  3. Frédéric Schütz

    Let me add to Pavel’s note that Wikimedia CH has clearly shown an example of efficient decentralized payment processing, with very little expenses, and obvious advantages related to local payment methods and tax deducibility. Exactly *0* of the headaches you mention apply to WM CH (the only legal costs we incurred were due to an analysis of the grant agreement that showed that we could not possibl sign such a thing !)

    A large part of the discussion on meta was about providing concrete arguments – and that is definitively what I spent most of my time discussing. I can only agree with Thomas that we are back to vague claims, not backed by any concrete figures. This is extremely disappointing.

    Reply
    1. stu Post author

      Frédéric, thanks for your comment.

      I don’t personally know about the Wikimedia CH situation, so I am going to speak about principles.

      Collecting money online from donors is serious stuff. And highly regulated. There are privacy regulations. Insurance requirements. Disclosure obligations. Legal statutes to stay current on. Accounting reconciliations to do and then audit.

      In the past when our overall fundraising was fairly small, we were perhaps under the threshold where regulations applied or where we would be noticed. But we are now growing big enough that this is no longer the case.

      So, for an organization to payment process hundreds of thousands (or millions) of euros, it will take effort. I do not consider this a “vague claim.” It is reality. And if that effort really isn’t being applied now, then as Audit Committee chair and someone who feels personally responsible for ensuring every cent donated at wikipedia.org is protected and spent wisely, I would be worried.

      Anyhow, principles (and the obligatory concerns of an Audit Committee Chair) aside, I know Geoff and Garfield are ready to have an in depth working session at the Wikimédia France event to review all sorts of data on this topic. I see you’re on the attendee list. I’m really looking forward to walking through that together and continuing the discussion then.

      Reply
      1. Frédéric Schütz

        The “vague claim” is not that some effort is needed, but the assumption that it is not worth doing it for chapters — and we still don’t see any data backing this position. I understand that you may know about the specific details about all chapters — but as Liam mentioned, everyone agrees on the general principles, so it is the particular cases that have to be discussed.

        I think you make a mistake with the argument on opportunity costs. It reminds me of a similar comment that was made about Wikipedia editors: “these guys should work on important topics rather than spending their time writing articles about Star Wars”. This has been debunked, and I think the same rationale applies here: if chapters are not spending time fundraising with the WMF, it does not mean that they will have more time to devote to other programs (in my case: I would probably get some sleep if I was not working on the fundraiser !). Most likely, as you hint in (the revised version of) your post: it is almost certain that many chapters would launch their own fundraiser. Because they would have projects they want to fund that would not be accepted by the FDC (and I think this is a very good thing: if a central body decides not to fund a certain type of projects, and it proves to be a mistake, this mistakes applies to all grant-funded chapters; however, with an independent fundraiser, this risk is dilluted). And because, yes, that would improve their independence; I still strongly believe that chapters who fundraise with the WMF increase their independence by building fundraising capacities. If the FDC was to pull the plug (for any reason) on a chapter that depends entirely on grants, this chapter would basically die. A chapter that has fundraising capacities is clearly in a better position.

        However, this separate fundraiser has a big drawback: it means the WMF would be competing to attract the potential chapter’s donors. This could be a nightmare in terms of public relations, and given that chapters *will* fundraise, it is something worth considering (I don’t think it has been done before). And, no, I don’t think that “as a movement, we have figured out fundraising”, as you write…

        One last question. You write “the idea that some chapters are considering hiring their first employee, and are considering hiring someone to do fundraising, is IMHO completely the wrong move both for that organization and for our movement.” In the context of your argument, I understand that you think hiring someone to do fundraising is a bad idea (although I strongly disagree, and as stated above, believe that chapters will do it regardless of any decision made on payment processing — and that would be a good move). But surely you are not implying that chapters should not hire employees at all, not even project managers, right ?

        Thanks for your time !

        Frédéric

        Reply
        1. stu Post author

          Thank for staying engaged, Frédéric. I appreciate your point on opportunity cost, and the important of building independence through fundraising. I do still think the opportunity cost argument is real. If a chapter spends say 20% of its collective energy on fundraising, it has to be a distraction from program work.

          And yes there is a risk that the FDC pulls the plug, and the WMF goes crazy too, and that chapters doing good work won’t get funding. But if those things happen under the distributed payment processing model, then the page views of qualified donors to payment process would go away too so the chapter would be just as screwed.

          Personally, I think that risk is infinitesimal. I’m an optimist and I think it’s better to spend your time trying to achieve a positive result than trying to protect yourself against a really really unlikely negative result.

          Yes I agree the potential conflict with local entities fundraising at the same time as a global entity is a tricky one. I don’t know the answer. But it’s a lot simpler a problem that many others our movement has solved, so I’m sure we can figure it out.

          And yes you’re right I have no objection to chapters with really good ideas about supporting editors, liberating content, etc. hiring staff to run those programs. See my first paragraph about commitment to decentralized model. I just don’t think fundraising is the right focus area! I updated that sentence to be a bit clearer.

          Thanks for all the feedback.

          Reply
  4. Florence Devouard

    At the risk of repeating what Pavel and Thomas asked, I also had my attention raised when I read

    “But distributed payment processing is not a goal or destination for our movement. It’s a tactic we experimented with for a few years. It didn’t work out. And how it’s time for us to move on.”

    Can you elaborate on “it did not work out” ?

    My second question is probably more philosophical. Your argument “I believe mission impact must be the sole driver of funds dissemination” is raising my concerns. What is a mission impact ? Is that okay that the WMF only decide what is within mission ? How is that measured ? By who ? How do you ensure independance so that the ones who decide what is “impact” are not the same that the ones who decide of the measurable succes factors and are not the same than the ones who actually control the level of the success ?

    And…. in a mouvement relying on the good will of a volunteer community, would not you consider that the happiness of this community should not also be at least amongst driver of fund dissemination ?

    Reply
    1. stu Post author

      Florence, thanks for your comment.

      On your question around my phrasing “it did not work out,” I realize after your comments and Arne’s and others that I didn’t really communicate what I was thinking. See my response to Arne below. I’ve gone ahead and updated the post…. take a look and let me know if that is clearer.

      On mission impact, yes indeed that is a tough question. It’s easy for us to agree on: “Imagine a world in which every single human being can freely share in the sum of all knowledge.” But how do we translate that into specific projects, priorities and resource allocation?

      We took a big step with the strategic plan. That gives some additional detail on what the vision means in more practical terms. So that’s one guideline we can use.

      But there are going to be some hard value judgments. As you point out, a good theoretical system is one where the work is carried out by one group, the metrics are defined by a second, and evaluation against metrics is measured by a third. That’s not too different than how some mature government and NGOs do it. My first job was at the United Nations and I saw this.

      But of course such a system is also usually a complete mess when it comes to moving quickly and responding to a rapidly changing environment. Too many checks and balances slow everything down. And that’s the trick for our movement. The internet is evolving and growing way too quickly, and our movement is growing way too quickly, for us to adopt a slow-moving model.

      The other extreme is to put one person in charge of everything. That can allow extraordinary speed and nimbleness. It’s how most of the successful startups that I’ve worked at do things. It can make a lot of sense.

      Except that it’s completely the wrong answer for our movement. Our vision is too big and too important to tolerate single points of failure. And our decentralized culture is profoundly incompatible with this approach.

      So we’re going to have to find a middle ground. I don’t know the answer. The idea of a community-driven committee that drives review makes a lot of sense to me. It’ll be difficult to put together, and a lot of work to make it successful. But it seems to be a compromise so is worth really trying.

      A funny point was made in our board meeting this weekend. We were talking about the ideal composition of such a committee. And someone pointed out that one scenarios we were discussing — having a majority of membership from the community, with a select addition of some experts with the technical knowledge required to do the committee’s work (e.g. grant giving) — is pretty much exactly the structure of the Wikimedia Foundation Board.

      And that points out a big challenge for our community. We’re all such believers in decentralization that we can develop instinctive suspicion about a centralized solution. Some are concerned about the Wikimedia Foundation Board having “too much power,” so the idea of a community-driven committee making grant decisions seems somehow better. But in the end I suspect the FDC won’t be that different. If that happens, will we then all want a third body to somehow balance out the power that the FDC has developed? I don’t know. But i do think that at some point, our community is going to have to get comfortable with some kind of centralization. Perhaps the right set of checks and balances will help, and I hope the FDC might help us understand at least one alternative for these.

      To your last point (before I get too exhausted to type any more), yes indeed volunteer happiness is an absolutely huge driver of the right approach. Personally, i focus on two parts of our volunteer community. First, I’m focused on the people doing the actual work, the ones having an actual impact. This is mostly our 79,000 active editors, I suppose. It is their opinion that matters, their views that we must respect. Second, I’m focused on tomorrow’s volunteers, and the volunteers that come after them. What I mean here is that for our movement to thrive and succeed for the next 100 years we can’t get too wrapped up in ourselves, or our current generation of community members. We have to think about how to build a movement and a community that will continue to attract new volunteers for decades to come.

      OK I’m going to sleep. Thanks again for your comments. And of course thanks for putting me on the board lo those four years ago! It’s been an incredible honor to serve our community. Plus it’s been a lot of fun.

      See you next weekend.

      Reply
  5. Arne Klempert

    You say: “Distributed payment processing is an experiment we’ve tried for the past few years. We all thought it would make sense. The lessons we’ve learned though is that it doesn’t.”

    IMHO your perspective is not accurate. It might sound like nit-picking since it doesn’t change much in terms of where we are now – however, I believe it’s important to sort this out.

    Distributed payment processing was not an experiment that turned out to be a failure. It was the best option we had when we started doing it. Let me give you some historical background. Chapters started to care about fundraising in their country mainly because the Foundation didn’t – the WMF was just not able to do it.

    Locally driven online fundraising began when the WMF didn’t know a thing about other jurisdictions than the US, it started when the WMF wasn’t able to provide any other payment methods than PayPal or sending checks via snail mail to the US, it started when the WMF did not consult with anybody to check whether a banner message and design could actually work it other cultures. Decentralized payment processing has actually been very effective – it allowed all of us to grow to what we are today – probably the most successful movement ever that understands how to do online fundraising on an international scale.

    What did change – mainly over the past two years – was the ability of the Wikimedia Foundation to support this with a highly professional fundraising team. So putting it the way you did does not reflect the historical reality and plays down the enormously important role that chapters have played so far.

    You say “The lessons we’ve learned though is that it doesn’t.”

    I am with you to some extent. Since we improved our online fundraising capabilities a lot, today it probably doesn’t make sense anymore to do local fundraising everywhere. However, where it might make sense and where not is something we just don’t know yet and still need to work out. We do have some data on the costs of decentralized fundraising, but so far we haven’t looked deep enough in the corresponding benefits.

    We have no solid data for these effects – e.g. tax-deductibility and or the increased trust donors might have in a local organization being the primary donation recipient, to name just two. This is why we (as in “the board”) weren’t able to specify the number of countries where it still makes sense. We (as in “the whole movement”) still have a lot work to do on this to get the full picture.

    Reply
    1. Thomas Dalton

      “This is why we (as in “the board”) weren’t able to specify the number of countries where it still makes sense. We (as in “the whole movement”) still have a lot work to do on this to get the full picture.”

      Arne, who do you think should make the decisions about which chapters should fundraise? Following the Haifa letter, the WMF board left the WMF staff to make those decisions based on some very vague principles, and it didn’t work very well (Sue chose to interpret the principles in a way that clearly wasn’t the intention). Do you have a better idea for this time round?

      Reply
        1. Thomas Dalton

          It’s something we need to give a lot of thought to. My current thinking is that the decision should be made by an external audit firm. The WMF should, based on legal advice (that they share with at least the internal community), put together a list of requirements that a chapter must meet in order for it to be legally safe for the WMF to send donors to them (I think that should be the only requirement – beyond that it should be for the chapter to decide) and then an external audit firm (likely the chapter’s usual auditors) should say whether or not the chapter meets those requirements.

          Reply
          1. stu Post author

            I totally agree we need to give it a lot of thought. It’s complex. It’s not black and white. Maybe we could all put together a set of criteria to be “safe,” and maybe we could all outsource that to an independent third party that we could all somehow agree on.

            But I think that approach totally, totally misses the point. Our goal is not to be “safe” with donor funds. Our goal is to make the sum of all knowledge freely available to every single person. We have got to use every penny of donors funds to pursue that vision most effectively. Not just safely.

            Can you help me understand why exactly you want to preserve local payment processing rather than take advantage of the centralized payment processing and local messaging/support model that we’ve all developed over past few years? I still don’t get that. Is it the perceived guarantee of access to donor funds, without any demonstration of ability to impact the mission?

            Reply
            1. Thomas Dalton

              Have you read anything that anyone has written on this subject over the past couple of months? I rather think we’ve explained why we think chapters fundraising is a good idea. I’ll summarise a few of the key points for you though:
              1) We can raise more money (due to tax deductibility, people preferring to donate to a local organisation, local payment methods, etc.)
              2) We can form relationships with donors that can extend beyond simple fundraising
              3) There isn’t a single-point-of-failure
              4) It encourages chapters to develop the kind of organisational maturity that will benefit their other work

              The only reason the WMF has been able to give for chapters not fundraising that has any kind of evidence or logic behind it is the legal risks. That’s why I talked about safety. Once a chapter can show that it has everything in place to handle donors’ money safely, there is no reason not to let that chapter fundraise. That is why safety is exactly the point.

              Reply
    2. stu Post author

      Arne, thanks for you comments.

      You make a great point and one frankly that is more in line with my thinking than the too-brief and too-flip way I originally worded my post. I apologize.

      What I should have written is something like, “Distributed payment processing may have been a good choice for at one time. 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 as it scaled. I believe we’re now at the point where distributed payment processing is no longer the right choice for our movement.”

      I will update the post to reflect this. Thanks for helping me better articulate my thinking.

      Reply
      1. Jürgen Fenn

        Stu, would you please allow for one question: Do you really think our movement can afford to miss some 4 million Euros in donations from German donors?

        In this country, we expect to be able to contribute to a local bank account and to a local organisation. We do not donate to a foreign body. We expect a local body to answer our questions regarding a donation, etc., just as put forth in WMDE’s statement on meta. This is the way it is. Thanks to Arne for putting this situation in historical perspective.

        To cut a long matter short, we should rather concentrate on whether a local chapter is able to manage fundraising, or not. Those chapters that are able to manage funds and donor relations should please continue to do so. In all other cases the WMF could well take over for the common good.

        Reply
        1. stu Post author

          Thanks for this comment, Jürgen. I think i addressed some of your concerns replying to your comment above. But let me add a few things.

          No, of course I don’t want our movement to forgo €4 million of donations. Our vision and ambitions are way too big for us to turn away support. The challenge is that I don’t think it’s so black and white. It’s nuanced. That’s why we need to work together to figure out the right answer on a case-by-case basis.

          To your point about focusing on which organizations are “able” to handle fundraising, I totally disagree. As I said in another comment, our goal is not to be “safe” with donor funds. Our goal is to make the sum of all knowledge freely available to every single person. We have got to use every penny of donors funds to pursue that vision most effectively. Not just safely.

          That’s one of the real challenges discussing this issue. There are two totally separate dimensions to the question.

          First, from a logistical standpoint, what makes sense? Where is the point of diminishing return on investment in overhead/bureaucracy? How do we manage the risk to our movement of failure to protect donor privacy, or follow related regulations? These I think are rational items that which lend themselves to analysis and thoughtful discussions.

          Second, from a mission standpoint, how do we have the most impact? This gets to funds dissemination, and my total dislike for the component of local payment processing that drives a fixed or guaranteed percentage of donor funds to the local chapter either a) because of precedent or the nature of an agreement or b) because of regulatory limitations on funds flow. I just don’t think that we should allocate funds donated to our movement in such an arbitrary way. We have to allocated based on where they will have the most impact.

          I admit that I’m struggling to be articulate on this topic. Am I making any sense here? I really value your perspective and want to find a way to communicate with you.

          Reply
          1. Jürgen Fenn

            Stu, thank you very much for elaborating on your point of view, especially for introducing the global perspective in our discussion. With a slight delay, for which I apologise, I would like to add one more point to perhaps make it clearer why local peculiarities matter in fundraising. Just a few points to draw a more detailed picture:

            1) I proceed from Germany which is different in many ways within our movement. In this country, Wikipedia regulars meet in great numbers in real life at local meetings that usually take place once a month in almost any big city. What’s more, some 95% of students at schools and universities and still some 50% of teachers use Wikipedia. Within those over 60, still 45% of those using the internet use Wikipedia regularly. So, our movement has a very strong standing within our society, and we indeed perceive Wikipedia to be more than a global, or an American project, but it also belongs “to us” in the sense that is has become an important part of our way of life. This is why Germans are very open about giving to the Wikimedia movement.

            2) On the other hand, a survey among donors to Wikimedia Deutschland has shown that those donating “to Wikipedia” expect not only to further Wikimedia projects in general, but they also expect to have, say, education programmes supporting a critical point of view in using our ressources in German schools. This is in part due to the fact that a large sharing of donations indeed comes from school teachers and, in general, academics, or, in general, people linked to education in some way or another. Hence, these important programmes are organised by our local chapter. But we also expect to find a local body they can address about any questions with regard to Wikimedia projects. This goes hand in hand with our standing in society, and it is why you cannot manage local affairs from abroad. Our donors expect to find a strong and proficient local body they can turn to directly and that talks to them in their own language.

            3) As I said before, tax deductability is not so much about money, it is about whether you trust an organisation you consider donating to. No one will give money to an organisation that has not been granted this status by a German fiscal authority because it is a mark of seriousness and trustworthyness. Indeed independent consumer protection bodies in this country disencourage donations you cannot deduct from your personal tax. Again, this is about trust, not only about money. This may be different in the U.S., but this does not matter to people here.

            I think this demonstrates that fundraising is indeed different in each country. There is not one sole model you can apply to any country, but proficiency of local chapters and expectations of donors matter indeed, in fundraising and in disseminating funds among chapters.

            This said, I would like to add that I am very much in favour of supporting the smaller chapters and furthering Wikimedia in those countries where it is not that present so far, for whatever reason there may be. But we can only achieve this goal by building on models and structures that have proven reliable and working. This is what I mean by being effective and efficient.

            Reply
            1. stu Post author

              Thanks for your thoughtful additions, Jürgen. Yes it is amazing how strong the German wikipedia is and how important it is in Germany. I have enormous respect for what the community has accomplished.

              And yes, I agree that fundraising dynamics are different in every country, for the reasons you cite and also due to the different cultural attitudes toward philanthropy. That said, some things are consistent — the importance of local tailored and tested messaging, the value of building ongoing relationships with donors, etc.

              To reiterate what I’ve said elsewhere, I’m not looking to reduce community (including chapter) participating in fundraising. I just want to focus efforts on where they add the most value.

              Reply
  6. Liam

    This is possibly the most inflammatory and destabilising posts I’ve seen in quite some time. That it comes from the WMF Treasurer makes it all the more distressing to read.

    The principles that you state are perfectly sensible on first reading. The thing is, they are so broadly stated that it is impossible to disagree with them, even though the interpretations you then go to make are written as if they are the only logical interpretations possible. No one is going to contest statements like “Fundraising is not a priority” or “Impact is what matters” with regards to a charity. However, you have used these undeniable statements to justify some highly controversial conclusions without backing them up. Ultimately, your conclusions demonstrate your preferred outcome rather than a statement of fact.

    For example, as noted above by several other commenters, the statements that Chapters managing the fundraising locally “doesn’t work” is clearly overreaching. AFAIK, all of the Chapters that did fundraising this year: achieved their financial targets without problems; did not have any privacy breaches or similar disasters; had a dedicated fundraising coordinator; and transferred the agreed amounts back to the WMF. Moreover their organisations have grown in capacity and professionalism because of the specific requirements that have been placed on them by you and the WMF. These are all *good things*.

    So, when you say that it “doesn’t work” what you actually mean that it has not worked *in some cases* in the past. As a result of the WMF Board’s “Haifa letter” the minimum requirements for participating in the fundraiser this year were significantly raised. This is a very good thing and it is likely that the bar will continue to be raised in the future. Those Chapters that did undertake fundraising were able, through the fact that they had grown their own organisational capacity early enough, to “step up” to this new level. However, those Chapters that did not already have the new minimum capacity were not able to reach that high. It looks like that the fact that some Chapters that had previously done fundraising did not do it again this year is being used to justify the broad assertion that Chapter fundraising “doesn’t work”.

    You concede that “Maybe in some very specific circumstance, it will make sense. In which case let’s do it.” without acknowledging that it takes time and effort to get to the stage where the local systems to make it “make sense” are in place. Arne points out that those Chapters that were first to do fundraising did so because they built their systems in the *absence* of WMF capacity to help. Now that the WMF has the capacity, its responsibility should be to assist others to grow their own capacity and professionalism rather simply pat the Chapters on the head and say “thanks for doing that for us, but it’s a tough job, so don’t worry your pretty little head about it from now on”. We should be looking at the success stories and trying to replicate them, but instead we are looking at the mistakes and saying “see, I told you so”.

    I’d like to return to the section entitled “Impact is what matters”. Again, a perfectly sensible statement. However, you then go on to mix two issues: that of funds dissemination being agnostic to where the money is raised, and organisation efficiency. This is being used to justify a 100% competitive system that forces everyone to “beg for scraps” off the WMF’s table. Under such a system only those organisations that have existing capacity can succeed because only they can mount viable bids. Everyone agrees that merely because a country has lots of donors that doesn’t mean it should *necessarily* receive more money for local spending. However, there is no scope in your system for organisational growth and financial security, enough that a newer/smaller Chapter could justify hiring staff. Therefore there is no possibility that those Chapters will be anything other than 100% volunteer managed forevermore – a self-repeating circle. For example, if a Chapter cannot prove that they will be more effective at talking about Wikipedia to their universities than Creative Commons (for example), then that “advocacy grant” budget will simply be given to the Creative Commons next year. And, if no one else in that country has already proved their organisational efficiency, then the WMF will simply set up shop directly – we’ve seen this in India, Brazil and the Middle East.

    I’m not saying there should be no competition or no focus on spending-effectiveness. Yes, there *should* be competitive funding offered for targeted projects (much like the way the WMF currently offers Tech RfP’s). But that’s quite different to being permitted to have multi-year funding confirmed in order to be able to provide a stable and professional local presence and long-term projects.

    *This* fear is why the fundraising discussion is so hotly contested. Because of statements like yours here, we all know that being directly involved in fundraising is the only way to ensure that our Chapters will be permitted to become successful and sustainable organisations that are * supported* in growth and professionalisation rather than challenged for existence.

    We both know that there is not such thing as true organisational “independence” no matter where your money comes from. I’m not arguing that Chapters being involved in fundraising gives any more or less independence than by a grants model. But, under your model, the logical conclusion is that if the WMF decides that it has the capacity to undertake fundraising and outreach in New Zealand (for example), it will set up a bank account there, apply for tax-detectability, hire staff and begin programs irrespective of any local initiatives. Those Chapters that do already exist will be “grandfathered in” but will be asked to compete for 100% of their funding against bids from external organisations (such as other Charities or university research groups) as well as internal bids from the WMF itself. This will all be overseen by a new financial super-committee that can have its decisions over-ridden by the selfsame WMF.

    I think that you forget that the Wikimedia Foundation is not, and should not be, alone. It is not “the WMF plus a bunch of volunteers out there who write Wikipedia articles and stuff”. The Wikimedia Foundation is the core – or linchpin – of this movement but the movement also inclues a network of allied organisations that are desperately trying to become as efficient and effective as you (and they) want them to be. It is no secret that some Chapters have stalled, or gone moribund. And it is for those situations that we need better procedures and mechanisms for ensuring that new Chapters can be given the best chance of being successful. The WMF needs to start offering carrots not just sticks, and offering firm guidance for growth and professionalism rather than pointing out that the Chapters don’t have as much capacity as it does. Otherwise, it will end up being alone after all. With 100% control but with no movement to lead.

    Reply
    1. stu Post author

      Jeez, Liam. I’m not trying to be “inflammatory and destabilising.” I’m going way out of my way and putting in huge amounts of extra time writing in order to be open and honest and transparent about what’s going through my head around a really important issue. If all this work is going to be greeted with an opening like yours, then I just won’t fucking bother.

      I’ll get to the substance of your note once I work through the earlier comments.

      Reply
      1. Liam

        I understand that you’re not trying to be destabilising, but I believe that is the result you’ll achieve. In the short term, your plan will undermine the good professionalisation activities underway in many Chapters by making them feel like that work is un-needed/un-wanted and not good enough anyway. on the long term your plan will be destabilising as it will leave the WMF as the sole organisation in our movement with the capacity to achieve results.

        I certainly appreciate that you are going out of your way to provide detail on your opinions in this debate, and I’m glad you are – we need more of that nuance coming from WMF board members. But, since you know that those opinions are controversial, you can’t be surprised that people will react to them with shock. I knew that you were concerned about the risks that Chapters undertaking fundraising posed, but I was unaware quite how against the idea you were. I always thought that it was about raising the standards for everyone, but no, it’s actually about cutting everyone else but the WMF off. That shocks and saddens me.

        It is shocking because it means that you see only the (valid) risks and not of the (equally valid) rewards of having a network of organisations. It saddens me because all the positive developments that have happened over the last year(s) are being outweighed by the potential for something to go wrong in the future.

        Reply
    2. stu Post author

      Liam, I’m still sore about the tone of your comment. I’m a volunteer. i put 6 or 7 hours into writing this post. I’ve spent at least 10 hours responding to comments. I did not need to do this. No one asked me to do it. I could instead have had dinner with my children last night and had a nice conversation (maybe a movie?) with my wife. Or actually done some of my day job this morning. I chose instead to commit this time to our movement in a good faith effort to help us through a complicated issue. We’ve all got to get in the habit of thanking volunteers who commit time to our cause, not being assholes to them. Even if we think we disagree with what they say.

      In the vein, let me say that I have huge respect for you. I think you have added tremendous value for our community. Thank you. I want you to be motivated and encouraged to stay involved for as long as possible. So I take your concerns very seriously.

      First, I want to me a general comment about fear. Going through your comment, I felt like I was reading a great summary of the fear some feel about the changes we are discussing. I got a great understand of what the concerns are, the outcomes people are afraid of, and the things you want to avoid. And I deeply respect that fear.

      It’s just that I also wasn’t sure you had actually read my post. Because you ascribed to me all sorts of opinions I didn’t write, ideas I don’t have, and things I don’t believe. I believe the fear you have is so strong that it colors your reading of the issues.

      This is totally normal — it happens all the time. It certainly happens to me sometimes, including around this issue. i’m the Chair of the Audit Committee and I feel personally responsible for every cent donated to our movement. I get afraid too. But I think we all have to rise above those fears sometimes, and really try to have a constructive dialog instead of just restating our fears. I will try to do better. I ask you to do the same.

      Second, let me try to articulate one fundamental reason we seem to be missing each other. We are being very sloppy with words. When I write “distributed payment processing,” I mean something very specific: an operational tactic used to collect payments from donors. It includes Chapters building the legal and regulatory framework to do this for large sums of money, building the staff to handle it. In the past, our implementation of it has involved fixed splits of donor dollars. It has involved some not-so-good outcomes like the ones we discussed in the Haifa letter.

      To me, “distributed payment processing” says nothing about volunteer involvement in developing fundraising messages and localization. It says nothing about the involvement of local volunteers in reaching out to, inspiring, and helping build relationships with donors. It says nothing about chapters doing other kinds of fundraising. All these things are important, but separate from the core of my message about payment processing.

      But when I say “distributed payment processing,” it seems you read some broad definition of “fundraising.” And I don’t know exactly what “fundraising” means when you write it, but am almost certain it does not mean what I mean when I say “distributed payment processing.” Would you mind going back, reading your comment, and then sharing a few sentence definition of “fundraising” as you used it? It think it would be really useful to compare the two definitions. It might us help avoid talking past one another.

      Third, let me address some of your specific comments. I’ve hit the themes above, so I will mostly highlight things you wrote that I consider noteworthy:

      - Please see my responses to Arne/Delphine’s comments on my wording that distributed payment processing didn’t work. As I told them, the moment I read their comments I realized that hadn’t really expressed what I felt. Rather, I feel we have a better option: centralized payment processing with distributed support for localization, messaging, etc.

      - You write that I’m ‘looking at the mistakes and saying “see, I told you so”.’ i just don’t see that. Where am I talking about mistakes and saying I told you so? My believe is that we have a better alternative, and my belief is that this new alternative will create less bureaucratic overhead and distraction.

      - I like your phrase that “funds dissemination being agnostic to where the money is raised.” sounds like we’re in agreement on that (finally! something!)

      - Please stop using language like “beg for scraps.” That kind of distracting, emotional fear-mongering is inappropriate for a serious discussion of an important issue.

      - I don’t understand how you conclude that “only those organisations that have existing capacity can succeed because only they can mount viable bids” or that “there is no scope in your system for organisational growth and financial security, enough that a newer/smaller Chapter could justify hiring staff.” I think that such a system would be insanely stupid and there’s no way I would ever support it. Part of having a independent, decentralized model is building capacities globally. Any funds dissemination system has to have as its core investing in, nurturing, and helping new organizations succeed.

      - To your comments, “And, if no one else in that country has already proved their organisational efficiency, then the WMF will simply set up shop directly – we’ve seen this in India, Brazil and the Middle East.” Let me ask you a question. Let’s say there is a country where a local community interested in organizational / movement-wide issues does’t exist. What do you think we should do? Based on this comment, it seems you want us to just let it alone, make no investment, and focus our efforts to support free knowledge only in places where a community grows on its own. But I’m pretty sure you don’t feel that. For me, I don’t think we should wait and just leave such countries alone. We have a mission and we need to pursue it. The right way to pursue it, IMHO, is to try and seed and help build a local community. I want us to try anything possible to do that. That’s what we’re trying to do it India. Not try to replace or marginalize a local community, but to invest in it and help accelerate its growth.

      - On multi-year operating grants to chapters, yes I think that kind of thing should be part of the model and as far as I know it’s been a core part what we have been discussing since Haifa.

      - On the idea of the Foundation “offering firm guidance for growth and professionalism,” let me probe that. I totally agree that as a movement we need to invest in growing all the organizations in our movement. It’s just that I’ve had too many experiences over the past few years where chapters have energetically resisted taking feedback from the Foundation. As we both agree, independence is tricky. That’s why I’m really glad the Movement Roles team has made a recommendation which the Board has accepted to expand an expansion of the ChapCom mandate to pursue peer review, mentoring and the full life-cycle of a partner organization. I believe the Foundation should provide whatever support possible to that effort.

      - I don’t forget the Foundation “is not, and should not be, alone.” I don’t believe that at all. Please go back and re-read the first paragraphs on the importance of decentralization. Notice that I wrote it first, because it is most important. Not second, or third, but first.

      - to your comment about my ideas that “you can’t be surprised that people will react to them with shock,” i actually kind of am surprised. I don’t think I’m saying anything too different that has been covered in the 218 pages of comments around Sue’s draft recommendations on meta. I think it gets back to my comments on fear v. reality. You asserted I am against “Chapters undertaking fundraising.” I’m not, I’m not, I’m not. I am against distributed payment processing as a model that all chapters should aspire to and which would be some kind of precursor to a chapter being considered mature or receiving significant funding. And I have a personal opinion that chapters spending a lot of time on fundraising activities isn’t a particularly good use of time in our movement, but I’m certainly not going to try and stop it.

      I guess my final question for you is this: how would you set it up? What model do you think makes sense? I don’t know the answer. What I do know is that fixed allocation of funds is not the right one. And I know that redundant investments around local payment processing don’t strike me as a particularly good use of donor funds (and have got to distract chapters from program work). If you could have a magic wand, and just do what you think is the right thing, what would you do?

      Reply
      1. Liam

        Unfortunately we can’t reply “inline” here, so I’ll add the first line or so to each paragraph that I’m responding to.

        Regarding: “I don’t know exactly what “fundraising” means when you write it, but am almost certain it does not mean what I mean when I say “distributed payment processing.” ”

        I believe I understand the distinction you are making here. When you say “Chapters can be involved in fundraising” what I understand you to mean is that Chapters shall continue to be allowed to help design/translate banners (like everyone else in the community), the can encourage friends/the public to donate (like everyone else in the community) and they are also allowed to do their own solicitation of funds through other means (e.g. shaking buckets at people in the street or applying for government grants etc.).

        When I say “Chapters can be involved in fundraising” I’m referring to the Annual Fundraiser and the fact of Chapters being able to receive the public’s donations directly via the donation banners. This includes the things mentioned above as well as the “distributed payment processing” method (e.g. paypal or cheques or whatever) and the corollaries – approved $ targets, banner testing, financial and privacy compliance. Crucially, it also includes being able to build a contact database from the donor’s details (when they chose to give them).

        Regarding: “I feel we have a better option: centralized payment processing with distributed support for localization, messaging, etc.”

        Your original statement that it “doesn’t work” and this edited version both allude the advantages of centralised fundraising – greater (financial) control for the WMF and the economies of scale that comes from having a fundraising “hub” (in terms of tech, staffing, training, paperwork). These are legitimate and real advantages. For the moment…
        But we’re already starting to see that the amounts of money raised outside of the USA are significant proportions of the revenue and therefore need to be managed with dedicated resources. Not just translating banners but also having local contact people, complying with local taxation/transfer laws, responding to local press… Eventually, if the WMF cuts of the Chapters from being professional organisations responsible for these matters the WMF is going to have to either do it itself (e.g. open offices, hire staff and get bank accounts everywhere) or contract external processing organisations to do it for them. This is no more efficient in the long run. So, we might as well support the professional development of the Chapters NOW rather than having to replace them with external contracting payment organisations later.

        Regarding: “Where am I talking about mistakes and saying I told you so?”

        You have focused only on the potential risks and the usual organisational messiness that comes from a distributed model, but have not softened this by mentioning any of the positives that have derived from Chapter’s being involved in the fundraiser over the years has achieved.

        Regarding: “I like your phrase that “funds dissemination being agnostic to where the money is raised.””

        AFAIK everyone is agreed about this point. Whilst it will be somewhat messy to work out the legal details for every country (e.g. some places are not legally allowed to send more than 50% of the tax-free money raised to other countries) everyone supports this principle. No one is arguing that “people in my country donated this money so it should all go back to them”. EVERYONE wants to support the WMF and remit the needed money and NO ONE has ever resiled from that principle.

        Regarding: “Please stop using language like “beg for scraps.””

        Yes, I understand – fair point. What I was trying to get across is the feeling that those of us “out here” get when the WMF says that you’re not allowed to do the “real work”, but that we are still valued for the ad-hoc activities and events that we might run. This is why I also say that “Chapters are not, and should not see themselves, as merely ‘Meetups with a logo’”. Wikipedia Campus clubs can be that if they want, but Chapters are administrative organisations that have genuinely important responsibilities. To reduce Chapters to only being able to apply for the same grants that any external group can also apply for undermines their value and importance to the Movement. That’s what I was trying to get at.

        Regarding: “Any funds dissemination system has to have as its core investing in, nurturing, and helping new organizations succeed.”

        I’m very glad to hear you say this and I’m looking forward to seeing this happen, but it has not really happened in the past – mainly because the WMF was extremely busy with getting its own systems set up to be able to focus on helping others. But now that it is has the stability to begin helping others (and I’m not just talking about providing money, because we know that nurturing organisations is far more than that) the WMF has the choice to support them to grow or to take their place. What I see in these proposals is the latter, not the former.

        Regarding: “Let’s say there is a country where a local community interested in organizational / movement-wide issues does’t exist. What do you think we should do?”

        Let’s take the case of India. As I told Hisham on the day his position was announced (by chance I was in Delhi with him that day), I applaud the WMF getting directly involved in India, but I worry that its office there will simply suck away the viability of the local Chapter. (I know that Asaf etc. are supporting the Chapter with lots of grants but my point still stands). He wasn’t in a position to say (or know) at the time, but I encouraged him to build an organisational infrastructure in India in close association with the Chapter with a view to slowly passing over the “reigns” to them. That is, for the WMF to catalyse the local Chapter – to “kickstart it” – and then slowly step away as they take more control of their own affairs.

        Regarding: “It’s just that I’ve had too many experiences over the past few years where chapters have energetically resisted taking feedback from the Foundation.”

        I know what you mean, and see it too. But I think a lot of this comes from the fact that the rules change each year and that some noises emanating from the Board/Staff (such as this blogpost) are seen as trying to cut the Chapters off. And yes, there are individuals from within the broader as well as the Chapters community who can be less than constructive, but that’s why I think growing the professional capacity of the organisations is so important.

        Regarding: “I don’t think I’m saying anything too different that has been covered in the 218 pages of comments around Sue’s draft recommendations on meta.”

        I think your post here (and subsequent comments) are the first time I’ve seen anyone from the WMF Board or Staff exec say outright that they don’t want the Chapters to be part of the Fundraiser (see my earlier definition of “involved in fundraising”). All previous comments (including Sue’s recommendations and the ‘Haifa letter’) could be read as either “the bar should be higher but we want to help Chapters to steadily reach that bar” whereas your position seems to be that Chapters should not be involved in the Fundraiser except in some extraordinary and undefined regulatory circumstances.

        Regarding: “I guess my final question for you is this: how would you set it up?”

        I actually posted a detailed description almost 4 years ago: http://www.wittylama.com/2009/09/fundraising-structure/ It’s somewhat dated now (e.g. talking about the 50/50 split) and the diagrams are gone (they were basically lots of arrows pointing in to the centre, or radiating out, depending on the model).

        But basically the model stands: The general principle is that we should be working to the point where ALL of the money raised by the annual fundraiser goes to the Chapters first. We need to have several “tiers” or “models” that Chapters of different levels of Capacity can reach for – each with increasing rights and responsibilities. This also calls for a WM-USA Chapter that, yes, would eventually have fundraising rights. You’ll note that many of the people commenting here also commented on my post back then. *Of course*, for practical purposes we are many years away from that eventuality, and many countries may never get Chapters or have a Chapter that gets to that level of capacity. However that is the direction we should be moving as it will ensure we’re always trying to build up local capacity according to the principle of subsidiarity, rather than centralising it.

        Ultimately, out mission statement is just as broad as the Red Cross’ – what they are to disaster relief we are to knowledge: global, neutral, free. Therefore we should think on their scale. We should look to the day when we have an active, competent, professionalised Chapter in nearly every country – one that supports a vibrant local volunteer network. Centralising all the administrative functions (including fundraising, but also things like the University outreach program for example) will just lead us to what Mozilla has – a huge central HQ and lots of little fanclubs around the world that have zero capacity.

        Reply
        1. Joan Gomà

          I think your speech is very clarifying and puts on the table the deep reasons of ferocity in battle for fundraising. Your speech at meta already opened my eyes.

          I personally was in favor of a distributed payment processing with a number of reservations and conditions. Most were already on the table. I would add the condition that before the WMF may delegate to another organization raising funds for a project / language needs to hear the binding voice of the community of editors of this project / language. In the case of the Catalan Wikipedia that has been adopted as a formal decision by the community. So I no longer care for this particular project. I would add that not only the chapters could go for payment processing but any organization that meets the requirements.

          But now I see clearly this is not a matter of neither efficiency, nor provide tax deductions to donors, nor actively participate in the activities of localization, nor contact with donors, to share data or coordinate campaigns with off-line campaign, nor multi-year funding guarantee … All this can be done with more or less complexity with the centralized payment processing model proposed by Stu.

          The deep question is the model. A chapter-centric model where the key of the box is in the hands of the chapters. A model where the WMF and other community organizations and individual editors have to “beg for Scraps” (forgive the language, but to summarize a short term the situation where you think the chapters are when the WMF is who processes payments).

          Taking into account the aggressiveness of this discussion and the deep reasons chapters have to fight for payment processing. I think, at this time and in this situation, if a distributed payment processing system is accepted WMF will be committing suicide.

          I think the WMF has been too generous with the chapters. The result is that the chapters feel owners of projects and representatives of the movement and the community. We urgently need to stop this and put the chapters clearly under the control of the editing communities. Not just by stopping payment processing by chapters but also eliminating the selection of board members by chapters and creating mechanisms to oversight chapters’ activities. I demand strict enforcement of conflict of interest policy so that board members appointed by the chapters and those with interests in a chapter can not vote on issues such as chapters payment processing or elimination of board members appointed by the chapters. Because these issues fall clearly in conflict with the interests of the chapters.

          Reply
        2. stu Post author

          Thanks for the additional comments, Liam. Sorry for the delay in my reply; I’ve been traveling to the Wikimedia France event. Couple follow-up items/questions.

          You wrote “Chapters are administrative organisations that have genuinely important responsibilities. To reduce Chapters to only being able to apply for the same grants that any external group can also apply for undermines their value and importance to the Movement.” Tell me more about that. I’ve struggled over the past 4 years to find a consistent view of what Chapters are or want to be — it seems to vary so much. Some chapters are focused on one particular thing (a language project, or GLAM). Some focus on a few things. And some do seem to envision a broad role. How do you describe the goal of the chapter model? And given the variety in motivations by different community members, do you think that’s a model which our movement should enforce/encourage everywhere?

          About chapter development, you write “the WMF has the choice to support them to grow.” I totally agree that a healthy mentoring systems is critical to the long-term development of a decentralized movement. How do you think that support should happen?

          As i’ve written about elsewhere, we seem to have a strange catch-22 in this. Many chapters people have expressed strong resistance to the WMF playing a coaching or active support role and see it as threatening their independence. Yet we haven’t been able to find volunteers willing to do this — e.g. ChapCom has been reluctant to play this broader role.

          This gets to a broader thought I’ve been musing on, that local chapters have inherently local interests and to expect significant global work from them (real work, as opposed to the always enjoyable opinion sharing and debating) may be unrealistic. As a community we’ve talked so much about a Volunteer Council or a Wiki Council (now a Chapters Council) yet none has ever come together into an effective body. And when we do try community-led global organizational things (e.g. movement roles), they IMHO don’t work particularly well. What do you think? Is it realistic to expect local chapters to play a global role?

          On India, and models there, yes I totally agree that the “kickstart” model is the right one. The challenge is to keep the WMF’s activities lightweight enough they don’t retard development of a chapter, but meaningful enough that we’re actually pursuing the vision and having impact. It’s a delicate balance.

          On what’s different in my post, ok i understand this might be the first time you’re hearing a Board member suggest that no chapters should be involved in local payment processing. But that’s not at all a new view for me, and the boisterous discussions among WMF board have discussed this possibility for years. Don’t forget that as Audit Committee chair my role is to think more about the risks involved. So I don’t think it should be particularly surprising that I’ve got a more more conservative view. And I’ll reiterate again that these are all my personal views; as a WMF Board (and as a community) we’re going to find the right compromises that make most sense for our movement.

          To your phrase “steadily reach that bar” with respect to participating in local payment process, just a quick comment. Yes indeed I want to see steady growth in impact by the chapters. That’s my measure — impact on the vision. Professionalization, or hiring staff, might help achieve impact but isn’t at all required. What I personally want is growth focused on programmatic work. I still strongly believe that it is a bad use of time for a chapter Board or staff to have to spend a lot of its time on fundraising (especially the administrivia like payment processing) when we’re in a movement that has so much donor support.

          On your fully decentralized fundraising model, thanks for detailing and pointing me to your post (which I read years ago but enjoyed revisiting). I just totally disagree that’s the right answer. It would put so much pressure on new and nascent chapters to develop administrative capacities first, rather than doing programmatic work, in order for them to have access to funding. And as Audit Committee Chair, I would have no choice but to constantly be auditing, evaluating, and pressuring chapters to improve administrative capabilities which would certainly only increase the tensions between the WMF and chapters. It would perpetuate the reality we have today that smaller chapters feel like they have to add administrative / fundraising staff in order to be seen as mature. I just think that would be a huge distraction from the programmatic work that is really the core of our mission. With a grants model, and something like the community-driven FDC, I think we can achieve the exact same results without putting a huge administrative burden on every single chapter….

          Reply
  7. Bishakha Datta

    Dear Stu,

    While I agree that “independent, decentralized effort is core to our success”, my understanding of decentralization goes much beyond what you propose here: I do not concur that “real independence flows from successful programmatic work.” Without getting into a philosophical discussion on what ‘real independence’ means, I’d say that independence, real or otherwise, rests on numerous factors, not just one.

    On the related topic of decentralization, I will extract from emails I have sent to the board list on this: As I understand it, wikipedia is a giant exercise in decentralized editing (270+ wikipedias edited by 100,000 editors and projects setting their own policies), as opposed to centralized editing (a few editors, top-down policies by the publisher).

    And many programmatic activities – except large-scale ones – be they photo walks, editathons, etc are decentralized: all the decisions around these are made by small groups of volunteers in their own ‘geographies’ or locations. At the same time, there are program activities that run on a large scale, such as the Global Education Program, that are more centralized and also succeed.

    Because decentralization is such a core value of this movement, I believe we need a decentralized approach to the organizational part of this movement, including fund sharing. I signed on to the fundraising letter because I believe that the proposed Funds Dissemination Committee is a step in the right direction – it decentralizes one layer of financial decision-making. Despite your observation that distributed payment processing does not work, I believe the jury is still out on that one – there may be regions where it does make sense, regions where it does not work. Until there is clear evidence of one or the other, I do not believe we have the information we need to make a solid decision on this.

    Reply
    1. stu Post author

      Thanks for your comment, Bishakha.

      I agree very much with what you say. Decentralization is critical. And the Funds Dissemination Committee should really help ensure that we find the right way to respect all decentralized efforts no matter where they are (and no matter how much fundraising happens in those countries).

      As I’ve tried to clarify in other comments and in the text, my view is less than distributed payment processing “doesn’t work” but that we have a much better model in centralized payment processing combined with localized messaging and support efforts.

      The one part of distributed payment processing that I absolutely feel doesn’t work was the automatic assignment of a fixed percentage of the funds raised to the local entity. As i said in my “impact” section, i think this is a horrible and possibly negligent way for us to allocate donor funds. Impact should be the driver. And I’d rather an imperfect assessment of impact (e.g. from a Funds Dissemination Committee) than an outright bad model of automatic allocation to one or another entity.

      What’s really challenging about this topic is that, as I said in the Board meeting, I feel we’re all actually much closer together on this issue than it appears. My objections to local payment processing are analytical (the cost/benefit analysis of redundant overhead and distraction for the movement doesn’t outweigh the marginal increases that can come from tax deductibility), relative (we have a better model with centralized payment processing and distributed leadership in messaging / support), and around fund dissemination issues (the fixed split to the local entity).

      If we can address all those — getting comfortable that the cost/benefit does make sense, that it will outperform our alternative, and the funds dissemination will be done based on impact — I don’t necessarily object to local payment processing. It’s a tactic. We should use it when it makes sense. I just don’t think it’s an objective or destination that all Chapters should have as a model or that all chapters should aspire to and which would be some kind of precursor to a chapter being considered mature or receiving significant funding.

      Thanks for helping me think through my views on all this stuff, here and in our hours of hours of email and in person discussion. I really appreciate it.

      Reply
  8. Torsten

    Perhaps you could remind us of some “successfull programmatic work” that was done by the WMF.

    A new mobile version. Yes, nicely done.

    A new editor and a new forum system. We are waiting for five years now.

    Offices in India, South America and Africa? Two years overdue, insufficient information about progress.

    Attract more editors and especially more women? I don’t see exactly what the WMF does to achieve this goal. There might be some progress, but is there any causal link to the activities in SF headquarters?

    Reply
    1. stu Post author

      Torsten, thanks for your comment.

      I don’t think this is really the place to discuss various movement initiatives. If you want to dive into what the Foundation is trying to do, check out http://wikimediafoundation.org/wiki/Annual_Report or the copious commentary in the activity reports at http://meta.wikimedia.org/wiki/Reports.

      More broadly, though, I think you are asking exactly the right questions. What really has an impact on our mission? As I said in my last section under Impact, that’s exactly what I think we should do with funds dissemination movement wide. Let’s avoid the kind of automatic fixed split of donor funds that has been a core part of our distributed payment processing model. I’d rather an imperfect assessment of impact (e.g. from a Funds Dissemination Committee) than an outright bad model of automatic allocation to one or another entity.

      Reply
      1. Torsten

        Thx for the links, but I have read the reports before. My point is: The WMF has yet not a very good track record in the category “impact”. But some chapters have done impressive projects like “Wiki love monuments”.

        If every project in the Wikimedia movement should be channeled through a WMF process, you need to prove you can do it. I don’t think you are there yet. One reason for that is: you chose this point to start an huge restructuring process without any apparent need while so much more important projects are in an important phase that need your full attention, like the expansion in India.

        And I think you are not very open about it. I believe you are not worried about costs of fundraising, but you don’t want to spend so much money in countries that already have a vibrant Wikimedia community. If that’s what’s bothering: just say so.

        Reply
        1. stu Post author

          Thanks for your reply, Torsten.

          I agree the WLM is amazing and awesome and has contributed an extraordinary amount to our mission. At the same time I have huge respect for many other initiatives our movement has done, including things the foundation played a big role in developing such as the mobile reader experience and WIkipedia Zero, the learnings around editor engagement form the public policy initiative, experiments with how to further engage readers through feedback and an improved reader interface, efforts to try and improve community’s frequently caustic online style, a ton of underlying infrastructure work with the technology, and of course building this amazing fundraising machine. Oh and supporting community’s wishes around SOPA. Just look at the latest activity report the team at the foundation just published, covering January.

          I don’t know how you conclude that “every project in the Wikimedia movement should be channeled through a WMF process.” I don’t believe that. I do believe we must spend donor money and volunteer time well, and that we should always be thinking about potential impact. That’s why I want the community-driven process to allocate donor dollars — it’s just what makes sense given our decentralized culture.

          On timing, you wrote “you chose this point to start an huge restructuring process.” I don’t understand your comment. This process has been going on for years. We’ve had an ongoing discussion about the right way to do this since Wikimedia Deutschland first started payment processing 5 or 6 years ago (see Liam’s 2009 blog post for an example). A community team focused on defining movement roles has been meeting regularly since 2010. We had a huge debate about this last summer, made some changes, and agreed we would all work together on next steps well ahead of the 2012 fundraiser. Sue published some of her thinking in the form of draft recommendations in January which have garnered hundreds of pages of commentary. This isn’t new, it isn’t a surprise.

          And on spending funds, you wrote that I “don’t want to spend so much money in countries that already have a vibrant Wikimedia community.” Please re-read the “Impact is what matters” section of my original post. That’s what I want — for us to allocate resources to those places where they can have the most impact on our mission. If that’s a project like WLM that’s awesome. If that’s a project like trying to seed and encourage the development of a community in India, that’s great too. The driver has to be potential impact, not anything else like where the funds or raised or where they have been spent in the past.

          I have to say I’m frustrated by your comment that I am “not very open.” I’ve spent about 20 hours on this blog post and comments sharing my views with community, taking comments, responding. How could I be more open? Please let me know and I will do it.

          Reply
          1. Joan Gomà

            Just a short comment about Wikilovesmonuments. Here we are talking about fund raising and distributing. Amical Viquipèdia participated in this project organizing it in Andorra and also the trans national price Pyrenees-Mediterranean Euroregion. I think part of the success of the project was due to a 0€ budget. In fact at the end we made profit from this project. Thanks to 0€ budget we searched for sponsors to pay for the prices and the venues of the events and price giving ceremonies. Those sponsors helped us to spread the voice and reach participants outside our circle.

            Reply
          2. Torsten

            I appreciate the time you spent reading comments and answering extensively. But I was a little frustrated myself.

            If you change how money is spent, you have take some money away from those who spent the money before. Politicians always stress where they want to put more money in. But the important part is to convince people to spent less on other things. This is what I meant with openness. Nobody could argue, that Wikimedia projects should have impact. But what does this mean?

            For example: WMDe spent 250000 Euro in community projects that are primarily for the German community, like professional recordings of German Wikipedia articles or aerial pictures of German landmarks. Do you think this money would have better spent for community projects in India? This would be a legitimate position and people could argue about that.

            While the public policy initiative and the experiments to engage readers are clearly laudable, I don’t see them having the effects that were intended, like the usability initiative before.

            Reply
            1. stu Post author

              That’s a fair question, Torsten. I have a theoretical answer to your question, and a practical one.

              Theoretically, I do believe that how money was spent yesterday should have no bearing on how it is spent tomorrow. The Funds Dissemination Committee should attempt to assess what projects will drive the most impact on our vision and direct money to them. If there is some overlap with prior spending, great. If there isn’t, it shouldn’t matter. We have to focus on our mission, not on simply continuing to spend donor funds on the same things year after year. (In the business world this philosophical approach is called “zero-based budgeting”).

              Practically, you can’t move things around too quickly or too frequently without causing disruption. Building staff to do mission work is hard if you don’t have some confidence in the funding being there for a few years. I respect that, and believe that reality puts two pressures on the system: one, hiring managers have to only hire employees if they see real impact over a multi-year period that is typical of an employer-employee relationship, and two the FDC has to be willing to give program work / teams some time to start producing rather than looking at things in the short term.

              To reiterate an important point that’s sometimes lost: at the moment in our movement I believe we have more money than we have good ideas for how to spend it. So I don’t think there needs to be the kind of either/or approach to German community projects and community projects in India. What we do need to ensure is that as our movement develops we build a culture of impact on the mission as the driver of resource allocation.

              Reply
  9. Joan Gomà

    I must say that in this debate there is something that saddens me. It is the perception of greed in an essentially generous movement. I think that over 90% of the value we get are the projects that we are creating together and generously share with everyone. But now it seems that the remaining less than 10% is driving us to fight fiercely.

    There is one sentence in your initial post and another in Liam’s response that can perhaps shed light on the reasons for this fight.

    You say that we are able to raise more money than what we are capable to spend.

    The first time I read it, I was shocked. Personally I feel capable of spending well over 30 million. It is not easy. But there are efficient ways to do this benefiting the projects.

    Then, reflecting, I realized that you are right. Given that we are a movement based on voluntary and demand our chapters and other organizations to develop their activities based mainly on volunteers. Professionals are only a small fraction of the people aimed to catalyze and energize volunteers. Then you are absolutely right. I actually think it can not be otherwise. I think right now our priority is to attract more editors and help those who already have and I think a necessary condition to this is to convey the image of the WMF and other affiliated organizations of being very austere in handling money.

    I wonder if we should add a requirement to fund any professional position. It is that there are no volunteers willing to do the job and that the work done by professionals has a multiplier effect in and is not a substitute of involvement of volunteers.

    The phrase in the Liam’s response states that the fear against centralized payment processing comes from the belief that processing payments is the only way to have multi-year funding confirmed in order to be able to provide a stable and professional local presence and long-term projects.

    I wonder if implementing the multi-annual program grants scheme to fund professional positions that could reduce tension in this debate. I guess programs, for example in 2 years, which are reviewed each year and extended for another year. So that organizations have the tranquility that they always have foreseen funding from one to two years in advance.

    Reply
    1. stu Post author

      Thanks for your comment, Joan.

      On a requirement that professional positions only be filled if no volunteers will do the job, I think it’s more nuanced. An important dimension is time commitment. Volunteers may be able to do lots of different roles, but may not be able to commit to work on it full-time. That’s one of the reasons our editing model works so well — you can put in 5 minutes a week, or 50 hours, depending on your situation. So to me the principle behind might be that we professionalize if a) a position is a great way to use precious donor funds to pursue our mission and b) if there are no volunteers interested in doing the work and able to commit the necessary time to get it done.

      On multi-year grants, I completely agree. And as I think Sue, Asaf, Barry, and most of the Board have said at one point or another, we all think that’s a great idea and want to pursue it. Perhaps to your point about fear, it doesn’t seem like some people have heard that though.

      See you next week at the Wikimédia France event.

      Reply
  10. Delphine (notafish)

    You say “Fundraising is no longer a priority”, and argue that the focus should go from fundraising to program work. For one thing, I would like to argue that the Foundation changing the rules constantly about how fundraising should or should not work has been a huge factor in us as a movement actually focusing on fundraising more than we may have wanted to.

    This said, what makes you say that we actually have focused on fundraising more than we have on other things? Is there data that tells us that we have spent too much resources (money, human, whatever) on fundraising and not enough on editor retention, women editing et al.? How do you come to this conclusion?

    As treasurer of Wikimedia Deutschland, I can tell you that while we did spend a lot of time thinking about fundraising, this was in no way lost time, or time we didn’t spend on program work. As a matter of fact, I believe that thinking about fundraising is actually a driving force behind how we approach our program work. Knowing how much money you can raise or rather, estimating how much money you can raise, is definitely a motivation as to how ambitious you can be to achieve important and useful programs. Pleasing the donors, people you cross in the street everyday, users of Wikipedia and our other projects, is what makes it worthwhile. This is not about the money, fundraising isn’t. Fundraising is about our movement’s capacity to change the world, and how people who might never hit the edit button are ready to support our mission. Without those people, their trust, their support, we might have all the best ideas in the world, but we may never have the means to carry them out because these are our ideas, and not ideas others find worth supporting.

    I believe, as I have said elsewhere, that the ability for a chapter to do their own fundraising leads to better tailored program work, because we have to stay tuned to what real people want, those people that allow us to do what we set out to do. I don’t think that all chapters should fundraise, for all the accountability reasons mentionned countless times, but I do think that we should always keep an open mind about who should and who shouldn’t, and assess the impact of direct donor support on the health, motivation and program work of the Wikimedia organisations.

    Finally, you say: “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” and I find this to be somewhat of an over optimistic statement. Sure, today, fundraising work because we have the most amazing billboard in the world of non-profits, to raise awareness among donors about the needs we might have to fulfill our mission. Will this be like that for ever? Is it really a “magical formula”? I don’t know. I am an optimist, and I like to think so, but if we don’t listen closely to our donors, by being where they are, by speaking their language, understanding their wishes and turning those into world changing program work, the billboard might not work its magic any more. Liam argues that “noone is going to contest statements such as “Fundraising is not a priority””. Well, I contest it. Arguing about fundraising should not be a priority, I’ll give you that. But fundraising should be a priority. Definitely not the only one, and definitely never at the detriment of other core mission priorities, but gaining and renewing donor trust in the best possible way definitely is a priority, because without it, we won’t be able to carry out our mission, period.

    Reply
    1. stu Post author

      Thanks for your comment, Delphine.

      On change, I feel your pain. But as I said at the bottom of my post, I think we’re in a dynamic movement and a dynamic world and change is going to happen. Yes we should minimize it, and i hear the criticism that the Board may not have done that well around payment processing as we’ve struggled to articulate our own views (let alone reach consensus) on this complicated issue.

      I feel like language barriers and subtle differences in word usage are really getting in the way here. Please see my comment in response to Pavel above. To repeat, my objection is to a very specific thing — distributed payment processing as the model that all chapters should aspire to — because in most cases I don’t believe it makes sense for our movement any more as we have developed a much better alternative.

      As I said, I think it can be wonderful for chapters to think about fundraising, to think about pleasing donors, to think about all the things you mention. I just don’t think it makes sense chapter to _have_ to do that, from day one.

      To your question, I do not have any specific view that one organization or another is spending “too much” time focused on distributed payment processing. But as someone who has been a part of lots of different kinds organizations, from small businesses to huge international bureaucracies, I believe focus is one of the most powerful keys to success. As volunteer-driven organizations, time is incredibly precious and finite. Every minute a chapter board spends thinking about transaction processing issues is a minute it doesn’t spend thinking about program work and our mission. So I’m making a general statement of principle, not a specific analysis of one or another organization.

      Thank you so much for these comments: “Arguing about fundraising should not be a priority, I’ll give you that. But fundraising should be a priority. Definitely not the only one, and definitely never at the detriment of other core mission priorities, but gaining and renewing donor trust in the best possible way definitely is a priority, because without it, we won’t be able to carry out our mission, period.” I may well frame them and put on my wall. It is incredibly insightful and a much better articulation of my views than the too brief and too casual statements I made in my post.

      I look forward to continuing this discussion here and in person next week.

      Reply
  11. Chris Keating

    What happens when the money tree stops growing?

    (This is in part in response to your comments above about fundraising not being a priority, and in part to the broader debate about Wikimedia fundraising…)

    We have seen remarkable growth in the annual fundraiser in the last few years. However, there is no guarantee that the fundraiser will keep on growing indefinitely. Currently the most pressing issue might be how to spend the vast sums of money the Wikimedia movement has, but there will come a point where the annual fundraiser stops growing – probably not 2012, perhaps not 2013, but sometime in the future we’ll stop seeing income growing as fast as it has done.

    Fundraiser income is driven by two top-level factors;

    - traffic to Wikipedia (other projects being negligible by comparison)
    - increased conversion from visitors to donations

    Traffic is increasing globally at something like 20-25% a year (though traffic in geographies where readers are rich (by global standards) is probably key – is there a projection for that?)

    The conversion rate (% of readers donating) has also increased markedly in the last few years but, if you look at it in detail, this is down to a relatively small number of “breakthrough” efficiency gains which have been revealed by the testing programme. I haven’t got the data or time to analyse this properly, but I would be willing to bet that you’d find that most of the increased performance in 2011 compared to 2009 can be explained by these 5 factors.
    * Photo banners rather than text banners
    * The Jimmy “temple of the mind” appeal text
    * Banner photos with green leaves in the background
    * Offering a wider range of donation channels and currencies
    * The comparison with other top 5 internet sites messaging that was used in the 2011 campaign

    Personally, I am very sceptical that it will be possible to continue to increase conversion rates. It will always be possible to get more donations by making banners larger and more interruptive, but at the cost of making the community and users angry (we could just put the donate page as the first page anyone sees when they arrive on Wikipedia, but people wouldn’t stand for it).

    But unless the banners simply become larger, we are likely to be faced with a situation of diminishing returns. In 2010, more people clicked on photo banners than the text banners used in 2009. In 2011, more people clicked on photo banners with in-focus green leaves in the background than the photo banners used in 2010. In 2012, perhaps we will find that people click better on banners where the background photo is one species of tree. In 2013, exhaustive testing may reveal that the optimal banner photo is taken in front of a particular bush in a park in San Francisco… There is only so much detail that it’s possible to improve. Within the next couple of years, conversion rates will stop growing, and the potential of the annual fundraiser will be limited by the traffic growth. (There might be a counterbalancing effect as more people see Wikipedia as something worth donating, and there are potentially ways of measuring this.)

    So my question to the Foundation – in particular the Board and senior staff – is what is the fundraising strategy for the Foundation for the next 5 years? Have you thought about the kind of issues I have mentioned in this post – if so, what is your opinion? Do you think that there is indefinite scope for fundraiser income to keep on increasing – if so, why?

    Reply
    1. stu Post author

      Chris, thanks for posting such a thoughtful note on such an incredibly important topic. I will spend some time on this over the weekend. I may even pull your comment into a separate blog post — it’s that important. Thanks again.

      UPDATED — Discussion has moved over to meta. Please jump in and join there.

      Reply
  12. stu Post author

    A few commenters have asked for more details on my view that decentralized payment processing is a bad model and hasn’t scaled (and therefore in my original language “doesn’t” work). Here are a few points:
    1. It creates a two-tier system of chapters, building a sense of entitlement or wealth on the part of chapters in larger economies that can raise significant funds payment processing.
    2. The two-tier system of chapters it creates means that newer and smaller chapters will have less access to funds until they have developed the bureaucratic capabilities to payment process.
    3. It implies a path of growth that I don’t agree with. Payment processing isn’t an objective for our movement organizations — our vision is. That’s where we all need to focus energy and time. Participating in fundraising and should be an important component of growth. But the bureaucracy of distributed payment processing should not.
    4. As a model, it doesn’t scale well. Having 100 payment processing teams in 100 chapters in 100 countries is tremendously expensive and duplicative and distracting. We need to focus on our mission, not on bureaucracy.
    5. The regulatory challenges of transferring money out of the handful of countries that payment process today are significant. Growing to 100 payment processing countries just won’t work; these challenges grow exponentially with each new payment processor. Decentralized payment processing is certain to put significant legal restrictions on the flow of funds. That is not in the interests of our movement.

    Reply
    1. Thomas Dalton Post author

      Thank you for that explanation, Stu. Your first two points, however, are irrelevant. They relate to funds dissemination, not fundraising, and we’ve all agreed that they are separate questions.

      I think you overstate the amount of work involved in fundraising. A lot of the time we put into fundraising at the moment actually goes in to these kind of debates (as Delphine has pointed out). If we could just get on a fundraise without arguing about it all the time, it would be much easier.

      The fundraising chapters have been consistently moving towards having staff handle most of the day-to-day work of the fundraiser. They aren’t all quite there yet, but once they are the fundraiser shouldn’t be a significant distraction for the board and other volunteers who can get on with the programme work. The only question is whether the additional money raised by local fundraising is enough to justify the cost of hiring those staff (after deducting the cost to the WMF of fundraising in that country, which will tend to be less due to economies of scale, but certainly isn’t zero). I think many chapters will be able to justify that cost. WMUK, for example, expects to get about $140k through “gift-aid” (refund of income tax paid by donors) that the WMF could never get. That alone should cover the extra fundraising costs.

      I’m not at all convinced that it doesn’t scale well. You need to compare the economies of scale that you get from the WMF doing it all with the extra revenue you can get from tax deductability, local payment methods, trust in local organisations, etc.. I haven’t seen any convincing evidence that the economies of scale are greater.

      That said, I’m not sure I would support 100 payment processing chapters. I’m still undecided on the question of how we should fundraise in countries with low fundraising potential (due to being very small or very poor).

      Reply
    2. Thomas Dalton

      Thank you for adding that 5th point. I agree that there have been significant hurdles to overcome with finding ways for chapters to transfer funds to the rest of the movement. I don’t know all the details of each chapter’s problems, but my understanding is that we have generally been able to get over such hurdles.

      I don’t see how the problems grow exponentially. How difficult it is for a given chapter to transfer money doesn’t depend on how many other chapters are needing to transfer money. At most, it grows linearly. I think it actually grows slower than that, though, because once you have found a solution for a particular chapter the work is pretty much done – you just implement the same solution each year. As long as there aren’t too many chapters starting to fundraise at any given time, we should be able to cope.

      I think the problem will become easier to deal with once we has a FDC/FAC deciding who gets what money. At the moment, every fundraising chapter has to send its money to the WMF, which then distributes it. There is really no need for that and it makes things very difficult. It is often much easier from a regulatory perspective to make restricted, or at least clearly focused, grants so that you can specifically say “we gave this organisation this money to do this work, which furthered our charitable objects in this way”. It isn’t practical for the WMF to receive restricted grants from each fundraising chapter – it would make your accounting a nightmare. Once we have an independent committee deciding on grants, those grants won’t need to go through the WMF. They can go directly from one chapter to another. That will make it much easier for the granting chapter to account for those funds and show how they were spent appropriately.

      Reply
      1. stu Post author

        Thanks for keeping the comments coming, Thomas. I’ll reply to both your posts here.

        On my first two points being “irrelevant,” I totally disagree. We cannot separate fundraising and funds dissemination — they are too intricately intertwined. Because of the prior model of chapters keeping some of the money they payment processed, and the sense of entitlement that has in limited cases grown out of that, there is no way to separate the two. That’s why Sue’s draft recommendation encompassed both, and why as a board we treated both together in the same letter. I don’t believe we can solve one problem until we solve both. And you yourself note in the last paragraph of your second post that two issues are tightly related.

        On whether I overstate the “amount of work involved in fundraising,” let me once again be very clear about terminology. I want to move away from local payment processing. I continue to want a huge, vibrant community (and chapter) involvement in fundraising. And while you (and some others from recent list traffic) might feel the work involved in local payment processing is fairly small, i strongly believe that to it right, at scale, and in full compliance with all the legal/privacy regulations, is a significant amount of work.

        On economics of scale, yes that is one way to look at the hard financial costs. And to your point about good evidence, I haven’t seen particularly good evidence that they weigh in favor of local payment processing either. And as Audit Committee chair, I’ve seen a lot of the problems and issues that have arisen with you organizations being involved in such significant funds flows.

        I do disagree that once staff are hired that local payment processing “shouldn’t be a significant distraction for the board and other volunteers who can get on with the programme work.” i’ve seen absolutely nothing over the years to believe that. Given all the regulatory issues involved, and potential risks, Board and staff are going to continue to have to spend lots of time on the issues even if appropriate justified staff have been hired. Part of that is the reality of the challenges involved (and the risk they could kill an organization if screwed up). Part of it is also the reality that we’re Wikipedians, we like getting involved in interesting complex things where, so I don’t think Boards and even volunteers could resist the temptation to jump and in try to optimize payment processing items. That’s the energy that I think we need to invest in program work, not details.

        On how fast the problem grows, yes maybe it isn’t exponential (as long as we avoid crazy administrative misery like having 100 payment processing chapters individually make 100 grants to the other 99 chapters and the WMF). But it’s really complicated. And based on my professional experience, and on advice from the WMF legal team, I think it has to be a lot simpler if funds are flowing _out of_ a lot fewer countries.

        On the FDC, just to reiterate a point made on lists, remember that the WMF is the legal owner of wikipedia.org so has a fiduciary duty to all contributions solicited through it (including any that might end up locally payment processed). So I don’t think your last paragraph necessarily reflects the reality we’ll have to use with the FDC — the WMF is still the final approver (even if it as I personally hope accepts 90+% of the FDC’s recommendations). I’m not really sure of the funds flow implications — it’s really an operational detail and we can/should/will optimize — but just wanted to put in yet a reminder of the fiduciary duty issue. It’s a hard one to keep in mind — our movement is so decentralized and we’re all so used to the concept of copyleft and community ownership — but the realities of trademark and domain name ownership are sadly a bit behind the legal models we’ve all helped develop in online content. And that puts the WMF in a position of responsibility (and keeps me up at night!).

        Reply
        1. Thomas Dalton

          Sue had separate recommendations for fundraising and funds dissemination. They are related issues, obviously, but they are separate ones and issues with funds dissemination should not prevent us fundraising in whatever way we consider optimal. The previous model did include an entitlement to 50% of the funds raised by the chapter, but I think everyone has now agreed that that is the wrong approach and it isn’t the approach that was taken in the last fundraiser – the annual budgets chapters came up with tended to be about 50% of the amounts they intended to raise (see [[Anchoring]]!) but that should improve over time as we get better at writing and reviewing budget proposals. I really don’t think the entitlement problem is a real one, it’s just a change we need some time to get used to.

          “i strongly believe that to it right, at scale, and in full compliance with all the legal/privacy regulations, is a significant amount of work.”

          The chapters that fundraised this time round have all given detailed explanations of what it cost them and they are a lot lower than the amounts the WMF seems to be talking about. Does that mean you think they didn’t “do it right”? What was done wrong? What requirements weren’t complied with? You keep coming back to these claims that chapters have been doing a bad job but keep not giving any details. If you can’t say specifically what was wrong, then the conclusion has to be that everything was fine. (I’ll accept details of hypothetical problems that we only avoided by being lucky, but you do need to be specific.)

          Reply
          1. stu Post author

            Tom I understand your view on the separation between fundraising and funds dissemination, but you are completely incorrect. one of the key contraints here is governance and fiduciary duty, and that links the two. If we don’t have a good system for funds dissemination, then the WMF’s fiduciary duties severely limit its alternatives for how much other entities can participate in payment processing.

            On the challenges some of our movement entities have had meeting basic requirements around reporting, transparency, etc., we’ve covered that in excruciating detail in many forums including the Haifa letter and elsewhere in this comments section.

            Reply
  13. Sebastian

    “Second, from a mission standpoint, how do we have the most impact? This gets to funds dissemination, and my total dislike for the component of local payment processing that drives a fixed or guaranteed percentage of donor funds to the local chapter either a) because of precedent or the nature of an agreement or b) because of regulatory limitations on funds flow. I just don’t think that we should allocate funds donated to our movement in such an arbitrary way. We have to allocated based on where they will have the most impact.”

    This statement, or others with similar content, has been repeated a number of times. And, from what I can tell by how little reaction it has caused, seems to be accepted as a truism, something not worthy discussing. But, is it really the case that we have to spend our effort where they have the most impact?

    Underlying this question are two separate concerns: effectiveness (“impact”) and efficiency (“most” as in maximum result at minimum resource use). Clay Shirky once described Wikipedia as one of the most *effective* online-collaboration projects ever in that it has produced an unprecedented quantity of educational content in remarkable quality. At the same time, he also considered it as one of the least *efficient*. There is tremendous cost involved with creating Wikipedia, perhaps not in terms of money, but in terms of time, effort, good will, conflicts, frustration, setbacks, waste, etc. If Wikipedia had to be efficient, rather than what we have today, we would have clear-set priorities on what to work on, clear scope (and limitations) for volunteers to engage in, and a significant participation by paid professionals in content creation and management.

    The trouble is, “efficient Wikipedia” isn’t what would attract the number and quality of volunteers “actual Wikipedia” draws (or used to, perhaps). From my own now eight years in the Wikimedia universe, I know that there are many, many, many Wikipedians who contribute to some part of Wikipedia merely because they want to, because it’s a hobby, because nobody tells them what to do or what to work on, because they, by participating in Wikipedia, somewhat compensate for the rather highly structured, goal- and results-driven world of their workplace, their studies, or the “physical world” in general, with all its pressures, expectations, and consequences. What many of them, when they participate in Wikipedia, couldn’t really care less about is whether, what they do, has broad impact on the world, whether it really contributes to making the sum of all knowledge available to everyone in the world, and, most certainly, whether the contribution they freely choose to make is more or less impactful than some other contribution that they would be less likely to choose to make.

    Incidentally, there’s a similar situation in many chapters. Many, many, many chapter folks I’ve met and/or worked with get involved in chapters because they want to, because it’s a hobby, because nobody tells them what to do or what to work on, because they want to, again, compensate for the “normal world” where they are required to be productive. It’s the offline counterpart to getting involved online. The kinds of activities they end up engaging in, do vary, of course. Rather than revising articles chapter volunteers plan events, rather than discussing editing policy they discuss structural controls and bylaws, rather than writing stories for a signpost they write blog posts or talk to journalists. The nature of the work may differ, but the motivation does not.

    Chapters, more often than not, are as efficient (or as inefficient) as the local project community because there’s personal and motivational overlap. In fact, even for non-chapter groups that get involved in Wikimedia activities offline, like local WLM groups, local GLAM advocates, Amical, that still holds true. They are usually Wikipedians, they are usually people who have specfice things they’d like to do, and they tend to want to do this within the general philosophy of Wikimedia.

    What does this all have to do with your main point? When you say that we must prioritize activities with the most impact, you necessarily take away a lot of the freedom that, up to today, has defined much of what Wikimedia volunteers can do. It’s the freedom to idle, to engage in whatever activities one feels like at a time and place one feels like as well. I personally think that’s a problem because Wikimedia is way more than what “imagine a world…” specifies. What you seem to propose, and please correct me if I’m wrong, is to transform Wikimedia into an entity (or a set of connected entities) that (1) together make a world happen together where indeed every human has access to the sum of all knowledge, (2) to do so in the fastest, most efficient (as in maximum impact at minimum cost/effort) way, and (3) to subjugate every issue that arises as a consequence under points (1) and (2).

    Now, personally, I can imagine that this might actually work. I can imagine a Wikimedia where we well define a limited set of activities for volunteers (mostly online, some offline), set priorities and provide funding just for those activities, and, more than anything, focus on the developing world where, by definition, every dollar spent will result in more effect than in the top twenty of nations by GDP. I can imagine that fundraising would actually keep focusing on those top twenty because, well, that’s where the money is. What that Wikimedia would be like is similar to many other organizations involved in development aid–collecting donations in “rich countries” to build infrastructure and promote education in “poor countries”, guided by maximum impact, so that standards of living increase where they “need” to increase more than in other places. Translated to Wikimedia, it would mean that we heavily focus on community building and content creation in large, populous countries with low standards of living and high dollar or euro purchasing power, while at the same time severely reducing activities in much of Europe and the US (other than perhaps as testbeds).

    While I can imagine such a Wikimedia to exist, I can’t imagine that the same people who are currently engaged in Wikimedia activities, whether offline or online, would be involved in this future model. Similarly, judging from what we know about our donors, I can’t imaginge that the same donors who give money to us know would continue to do so in this future model.

    Now, I might be totally mischaracterizing what you intended with your statement of allocating based on maximum impact. So, rather than to continue, I’d like to ask you how off I am there.

    Reply
    1. Phoebe

      Dear Sebastian — of course I’m not Stu and I can’t tell you what he intended. But I just wanted to mention that I love this bit: “It’s the freedom to idle, to engage in whatever activities one feels like at a time and place one feels like as well.”

      So true! We are built on serendipity and randomness and the belief that collaboration trumps efficiency. That’s our magic. We shouldn’t lose it :)

      So I agree a thousand times over that organizations, too, should be free to play and try things. A group of people doing very local things — things that only have a tiny impact on the world stage (work in a small language, a speech to just a few people, an article in a local newspaper) — matter a great deal. And the ability to be playful can lead to innovation, too.

      But I think part of what we (collectively, all of us) are trying to think about is how to balance that out against being responsible with donated money. It’s my guess that the majority of donors everywhere donate to support Wikipedia and don’t think much else about it (of course I have no way of knowing this absolutely, but it is just a guess based on watching many fundraisers). So… how do we take the money we raise, account for it, support the projects, and then support all sorts of ideas to do so?

      Reply
      1. stu Post author

        Well, Phoebe, if would like to be Stu in the context of responding to comments/flames/heat on this issue you’re welcome to take over for a while! Just kidding. I’m really enjoying this high quality discussion on an important topic. I’m a bit behind responding to a few comments — for some reason my day job has all sorts of expectations. I hope to catch up on comments on a long flight tomorrow.

        Reply
        1. Phoebe

          noooo thank you :) I can’t cope with the nine zillion emails! But maybe if I learn to knit in time I can knit us all flame-proof sweaters….

          Reply
    2. stu Post author

      Sebastian, as always you have interesting things to say.

      Generally, I don’t personally view efficiency as a big part of our philosophy as a movement. The objective is long-term impact, which I myself think of as “Our goal is to make free knowledge availably to every single human. So, how many of the world’s 7 billion people have we reached?” Maybe that comes efficiently. Maybe it doesn’t. The rule of diminishing returns applies if we try to deal with illiteracy, lack of internet access, etc. What matters is that we make progress toward our movement’s objective.

      I do draw a distinction between “efficiency” with volunteer time and “efficiency” with donor dollars. I think that because of the many personal motivations that you so articulately describe, the overall use of volunteer time could be meandering and personally-driven, not focused on efficiency.

      But a different standard must apply to donor dollars. Here we have a duty to not waste the money donors give us to pursue our cause, so some measure of efficiency has to apply.

      On the world you describe of a “focus on community building and content creation in large, populous countries…while at the same time severely reducing activities in much of Europe and the US,” I don’t think it’s an either/or situation.

      My vision is that volunteer communities, where they are healthy and strong, can drive pursuit of the vision with all the variations and personal interests they have. We should use donor funds to support those communities, but mostly stay out of their way.

      But when a volunteer community doesn’t exist, or hasn’t yet found a way to be effective with impact, we as a movement commit donor dollars to try and kickstart the volunteer effort.

      An interesting question and perhaps what you’re getting at is the allocation of donor funds to different geographies. I don’t know the actual numbers, but let’s say 10% – 15% of funds donated to our movement last year are allocated to the German Wikipedia broadly, including Wikimedia Deutschland. You might be asking me if I think spending 3.3 million € of our movement’s donor funds in Germany in 2012 is appropriate.

      Personally, no I don’t think it is appropriate. I think our movement is blessed to have a strong, passionate, and incredibly effective volunteer community working on the German Wikipedia. I don’t think we need to pour such a huge amount of money into one of our best performing projects. It’s well past the point of diminishing returns. As a movement, I think we could do so much more toward our vision if we spent that money elsewhere.

      Now, these are my personal views. They may not be held by others in our community. The community-driven Funds Dissemination Committee has to take issues like this up. That won’t be an easy process.

      But we have to do this kind of analysis — we owe it to our donors to do our best to use their money in the way they intended. That’s one of the most tricky parts of this — what is donor intent? Maybe we can all figure out some answers around that at the Wikimedia France event!

      Reply
  14. Pavel Richter

    Hi Stu,

    if I understand you correctly, your main concern about distributed payment processing is that it costs too much; and that you see two kinds of costs involved: the financial costs, and what I would call the “focus costs”, meaning that people within our movement get distracted by thinking about payment processing and not program work.

    Even so for me it still does not make sense to separate fundraising from the payment processing (for all the reasons I and lots of other people have pointed out over the last months), for the sake of argument, let´s separate the two. So in this comment only, I will accept the presumption that payment processing can be separated from fundraising in general.

    Let me start with the financial costs involved with distributed payment processing: For Wikimedia Deutschland (and I speak about WMDE only because that is what I as the CEO know best), we have reserved 220.000 € (approx. 290.000 USD) in our budget for fundraising in general in 2012. And that means *all* aspects of fundraising: involving the community, donor feedback, server costs, donation receipts, testing, outside consulting, legal and tax advice, accounting, and so on. What is not included are overhead expenses, such as providing desk space for staff, and administrative and management support. Let´s put this very generously at 25.000 € or 33.000 USD. So to raise around 4.800.000 Euros / 6.3000.000 USD (total in 2011) in Germany costs us about 323.000 USD.

    If you centralize payment processing in San Francisco, how much of these 323.000 USD could you save? Well, for one, you would not need to send donation receipts via snail mail, because the WMF is not a registered charity in Germany. That would save you a minimum of 40.000 € / 52.000 USD (we are sending out 80.000 such receipts this year, and each one costs 0.50 €. We get lots of additional donations after we send out the receipts, we get thousands of new members for Wikimedia Deutschland out of it, and great donor feedback in general. But that is not the point here). But what else would you save? For the most part, my staff (which of course make out the huge part of the 220.000 €) are not concerned with payment processing, but with testing, messaging, donor communications, etc. And all this would still be done by us, if I understand you correctly, even under a centralized payment processing model. So these costs are still there, even with centralized payment processing.

    One could argue that 52.000 USD is a lot of money, which could be used on great programs. That is right, but I am convinced (and all available data that I know of shows) that we would lose huge amounts of money if we did not offer tax deductibility and donation receipts. In the next couple of days we will send out 80.000 donation receipts, which represent approx. 3.000.000 Euros (4.000.000 USD) of donations received by Wikimedia Deutschland in the last fundraiser. If only 10% would not donate to us without getting tax deductibility, we would lose 300.000 Euros / 400.000 USD. That is a lot of money that would not be available for our mission and program work.
    And this ist not only about people who like to save taxes – mostly, because an organization that asks for donations in Germany, but does not submit itself to local laws regarding tax, accountability, privacy, and so on, will be regarded as shady at best. That would cost us greatly, both money-wise and in terms of reputation.

    But of course, we (and a lot of other chapters) have built up accounting infrastructure over the last years, paid for legal advice, set up bank accounts, negotiated with tax authorities, invested in fundraising software, and so on. So yes, chapters spent a lot of effort and money building up the capacity to handle money – but we did not primarily do so because we wanted to payment process donations. 90% of this infrastructure is needed because chapters are handling large amounts of money. And with this comes responsibility, regardless of the source of this money. Take Wikimedia Deutschland again: We have a budget of 3.3 Million Euros in 2012, of which 2 million Euros come from donations that we process. If next year we get 65% of our budget through some kind of funds distribution mechanism, we still need to have accounting standards, bank accounts, tax and legal advice. It does not matter if we collect the donations ourselves or if we get a large grant from the WMF: As the CEO of Wikimedia Deutschland, I am personally responsible for the handling of this money, and I will make sure that we have all the necessary processes in place. So again, I can not see any significant potential to save money or effort if we payment process out of San Francisco.

    But let´s go to the second kind of costs you are mentioning, which I called “focus costs”. You said in a comment: “Every minute a chapter board spends thinking about transaction processing issues is a minute it doesn’t spend thinking about program work and our mission.”

    As a volunteer driven movement, I would argue that *volunteers* should decide on what they would like to spend their spare time on. For a lot of volunteers, this means liberating content, building relationships with GLAM institutions, talking about Wikipedia at schools and universities, and so on. But for some volunteers, other things are important:
    I want to give two examples that are a bit like fundraising and probably raise rather similar issues as localized fundraising does. First, Wikimania. Wikimania is a huge endeavor each year, financed by the WMF and chapters, but organized by volunteers. As we all know, each year there are tensions within the organizing volunteer group, things go wrong, money is wasted, wrong decisions are made, and wrong turns are taken. And the potential for failure gets bigger every year, because every year Wikimania gets larger, and more visible.
    And let´s face it: negotiating with a catering company, talking with venue providers about the price of a conference center, organizing dormitories for hundreds of participants, or setting up the technical infrastructure for such an event – this is not time spent on program work. All this could be done by a company that specializes in organizing large-scale events. So why don’t we say: Let the local volunteers focus on the program of Wikimania, but not on the organization part? Surely, this could be done much better and cheaper by a large international company (maybe we find one that does it for free, as a kind of sponsorship?). And the risk of failure is reduced, which is important because Wikimania gets bigger and bigger each year. So why don’t we hire a permanent Wikimania Organizing Director in San Francisco who builds up a team to organize such an event each year, regardless in which country it is happening? Surely, this would free up time for those volunteers organizing Wikimania, so that they can better focus on program work and our mission.

    My second example: The Mediawiki software. Making the sum of all human knowledge available for all humans does not need the ability to develop software. The software is just a tool. So why do we rely on volunteers to develop Mediawiki? They spent huge amount of time on coding, testing, failing, re-doing, and so on. And the WMF has to spend a lot of time, energy and money on coordinating these volunteer developers, on supporting them. Would it not be much better to hire lots and lots of professional software developers and tell them to develop Mediawiki in the way the WMF wants to, especially now that we have enough money? So that all the volunteer developers have more time thinking about program work and our mission?

    The answer to why we don’t let paid professionals solely organize Wikimania or develop the MediaWiki software: Because there are at least as many ways for one to support our mission as there are volunteers out there. You think your best contribution is by developing a new feature for Mediawiki? Do it – and Erik and his team will support you on the way. Media relations is what you are interested in? Great, here are Jay and Catrin, ready to get you started. You want to gets hundreds of Wikipedians in your city, but you do not know how to negotiate the price of a decent meal for 500 people in Washington? No problem, thank you that you help us all in this way, and let me find someone who might be able to support you. Or you want to think about the details of money processing within a large international non-profit organization: how to payment process in your country, how to set up the legal and financial structure needed to do so and to transfer money to other chapters or the WMF? Yes, that is great! Stu and Delphine are the right people to talk to.

    While software development, event organizing, payment processing, media relations, and so seem to be only means to an end for the Wikimedia movement, the fact that they are done by volunteers is core to who we are and how we got here. It all started with the crazy idea that volunteers are the right people to write an encyclopedia, and in this encyclopedia to collect all the knowledge of the world. Nobody told them what to do first, or how to do certain things. They just did it, they failed, they started again, they became better in what they wanted to do. And along came chapters and the Foundation to help them in everything they were doing. Not because professional staff can do it better, or faster, or cheaper, or safer. But because we have the ability and the means to empower people worldwide in a wide range of activities, and Wikipedia shows us every day that empowering people leads to great things.
    But it should be the decision of each and every volunteer how he thinks he can serve Wikimedia best. Because in doing all this – software development, event organizing, payment processing, media relations – volunteers contribute to the overall volunteer environment that is the basis of Wikimedia.

    Enabling volunteers – that is core to what we do.

    Reply
    1. stu Post author

      Thanks for your comment, Pavel. I’ll try to respond quickly to your comments in roughly the order you wrote them. I’m about to get on a plane for the Wikimedia France meeting.

      First, I have to reiterate my answer to your earlier comment. I’m concerned you and I are still speaking about totally different things. I am speaking about, and advocating a transition away from, local payment processing (the nuts and bolds of how payments are collected and how our movement complies with relevant regulations). In most of your comment you are speaking much more broadly about fundraising and the many ways our community can be involved in it (message development, donor relations, etc.). I think the community / chapters should be involved in all those things.

      Second, I really don’t understand how you can assert that local payment processing somehow cannot be separated from broad involvement in fundraising. Something like 30+ chapters, as well as volunteers in dozens (hundreds?) of countries, have done an amazing job participating in fundraising without local payment processing. It’s the way the vast majority of our movement operates. Of course they are separable.

      Third, to the idea I’m mostly focused on costs, I don’t love your wording because most people associate costs with financial matters, not more broadly. I continue to believe there is a financial cost driver (which is relatively unimportant), and a distraction driver (which is hugely important).

      Fourth, to the question of what financial costs could be saved with centralized payment processing, thanks for your analysis but with all due respect I think it completely misses my point. I’m focused on the expenses narrowly associated with local payment processing. I suspect that much of the 255.000 € you describe is spent on donor relations, message development, and other really important things unrelated to local payment processing. So most of the numbers you cite aren’t relevant to an analysis of what cost savings could be obtained by switching payment processing models.

      For those costs narrowly associated with local payment processing, my instinct is that there’s probably about a 75-80% cost savings by centralizing the legal analysis, the insurance costs, eliminating duplicated processes around financial transactions, privacy compliance in additional jurisdictions, etc. Economies of scale almost always apply to operational matters, and there is no reason to think detailed processes behind payment processing are an exception.

      But as I said above and in other responses here, I believe these hard financial costs are relatively unimportant.

      Fifth, on the opportunity costs of local payment processing (or “focus” costs as you call them). I absolutely agree with your point that volunteers should be able to choose what they work on. Look at me. I’m a finance person. I’m into numbers, and financial transparency, and organizational focus, and improving decision-making with better analysis. I’m really happy there is a role for me to apply my skills/interests supporting the Wikimedia movement.

      I draw a distinction though between what individual volunteers may want to work on (wikimania, mediawiki, etc.) and what a Board or the executives of an organization have to spend time on. Yes volunteers of course get to choose how they spend their time. But Boards and staff do not. Boards and staff have to focus on what the organization is doing, regardless of whether they want to. That is the “focus” issue I have. Dealing the local payment processing is an administrative burden and one that distracts boards and staff from programmatic work.

      Additionally, while the process of trial-and-error is a lovely and powerful one as you articulately state, I believe we must look at it in the context of the potential costs. If a volunteer makes an edit to the article and it’s a bad edit, it will get reverted quickly. If a volunteer learning PHP writes a piece of code for Mediawiki, and it’s bad code, it will get rejected in the submission process. If an organizing team for Wikimania struggles to find a venue or arrange food, 500-600 attendees may end up meeting in a park and eating street food (stroopwafels anyone?).

      But the wiki model — where the costs of a mistake are small and easily fixed — is different from organizing an international movement. As I often hear Jimmy saying, “An organization is not a wiki.” If we make a mistake with something critical to funds flow, or violate an important privacy regulation, or fail to have appropriate financial controls in place and money goes missing, the costs to our movement and its objectives could be very high: damage to our reputation and therefore a loss of readers / impact, a reduction in donor confidence and therefore support, restrictions on our ability to operate in different geographies, etc. As Audit Committee Chair it is — literally — my role to focus on such things, which is one big reason I’ve been so outspoken on this issue.

      Sixth and finally, FWIW there is an additional issues i have with local payment processing which you didn’t mention. Somehow it has led us to have a system that suggests that local payment processing is an objective that all chapters should aspire to and which would be some kind of precursor to a chapter being considered mature or receiving significant funding. I think this is totally, unambiguously the wrong thing for our movement. We need to encourage / foster volunteers of all sizes and shapes to join our movement, not put bureaucratic requirements / barriers in their way.

      Anyways, thanks again for your thoughtful commentary. i’ll try to reflect more on the plane (and catch up with other comments). I’m really looking forward to discussing this more at the Finance meeting. See you in a few days.

      Reply
  15. Oliver

    Thank you for making clear what seems to be so obvious. The Foundation is taking care such a lot about aggregating the money in its hands, but so utterly embarassing zero about empowering and enabling volunteers. This doesn’t cause “the most impact” for sure.

    Reply
    1. Phoebe

      Hi Oliver, on the subject of empowering volunteers, I wrote this last night… it’s not very specific, but it is my own philosophy as a trustee. And from what I have seen in the WMF, everyone there cares a great deal about community empowerment. We have not done a perfect job of building systems to support empowerment… there are many things to improve… but please don’t attribute the wrong motives to the Foundation or the people involved in it because of this.

      Reply
      1. Oliver

        Sorry Phoebe, but I didn’t say a word on motives (and never would, as it would mean to speculate on things of no importance). It is the act that counts, I guess we can agree on this. It is not my intention to blame someone, trust me, but if there is a strong disbalance in action, one must be allowed to adress this.

        Reply
    2. stu Post author

      Oliver, I don’t understand your comment. The Foundation does an extraordinary amount of work to empower and enable volunteers. That is its mission, and what it does every day. Do you really believe it does zero in this? Please review all the activity reports published at http://meta.wikimedia.org/wiki/Reports you want detail on what has been and is being done.

      Reply
      1. Oliver

        Thank you, Stu, for the link to a page with 36 lines of local chapters working close to their communities, doing excellent work though being almost on their own.

        Reply
  16. Thierry (aka TCY)

    “I’m a volunteer. i put 6 or 7 hours into writing this post. I’ve spent at least 10 hours responding to comments. I did not need to do this. No one asked me to do it..”
    I ‘m fully identify my self in this sentences .
    Just a remark : Stu, if it’s hard for you whose first language is English, imagine for me or others whom English is not so fluent. And are also excluded from this important WM debat all the Wikimedians, probably a majority in the movement, who do not speak English or not enough (even if some Chapters representatives try do the link with their chapters members ).

    “Distributed payment processing is a tactic, not an objective”
    Sorry but I fully disagree with that one.
    For me distributed payment processing is part of an objective, not a goal but clearly a part of an objective. To strengthen the capacity of action, the maturity of the chapters,to enable them to better fulfill their mission. We spend more effectively the money we made ​​an effort to collect. For me here, subject to good accountability, a chapter should aiml to fundraise. It will be even better, more legitimate among its members, donors, national institutions of his country, to carry out its mission, our mission.
    The Wikimedian model is a decentralized one. It has proven to be successful. Do not let’s break it. Without proved evidence that a point of this decentralization is not working properly, it should not be changed.

    Reply
    1. stu Post author

      Thierry, thanks for commenting.

      Yes I’m so sorry this discussion is all in English. I don’t have a good solution. I added a Google Translate link on the top right corner of the page, but that is hardly a help given the inability of machine translation to capture the nuance of meaning central to this discussion.

      I appreciate your perspective that payment processing is more than a tactic. As I said in the original post (about 5,000 words of comments ago),I think playing a role in fundraising can be valuable for any part of our movement. I still consider the actual act of collecting payments made on wikipedia.org and other projects to be relatively unimportant, more administrative drudgery than value add. Helping drive messaging, and testing of messaging, are all important. Helping drive ongoing relationships with donors, are also important. But actually collecting the payments? I think that’s not worth the distraction for Board’s a staff drawn away from program work.

      I’m looking forward to discussing more at the Wikimedia France meeting.

      Reply
    1. stu Post author

      Thanks for your comment, Oliver. I’m confused by your question. The board collectively drafted and approved the letter. Is there something else you’re asking? Sorry if I’m missing your point.

      Reply
  17. stu Post author

    in response to a question about payment processing on internal-l

    This page has grown long (over 25,000 words) and is in English which is unfair to many. To help, here is a short summary of my thinking on payment processing.

    I believe that no local chapters should payment process because:

    • Payment processing is an administrative detail and a distraction from the important program work of supporting our volunteer community. Complying with all local regulations requires significant money and significant time from volunteer boards and any paid staff.
    • Our movement has a better option in the combination of centralized payment processing and extensive volunteer community involvement (including from chapters). This is the model our movement follows successfully in almost every country.
    • Local payment processing confuses the issue of funds dissemination by creating a sense of entitlement to donor funds. A community-driven Funds Dissemination Committee is a better way to allocate donor funds — based on impact, not where they are raised.
    • Because the WMF is the legal owner of wikipedia.org and other sites, it has a fiduciary duty for all donations solicited through these sites, regardless of who payment processes. To fulfill its duty, the WMF would have to impose many standards on payment processing chapters. This level of control is unlikely to be consistent with our culture of decentralization and might challenge the legal independence of local chapters.

    These are my personal views. As the WMF’s Audit Committee Chair, my role is to focus on fiduciary duty and regulatory obligations. As a community we are still working together to find and implement the right approach, including at the Wikimédia France Finance Meeting this weekend.

    Reply
  18. Samuel Klein

    Stu, thank you for your thoughtful post and for stimulating all of this discussion around it. This comment thread is one of the best discussions we have had to date.

    I interpret our Board letter so far in the opposite (positive) sense to your summary here. I believe that at least some Chapters should payment process, because in some cases we already see that it offers a net benefit for the movement. And I think that any chapter which is mature, skilled in dealing with donations, efficient in its work, meets a high standard of financial accountability, and has a history of supporting community-driven dissemination targets, and *wants* to payment-process for banner-driven donations, should be able to do so.

    By this description (and reflecting on your four points above), such chapters, before they could process payments from sitewide-banner campaigns, would first have to be:
    * Already processing payments locally, managing their national messaging in sitewide campaigns, complying with local financial regulations, and handling donor relations. (They would already be processing payments from local email and media campaigns)
    * Efficient in their financial work; so that this would not be significant additional time and money on top of their normal operations
    * Demonstrably skilled in their financial work, and able to meet strict standards maintained by the Foundation and the movement as a whole.
    * Lacking in a sense of entitlement, and participating in community-led allocation work to identify and support impactful work worldwide

    This would be a limited set of large, respected Chapters. It would not be a natural step in chapter growth, and only those with a financial and donor-focused bent would be in a position to pursue it (or to implement it efficiently). Other options exist now and will only grow for smaller chapters. Some chapters will be founded in countries with strict financial laws that make it too difficult to distribute funds outside the country.

    Enabling groups to grow in areas where they have demonstrated excellence and foresight is likely to be consistent with our culture of empowerment; and having more than one body competent to do any significant task is consistent with our culture of decentralization.

    Reply
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