2011-12 Fundraising and Funds Dissemination process/Recommendations by Tango

The principle of decentralisation and allowing everyone to contribute to the movement in the way they think best is fundamental to the Wikimedia movement. Therefore, I think decentralised fundraising should be our default choice. We should only restrict who can fundraise if there is a very good reason for doing so.

There have been several reasons put forward in the recent discussions for why all fundraising should be done by the WMF and chapter should not be permitted to fundraise using the Wikimedia project websites. Some of those reasons have actually been arguments regarding funds dissemination and I therefore don't think them relevant to this point. There have been claims that allowing chapters to fundraise would somehow restrict funds dissemination, but I do not believe that any restrictions have been mentioned that cannot be overcome if we try. I will restrict my comments to two reasons that I think do have some merit.

Reason 1: The WMF can fundraise more effectively

There is certainly some evidence from the recent fundraiser to suggest this, however that evidence is unclear. There is also contradictory evidence. For example, the country we seem to be the most effective at fundraising in (relative to either population or GDP) is Germany, a country where a chapter fundraises. I think poor performances by fundraising chapters can probably be explained by inexperience (which is consistent with Germany, a very experienced fundraising chapter, doing so well). This means we may lose a few donations in the first couple of years when a particular chapter fundraises, but we shouldn't be too concerned about the short term.

Once chapters have gained the necessary experience, I expect they will be able to do better than the WMF due to the various additional tools at their disposal (tax deductibility, local payment methods, the appeal of donating to a local organisation, etc.).

It has been suggested that the WMF's fundraising costs will be lower due to economies of scale. That is probably true, but I don't expect it to be a large enough effect to make it worth centralising fundraising.

Reason 2: Chapters fundraising poses an unacceptable risk to the WMF and the movement

It is certainly true that, wherever there are large amounts of money, there is a potential for mistakes, fraud, dishonesty and other things likely to cause legal and reputational problems. As the body directing donors to a chapter, the WMF shares in the responsibility should such things happen. I believe these risks can be mitigated to acceptable levels, though. The criteria the WMF board set down in Haifa are very sensible and should be successful at mitigating the risk. I propose those criteria be implemented in the following way.

The WMF board should instruct the Executive Director and her staff to flesh out the criteria into clearly assessable and precise requirements. The WMF should seek legal and other expert advice and should consult with the chapters and the wider movement. The ED should present recommendations to the board on what these detailed criteria should be, having first presented the movement with a draft version for discussion. The board should then adopt such detailed criteria as it believes are necessary to protect the WMF and the movement.

Any chapter wishing to fundraise in 2012/13 should submit a report, written by its external auditors (who should be licensed in whatever way is customary for that country - if such licensing is not internationally respected, then a suitable alternative should be found), to the WMF specifying that it meets the criteria (if a chapter doesn't have any external auditors, then it will need to get some or there is no way they can be ready to fundraise). The auditors will obviously charge for this (although a lot of the work will probably have already been done as part of their main audit, so hopefully it won't cost too much) and the WMF should assist any chapter for which the cost would be a problem.

There are three advantages to using external auditors like this rather than the WMF handling the audit: 1) the auditors will already be familiar with the workings of the chapter 2) the auditors will be familiar with the situation in the country in question and will know how such things are usually done and 3) they are completely independent so there will not be any unnecessary unpleasantness if the answer turns out to be "no".

Recommendation 2: Establish a Funds Allocation Committee to review annual plans and plans for individual initiatives and allocate funds accordingly

There seems to be a consensus that such a body should exist. I think that, in the long run, it should be a separate legal entity, but we need to have a lot more discussion before making that decision so for now it should be officially constituted as a committee to advise the WMF board. The board should instruct the ED and her staff to prepare recommendations, following consultation with the chapters and wider movement, about the make up of the FAC, its detailed terms of reference and how it will operate. A draft of these recommendations should be presented to the movement for discussion prior to being presented to the board.

The body should be responsible for reviewing and approving or rejecting all requests for funds raised using the Wikimedia project websites. This includes spending by the WMF and fundraising chapters as well as requests for grants from non-fundraising chapters, other affiliated organisations and individuals (although individuals requesting small amounts should go through their local chapter, or the WMF is they don't have one). There should be no exemptions for "core" spending (although the WMF and chapters could use other income to cover core spending if they wish and are able to). The FAC will be expected to fund all core spending, but the decision about what is and isn't core should be for the FAC. How money not raised using the Wikimedia project websites is spent should be for the individual organisations to decide for themselves. Such other income should be declared to the FAC, but there should not be a requirement to allocate such money before requesting funds from the FAC - the money can be used to fund anything the FAC refuses to fund. (This helps give organisations some measure of independence.)

At least for now, the WMF will need to have a veto on the FAC's decisions for legal reasons. In order for the movement to have confidence in the FAC, it should be clearly stated in the resolution that creates the FAC that the veto can only be enacted by a resolution of the WMF board, not by WMF staff. This should give everyone confidence that the FAC will only be overruled in exceptional circumstances (since the WMF board is too busy to micromanage it) and will avoid the inevitable tension that staff having power over volunteers creates.