Wikipedia:Wikipedia Signpost/2012-04-09/Interview

Interview

Funds, fiduciaries, and the Foundation: the complex dynamics of scaling

By Tony1, Jan eissfeldt and Skomorokh

On the first weekend in April, the Board of Trustees of the Wikimedia Foundation published several resolutions addressing issues such as finance and movement roles (Signpost coverage). The Signpost interviewed community-elected board member Samuel Klein (Sj) for last week's issue to get an overview of the topic of movement roles and the surrounding debates. In this second interview, the only trustee voting against the fundraising resolution speaks in detail on the background of decisions taken on a broader range of issues from the Berlin resolutions to the make-up of the newly founded Wikimedia Chapters Association and of the Board of Trustees itself.

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Samuel Klein during the joint session of the Board of Trustees and the chapters on finance on March 31 in Berlin. Video by Manuel Schneider for WikiTV.

The most significant development that's emerged from the recent discussions on the organisation of the movement – the most radical change – is the Funds Dissemination Committee (FDC).

Samuel Klein: Yes. The one somewhat urgent consideration was our auditors’ suggesting that we needed to make sure there were direct financial controls for the use of a significant chunk of the funds we raise. And when they found out the scale of the fundraising that was passing directly to chapters, they said so how well do you know what those processes look like? Now they were asking for this additional layer of visibility; that was a big change for us, and we tried to respond promptly.

So this marks a turning point, from a hitherto laissez-faire attitude to these disparate far-flung chapters, to a more centralised set-up for auditing of transparency and accountability?

Absolutely, and we should have already set some standard – that anyone who raises at least a certain amount is committed to an annual audit and global standards that we all share. The Foundation itself has grown very quickly, and that level of change, and the quality of our oversight has gotten much better. Now that sort of growth is happening to some of the national chapters. So I agree that it’s absolutely a turning-point.

One decision that you've made has been to create a two-tier system, recognising the U.K., France, Germany, Switzerland, and in effect the U.S. as the five jurisdictions where it's much easier to donate with tax-deductibility. Is this just a by-product of the Foundation’s wish to tighten up on auditing?

Those are the five where people can already donate with tax-deductibility. This was not an active decision to limit tax-deductible donations on that kind of principle. The first concerns, last summer at Haifa, were about accountability, and these financial controls we’ve just been talking about. There are still some open questions as to what the right controls look like, and as people pursued that line of thought and had discussions with the 12 chapters which two years ago had been processing donations – reduced to four chapters during our discussions that laid out seven principles that groups need to follow to responsibly process [fundraising].

So Switzerland, a small chapter that doesn’t process much, is recognised, but Italy is not, despite the fact that it's a much bigger chapter?

Correct, because Switzerland already had very clear guidelines and oversights for the transfer of funds to other countries, so it was easy for them to transfer the remainder back to the rest of the Foundation.

Klein (centre) speaks on a panel flanked by the two chapter-selected trustees Arne Klempert (left) and Phoebe Ayers (right).

Will more chapters be able to join the tax-deductibility arrangement, or is the current list of five set in stone until the next review in 2015?

As a result of negotiations and assessments, [since Haifa] the Audit Committee began to worry about issues of [project] redundancy and efficiency. This was a much more amorphous set of concerns, still about doing the right thing by donors, but deeper than the initial urgent issues of accountability.

Do you have examples at hand that were very worrying?

Rather than a few compelling instances of cases where this was problematic, there were 10 or 15 small concerns, each of which on their own were not terribly compelling, which together they seemed to some to paint a picture of a somewhat inefficient process that didn’t have any huge success stories or failures; there was just a general sense that this was an ongoing distraction both for the Foundation and for these chapters, who were ... talking about whether and when they could directly process donor contributions. And I think the strongest argument that people made against [the new arrangements] was “if we’re doing things right, the initial flow of funds doesn’t matter – as long as we're actually all working together to figure out how the funds should be spent”.

You mentioned tax benefits to donors, and a number of people have suggested that with the limited data available to us, this makes a small but not a huge difference to donors, and that maybe it makes less of a difference than things like getting the formatting style of the donation page right. I think it's good that we'll be able to compare a number of jurisdictions where there is tax deductibility; certainly if it turned out this was not true, and it really mattered to groups of people to have tax deductibility, and [if] they were telling us this, and it was visible, I think there's no question we would reconsider ... that would give the lie to one of the major analyses made so far.

So it's still a work in progress?

What makes sense to us as a movement is very much a work in progress. In the last year and a half, it was very much as a series of two-party negotiations with people involved advocating for a certain capacity for themselves, and even explicitly stating it as tied to one's importance in the decision-making process of the movement. As an example, Thomas Dalton, ex-treasurer of the UK chapter, proposed a model for the FDC by which chapters that directly process funds have extra votes on how funds are distributed.

His argument is not crazy, but that every entity that [processes] funds has a slightly greater responsibility to ensure that those funds are spent well; the Foundation thinks it's harmful to the movement to divide it that way into first- and second-class citizens, with the first-class citizens having a greater voice in what we're doing. [This would involve] defining first-class, for example, by how much money people in a country have to give.

Whereas you're defining first-class according to auditing of transparency and governance?

The Foundation's initial draft is that decisions by the FDC would not be tied to any of those things. The Foundation's view is that the processing of funds is just not important: it doesn't make the view of the Foundation or any chapter more important; it's purely a technical and procedural "fact", a mechanism at the point of donation that welcomes the donor to become part of the movement.

If the FDC is to be explicitly a "volunteer-driven" body, does that mean a clear majority of its members will be volunteers rather than Foundation trustees and employees?

At most a third of the members will be related [directly] to the WMF, and that's not because the WMF is processing funds, but because it's designed to have this global scope and has been doing this before. I think once the [FDC] has been around for a while, we can find better criteria to figure out who should be on it.

With the dual creation of a new Wikimedia Chapters Association and the Foundation's own revamped Chapters Committee, we have two bodies that could conceivably overlap in their interests and duties.

They certainly will have a lot of work to share and to coordinate. Some of the people who have been helping to plan the chapters association have been part of the chapters committee, and some of the definitions of the new expanded chapters committee or the affiliations committee [assume] the future existence of a chapters association.

The Foundation's chapters committee will always have a unique responsibility to make the final recommendation [to the WMF board] on whether any group should be recognised for the first time, and it could be responsible for some of the mentoring when groups are approaching recognition, [whereas] the chapters association is interested in mentoring groups as soon as they're recognised, so there will definitely be overlap in that respect.

Is the chapters association going to be strongly encouraging good governance among its own members? Are there areas where there could be conflicts of interest? For example, what if delegates of a chapter are participating in the audit of that chapter?

Yes, if they were directly responsible, there would be a conflict; but as a peer-review group, it seems ideal.

Is there a chance that lobbying the Foundation's board might turn out to be the principle function of the chapters association?

One of the association's founding goals (not in the context of lobbying) is to provide a framework for chapters to coordinate their ideas and to present sensible unified ideas that all of their members can support.

Wikipedia:Wikipedia Signpost/Rquote You were the only Foundation trustee to vote against the board's recent fundraising resolution. Why was that?

There was strong consensus to respond to the somewhat urgent need to be stricter about accountability for anyone handling hundreds of thousands of dollars of donations; but this was combined with other less urgent concerns, and I think we just don't have all of the data about what's distracting, what's empowering, what the benefits and drawbacks are of a system that encourages everyone with the capacity and skill to deal directly with donors.

So you thought it was premature?

Not premature, but I think people got excited about trying to improve what had previously been an unconsidered framework for raising funds, and ended up combining responses to urgent needs with longer-term ideas about ways that might be more efficient but for which I think the answer is not clear. But we want to explicitly empower people by helping them with funding and to develop, and we want to avoid single points of failure.

So that risk of failure was why you voted against it? In your view there wasn't sufficient caution on the board about things that could go wrong?

What I'm hearing from lots of chapters is that it's not that they care about the technicalities of processing funds, but they hate being told "we know you want to do this, and it's not that you're bad at it, but we don't think you should". And personally I think that's [a] valid [complaint], and I don't think the funding resolution considered that trade-off.

No doubt you'll be hoping that your fears are not borne out.

Well, the response at the chapters meeting [in Berlin] was very productive, and even people who were disappointed by the results said, "it doesn't actually keep us from doing the work we care about". No one said, "I really personally care a lot about this technicality". So I think it was a minor negative reaction, and it's something we'll be thinking more about. The Foundation's view was, "let's focus on something else; let's get the distribution of power right and not worry about the technicality, and the FDC really decentralizes and shares power." The real power is how you decide what to spend, and until this year the Foundation has always made 90% of those decisions, so it's explicitly saying we want to share, we don't want to be that body.

Although in the end, the Foundation has the last say on every cent that is spent, true?

Since you mentioned fiduciary responsibility earlier, in the sense that if the FDC made a decision that the Foundation felt it could not responsibly accept, it might, it might, refuse to support an investment the FDC had recommended. But I can't imagine that happening; it would be like the Foundation rejecting the recommendations of its chapters committee – it's something we've never done.

Wikipedia:Wikipedia Signpost/Rquote But you must foresee that some of the chapters might feel that they have to work a bit harder to get their money, to put it crudely: not only do they have to come under your microscope of governance and financial scrutiny, but they might actually have to apply for their special purpose money. Do you think that's behind some of the chapters' fears about the new arrangements?

The very key chapters were in a position to process donations in the first place, and everyone I heard, including those chapters, agreed that processing donations does not imply any extra rights to spend those donations, and actually there was surprising unanimity – on internal [mailing lists] and on Meta – that chapters should [not] be granted easy access to funds just because donors in their country gave those funds to the Foundation as a whole. Of course [chapter] people are always distinguishing (i) funds donated through the sitewide fundraisers, which are predominantly from donors supporting the movement as a whole who are not, as far as we know, particular about which part of the movement they're giving to, from (ii) funds either restricted or unrestricted that are explicitly given them to do a project.

In the chapters association, we have for for the first time a high-profile mouthpiece to speak plainly for the chapters, perhaps particularly for the stronger, more powerful, more vocal chapters. Might the association – subtly or not – put pressure on the two chapter-selected trustees?

Absolutely – that's not necessarily a bad thing. It's only an imbalance in that the projects don't have a strong institutional voice analogous to the chapters association to synthesize, coordinate, and articulate a more nuanced set of desires, interests, and ideas, more than just the single vote for the community-selected trustees. So I would like to see a strong voice for the projects as well, which would benefit the project communities.

The Signpost will as always be keeping a close watch on the changing dynamics of organisation and relations between the Wikimedia Foundation and the sometimes nebulous array of movement entities in the coming weeks and months. In the meantime, for the latest developments surrounding the nascent and powerful Funds Dissemination Committee, consult this issue's "News and notes" report.

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These comments are automatically transcluded from this article's talk page. To follow comments, add the page to your watchlist. If your comment has not appeared here, you can try .

• Thank you for covering the Berlin meeting in such detail, and for caring about governance developments even though they are removed from everyday work on the projects. I am glad to have been interviewed about this subject, but concerned about giving readers only one perspective of what is happening! This is a controversial and emotional topic, and no single participant can provide a neutral summary of it. My views are my own, and you would get different answers from others involved in these decisions.

I understood that this was part of a set of interviews with other attendees at the meeting. As you continue to cover these topics, please make a point of interviewing voices from a spectrum of the parties involved including the auditing, fundraising, and local-programs specialists of the movement. Regards, – SJ + 00:00, 10 April 2012 (UTC)

• I suspect that most Wikipedia donors (the silent majority) are not involved in the chapters and do not want much of their money being funneled out to them. Can we point to specific improvements that these chapters have made to Wikipedia? With that said, I can't say I'm all that happy about how the Foundation seems to spend money either - it seems they hire a lot of "consultants" to say common-sense things rather than spending the money on developers to improve the remarkably aged technology. II | (t - c) 17:20, 16 April 2012 (UTC)

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