User:Sue Gardner/scratchpad/Movement Fund-raising and Fund-disseminating

This page is really just scratch pad notes to myself: I am using it as a place to organize my thoughts on the issue of fund-raising and fund-disseminating for 2012 and beyond. I used to have this page on the office wiki, but decided there's no reason not to have it on meta. You're welcome to read it, and you're welcome to comment on the talk page if you want. Please don't edit this page though. Also please note this page may be ephemera -- if I don't find it useful, I will, at some point, just abandon it. Sue Gardner 21:52, 13 October 2011 (UTC)

Background and assumptions

Background: The Board is likely going to ask me to run/lead/facilitate a process aimed at coming up with potential models for the Wikimedia movement for fund-raising and fund-disseminating.

I am titling this project "2012 And Beyond." It's got nothing to do with the 2011 fundraising campaign, which we are just going to need to muddle through as best we all can. This project is aimed at creating recommendations for the Board for 2012 and afterwards, likely to be in effect by the beginning of the 2012 campaign.

Assumptions:

I'm assuming the models will be intended to reflect an ideal future state, not a compromise between 'what is ideal' and 'what is possible today.' (So, for example, if chapters payment processing is the right way to handle bringing in cash, then that's the model we'd move towards, despite any capacity or capability challenges that chapters currently face.) So: we are aiming to imagine the ideal future state, and then we'll develop an action plan for getting there.

I am assuming there are two key questions at play here:

How does the movement bring in money
How does the movement distribute the money it brings in

I am assuming that the first question is relatively straightforward to answer, and the second question is much harder. "How we bring in money" doesn't need to be complicated, but "how we disseminate money" surely will be. (For one thing, the number of countries involved in 'fundraising' is likely fewer than in 'funds receiving.' 68% of the movement's money is generated inside the United States; 88% inside the United States and Germany; 94% inside the United States, Germany and Canada [2]... whereas twenty entities currently receive funds.)

I am assuming that this will be a consultative process, although I don't at this moment know exactly what that will look like. Key stakeholders will likely include i) all existing chapters that currently spend money on programmatic activities, or aspire to spend money on programmatic activities.... ii) the Wikimedia Foundation.... iii) donors and other funders........ and iv) geographies/language versions that would benefit from investment and aren't currently getting it. More TC.

HOW DOES THE MOVEMENT BRING IN MONEY

Focus statement (assumed/proposed):

Wikimedia fundraises in whatever fashion most efficiently enables us to bring in the largest possible amount of money, and move it around with the maximum possible amount of freedom, while adhering to high standards of ethics and transparency.

Why efficiency. We don't want to waste donors' dollars. We want our fundraising to be as efficient as possible, because we want to spend as much of it as possible on programmatic activities.

Among the assumed implications: i) We'll fundraise more actively in rich countries compared with poor countries: this means translation work, payment options, crafting of messaging etc. will be optimized for wealthy countries, with a lesser or zero emphasis elsewhere. ii)

Why largest possible amount. We want to make the largest possible amount of money so that we have the most money possible to dedicate to programmatic purposes.

Among the assumed implications: This argues for such things as i) offering lots of payment options, ii) offering inventives such as tax deductibility etc., iii) knowing what potential donors want and creating messaging that will appeal to them.

Why freedom to move it around. The Wikimedia movement wants to make its own decisions about where money will be most useful. As much as possible, we want to avoid being constrained by impediments such as regulatory hurdles.

Among the implications: i) We will bring in the largest amount of money in rich countries, and we will want a not-inconsiderable amount of it to go to the United States (to support core functioning of the sites, etc.), and to developing countries (to support the Global South strategy). There probably is no situation in which we will want all the money to remain in its country of origin. Therefore, the work here is to research the top revenue-generating countries, and see what's the path to easiest transfer.

Note: This is not just about payment-processing. Currently the bulk of the Wikimedia movement's cash comes in via payment processing many small donations, but it is possible that in time other revenue sources may grow in importance (particularly, likely, foundation grants). And even today there are multiple non-payment-processing revenue streams -- ie., the German chapter and the Indonesian chapter have received grants from foundations, the French chapter has a merchandise shop, I believe the Polish chapter has some kind of fundraising activity outside the annual campaign. So therefore -- we shouldn't assume we are talking solely about payment-processing, nor should we assume even that we are talking solely about the annual campaign. Whatever we decide to do WRT fundraising needs to encompass all forms of revenue generation.

Data we would ideally want to gather

What brings in the largest amount of money that can be freely be moved around the world? XXXXXXXXXXXX

What is the cost of fundraising out of San Francisco

What is the cost of fundraising out of the country-of-origin

Is the cost lower for a model of "only SF payment processes" or "only chapters payment process" (note that of the top 14 countries as measured by total donations, four do not have a national chapter)

Is the most expensive model a mixed one, where both the chapters and SF payment-process

What does it cost to transfer money from chapters to the Wikimedia Foundation (administration, legal costs, etc.)

What does it cost to transfer money from the Wikimedia Foundation to chapters (administration, legal costs, etc.)

Are there countries that cannot transfer money from the country-of-origin to the Wikimedia Foundation

Are there countries to which the Wikimedia Foundation cannot transfer money

Questions that could potentially be asked of chapters in revenue-generating countries

What are some potential solutions for fundraising, for the movement?

What are some potential solutions for funds disseminating, for the movement?

What revenue sources do you think would be most fruitful to pursue in your geography

What incentives can you offer that donors could not get if the fundraising happened from San Francisco (this should include all incentives -- ie, tax deductibility where appropriate, localized messaging, etc.) (this question would not be asking what they offer today, but what they in theory could or would offer -- ie, the UK chapter does not offer tax deductibility yet, but in theory it could, and it wants to.)

What revenue sources would you be willing to put into a central pot for dissemination (e.g., presumably not restricted grants)

What would you be willing to transfer into a central pot for dissemination (to the Wikimedia Foundation, and to programmatic activities outside your geography)

What funding would you need to reserve for their own operations, to ensure viability (meaning, not for programmatic activities, but for purposes of fundraising, accounting, regulatory compliance and so forth. In effect this would be the cost of fundraising.)

Assessment of whether you think active participation in fundraising would hinder their programmatic growth and organizational development, or help it (I'm not asking whether having cash would hurt or help them, I'm asking whether actively working on fundraising would hurt or help them)

What conditions would need to be in place for you to be willing to put revenues into a central pot

Assuming one of those conditions would be that the entity making decisions about funds dissemination is required to have moral legitimacy -- what would create moral legitimacy, in your view?

Is your fiscal year January-December, July-June, or something different?

What is your planning cycle? (when are program plans developed, approved, assessed)

Are you able to move money out of your country without impediment? Please describe any impediments or restrictions you're aware of.

Would your chapter be legally able to transfer money received via online donations to a central pot for reallocation? Please describe any impediments or restrictions you think might exist.

When you think about the process of figuring out how the Wikimedia movement should handle fundraising and funds-dissemination, what's most important to you? And what are you most worried about?

And

What are the potential or actual revenue sources

On-site fundraising (many small donors model)

Off-site fundraising (many small donors model)

Unrestricted/operating grants from foundations or governments

Restricted grants from foundations or governments

Major gifts

Business development/earned income (including merchandise, shops, etc.)

Other?

Factors that drive donations

how much money people have
their level of charitable inclination
their receptivity to online fundraising
skill of messaging (ie how persuasively it is done)
substance of messaging (ie how compelling the program plans are)
how famous is the cause
how beloved is the cause
ease of giving (ie do we offer the right payment methods, is the giving process easy to complete)
any additional factors such as tax deductibility

Note: do we have info from the Readers Survey about why our donors say they give?

Key stakeholders

Donors
Chapters in revenue-generating countries
Wikimedia Foundation

Relevant research and data

List of top revenue-generating countries

This is supposed to be a list that ranks total movement revenues (WMF+chapters) from the 2010 campaign, ordered by country-of-origin. However, these percentages are obviously wrong, because they add up to more than 100%.

United States (68%) no national chapter: sub-national chapter
Germany (20%) chapter, has payment processed
Canada (6%) chapter
United Kingdom (6%) chapter, has payment processed
France (4%) chapter, has payment processed
Japan (3%) no chapter
Netherlands (3%) chapter, has payment processed
Italy (3%) chapter, has payment processed
Switzerland (2%) chapter, has payment processed
Australia (2%) chapter, has payment processed
Spain (2%) chapter
Belgium (1%) no chapter
Brazil (1%) no chapter
India (1%) chapter

Israel chapter. not in top 10 moneymakers, but has payment processed

Hungary chapter. not in top 10 moneymakers, but has payment processed

Austria chapter. not in top 10 moneymakers, but has payment processed

Sweden chapter. not in top 10 moneymakers, but has payment processed

Russia chapter. not in top 10 moneymakers, but has payment processed

HOW DOES THE MOVEMENT SPEND MONEY

Focus statement (assumed/proposed):

The Wikimedia movement determines where the money goes based on where it will be most effective at executing our strategy in pursuit of the mission.

Questions that will need to be resolved via this process

Who will make decisions about resource allocation
How can decisions be made without undercutting existing governance structures (eg chapter boards, WMF board)
What mechanisms can be created for preventing deadlock/gridlock
How to decouple fundraising authority from funds dissemination authority [*]
How to disentangle geography from language

[*] This is important because it's not legitimate for wealthy countries to be decision-makers for poorer countries.

Data we would ideally want to gather

Why do donors give us money

Who do they think they are giving money to

What are they giving it for

How do other organizations distribute their money

What are the pros and cons of the various models

What befits a decentralized movement like ours: how does money move around with as little friction as possible

Key stakeholders

Donors
Readers and prospective readers (probably primary?)
Editors
Chapters and entities that aspire to spend money in pursuit of programmatic activities
Wikimedia Foundation

If you don't aspire to spend money, you may not be a stakeholder for this process. For example, I believe the Macedonian chapter has, thus far, neither raised money nor spent money. This might be an evolutionary question (if for example it is just too young) -- but assuming the Macedonian chapter doesn't aspire to spend money, it is likely not a stakeholder for the money dissemination conversation. (Or at least, not a primary stakeholder.)

How money should be spent

(thinking out loud...)

on activities that support all projects and language-versions (e.g., costs of bandwidth, legal defence, etc.)
on activities that support priority geographies, where there is potential to reach large numbers of readers (ie a gap between potential and reality) -- ie India, Brazil, MENA
on activities that support priority languages, where there is potential to recruit large numbers of editors (ie a gap between potential and reality) --- ie Hindi, Turkish
on activities that support priority languages, where editor numbers are in decline --- ie German, English
on activities supporting projects that require extra support because they are troubled

All projects and language versions

e.g., bandwidth supports all projects
plus
plus

Priority geographies, where there is potential for reader recruitment

China
Russia
Indonesia
India
Brazil
Turkey
Iran
Saudi Arabia
Kuwait
Oman
Qatar
Armenia
Germany
South Korea
Italy
Vietnam
Taiwan
Thailand
Egypt
Ukraine
Morocco
Romania
Czech Republic
Hong Kong
Sudan
Greece
Syria
Algeria
United Arab Emirates
Tunisia

(Source: Analysis done by the Wikimedia Foundation in support of the strategy project, 2010. Analysis rank-ordered all countries according to a total score that attempted to assess potential for growing readership, based on the country's total number of internet users, internet users per 100 inhabitants, total population, per capita GDP, mobile subscribers per 100 inhabitants, total number of mobile subscribers, current market size, potential for market growth, current Wikimedia penetration, and access to a mature Wikipedia. Analysis did not exclude geographies for reasons related to the country's political situation -- ie access to a free press, presence of internet censorship, etc.)

Priority languages, where there is recruitment potential

This is a list of languages with 50m+ primary speakers, reverse-ordered by number of editors per million speakers. Data are from Wikistats here; I did the analysis. Simple English has been excluded.)

Punjabi (104m primary speakers, 0.0% editors per million)
Wu (77m, 0.0%)
Hindi (550m, 0.1%)
Western Panjabi (60m, 0.1)
Bengali (230m, 0.2%)
Egyptian Arabic (76m, 0.2%)
Swahili (50m, 0.2%)
Malay (300m, 0.3%)
Marathi (90m, 0.3%)
Cantonese (71m, 0.3%)
Urdu (60m, 0.3%)
Burmese (52m, 0.3%)
Tagalog (90m, 0.4%)
Telugu (80m, 0.4%)
Javanese (80m, 0.5%)
Chinese (1300m, 1%)
Arabic (530m, 1%)
Indonesian (250m, 1%)
Tamil (66m, 1%)
Vietnamese (80m, 4%)
Portuguese (290m, 6%)
Persian (107m, 6%)
Turkish (70m, 7%)
Spanish (500m, 8%)
Korean (78m, 9%)

Priority languages, where editor numbers are in decline

Below is a list of language-versions, ordered by decline in number of active editors between August 2011 and August 2010. (Source is Wikistats; I did the analysis. The list here is the 14 most-in-decline, of the 35 most-popular language-versions. Most popular = largest number of pageviews hourly.)

Croatian (down 11.7%)
Norwegian (down 8.9%)
Bulgarian (down 8.1%)
Swedish (down 8%)
Hungarian (down 7.7%)
Turkish (down 5.7%)
Slovak (down 4.7%)
German (down 4.7%)
Polish (down 4.4%)
Catalan (down 4.4%)
Danish (down 2.4%)
Portuguese (down 2.2%)
English (down 1.6%)
Vietnamese (down 1%)

Projects that require extra support because they are troubled

(in no particular order)

English: the most popular project, and one of two in the top 10 facing editor decline
German: the 4th most popular language version, and one of two in the top 10 facing editor decline
Portuguese: high reader potential, high editors potential, editors in decline
Vietnamese: high reader potential, high editor potential, editors in decline
Turkish: high reader potential, high editor potential, editors in decline

Relevant research and data

List of countries/chapters that are currrently spending on activities

Below is a list of chapters that have received funds from the Wikimedia movement, either directly from donors via payment processing, or via a grant from the Wikimedia Foundation. Chapters not listed here may have other funding sources, e.g., grants from grantmaking organizations other than the Wikimedia Foundation.

Israel
Germany
France
Netherlands
UK
Italy
Switzerland
Argentina
Indonesia
Hungary
New York City
Sweden
Philippines
Russia
Ukraine
Hong Kong
Portugal
Serbia
Estonia

List of chapters known to have received grants from outside the Wikimedia movement

(ie., not the Wikimedia Foundation and not another chapter)

Germany
Indonesia

List of chapters known to have paid staff

(and therefore spending commitments)

Germany
France
UK
Netherlands

[2] These numbers are totally wrong and need to be checked.

List of top 10 countries, as ordered by number of active editors

United States (20%)
Germany (12%)
Russia (7%)
UK (6%)
Italy (4%)
India (3%)
France (3%)
Poland (3%)
Spain (3%)
Canada (3%)

(source: Wikipedia Editors survey, April 2011, page 30 of the PDF version)

What do editors want to spend money on?

In April 2011, the Wikimedia Foundation asked editors what it should spent money on. The question was this: "How would you like the foundation to allocate funds for the following (out of $100)?"

Caveat: this data is of limited usefulness when it comes to supporting resource allocation. 1) We created a fixed list of options for respondents, and all fixed response sets are going to be inherently problematic because people's interpretations will be different, and the fixed set itself has an anchoring effect. 2) Many people would likely assume that the question "how would you like the foundation to allocate funds" refers to movement-wide funds allocation, but we can't know that for sure. 3) These are just editors' top-of-mind opinions, so in general they are going to be of limited utility.

That said, here are the responses we got:

Technical operations 28 cents

Technical features development for new editors 15 cents

Community work aimed at supporting healthy editing culture 12 cents

Technical features development for experienced editors 12 cents

community work for attracting/supporting new editors globally 11 cents

community work for attracting/supporting new editors in the global south 8 cents

grantmaking to chapters, individuals, etc. 7 cents

support for chapters 7 cents

(source: Wikipedia Editors survey, April 2011, page 30 of the PDF version)

Everything below this line is scratch pad

OTHER STUFF

(eg research, data, thinking-out-loud)

Hypotheses

From a maximizing-dollars standpoint, it's possible that it doesn't really matter whether the Wikimedia Foundation payment-processes or chapters payment-process. I am hypothesizing that, with a large number of countries and regulatory contexts and donor expectations& behaviours, it's a wash in the end.

Volunteer-based organizations are never going to be optimized (or even particularly good at) donor management and accountability (e.g., regulatory compliance, audits, thanking, database integrity) -- that's not their core work, not what they're designed for. if true, this would mean that if chapters intend to remain volunteer-driven rather than staff-driven, that's an argument for payment-processing out of SF.

The benefit to decentralized payment-processing is not large, but the benefit to decentralized mechanisms for dispersing funds is.

Benefits of centralization and decentralization

Benefits of centralization:

singleness of purpose: resources are focused rather than scattered
efficiency and cost savings: no duplication, less waste
reporting (transparency) is easy: there's just one voice
only one failure point rather than multiple failure points

Benefits of decentralization:

redundancy if one entity is corrupted or incompetent or compromised
many eyes make all bugs shallow: decision quality, other quality, goes up
a thousand flowers bloom: enables experimentation and low-cost failure
protection from group-think and over-concentration of power
if you're lucky, decentralized entities have more expertise than any single entity could ever hope to