Wikimedia Endowment: the long wait for transparency

As part of its 19 January 2023 meeting, the Wikimedia Endowment Board led by Jimmy Wales approved the minutes of its 21 July 2022 meeting. These minutes, posted on Meta-Wiki on 11 February 2023, shed fresh light on developments at the Endowment, established in January 2016 as a "Collective Action Fund" at the Tides Foundation.

Endowment budget: $1.8 million in annual expenses for 2022–2023

The minutes of the 21 July 2022 meeting provide some welcome information on Endowment expenses. They inform us that –

... the Board of Directors approve[d] the proposed annual budget for the 2022-­23 fiscal year, consisting of $10 million of forecasted revenue and $1,803,622 of expenses for the Endowment.

As far as The Signpost is aware, this marks the first time in more than seven years that the Endowment Board has published any figure at all for expenses paid from the Endowment fund.

In the past the Board's minutes almost never mentioned expenditure. What mentions there were lacked specificity:

• "Fees at Tides are very competitive, and it doesn’t make sense at the moment to change investment managers." (July 2019)
• "Approval given for moving forward on these items: Q1 (2020): Renegotiate our fees with Tides" (January 2020)
• "The Foundation is asking the Endowment to cover the costs of legal work to investigate a future legal structure for the Endowment." (July 2020)

So the naming of an actual dollar amount is a welcome departure from past practice. A WMF spokesperson has since provided further information on this planned spending on Meta-Wiki:

The 1.8 million USD earmarked for expenses includes personnel, equipment, and other administrative services including fundraising costs, human resources, information-services, clerical, finance, and legal services.

This appears to imply that the Endowment has its own personnel costs rather than relying on WMF personnel paid by the WMF, as Wikimedia Enterprise does.

In addition to this planned expenditure, the minutes for the July 2022 meeting also indicate that –

The Board considered proposals for a grantmaking strategy. Board directed staff to develop proposals for grantees for a total up to $5.7M in the area of technical innovation.

It will be interesting to hear more about these proposed grantees in due course.

The wait for the new 501(c)(3) will be longer still ...

The Wikimedia Foundation reported in late October 2022 that it had received IRS approval for its new 501(c)(3) non-profit (see previous Signpost coverage). The newly created organisation is designed to take over management of the Endowment and begin regular financial reporting for it, as mandated by US non-profit law.

The minutes now published reveal that IRS approval was in fact received four months before the public announcement. The WMF has since clarified the date: 28 June 2022. Signpost readers will recall that the WMF said back in April 2021 that the Endowment would be moved –

... in its entirety to this new entity once the new charity receives its IRS 501(c)(3) determination letter.

More than eight months have now passed since this determination letter was received. Yet the Endowment continues to be with the Tides Foundation, where its revenue and expenditure are completely opaque – there are no audited financial reports, no Form 990, and we literally have no idea how much money the people managing the Endowment have spent and on what. And apparently more months will pass still before this changes. A WMF spokesperson advised on 2 March 2023 that the WMF is –

... actively working on the steps necessary to set up the Endowment’s strategic and operational policies and systems to ensure a smooth transition of the Endowment funds and their management. We expect the transfer will take place in a matter of months. We will inform you when it has taken place.

WMF promises that the Endowment would soon be transferred to its own 501(c)(3) non-profit organisation and begin financial reporting date back to 2017 (see previous Signpost coverage). The end of the long wait for financial transparency is still not in sight.

The Endowment's investment value has decreased

According to the minutes, the Endowment raised $13,537,126 from 601,584 donations in the year from 1 July 2021 to 30 June 2022. This is likely to have included a number of planned gifts – for the past two years, money left to the Wikimedia Foundation in people's wills has been redirected to the Endowment at Tides instead.

The Endowment's investment value stood at $95.2 million on 30 June 2022. Six months prior, at the January 2022 Endowment board meeting, it was reported that the Endowment held $105.4 million ($99.33 million in the investment account and $6.07 million in cash) as of 31 December 2021, with an additional $8 million raised in December 2021 due to be transferred to it in January 2022.

Like the Foundation's own investment portfolio, Endowment investments were probably impacted by the 2022 stock market decline. The S&P 500, a common benchmark for U.S. investments, fell by more than 20% in the first half of 2022 (from $4,766.18 on 31 December 2021 to $3,785.38 on 30 June 2022, according to Google Finance).

Questions asked a week ago about the current total value of the Endowment (investment value plus cash) remain unanswered at the time of publication.

Brief notes

• Russia fine: Reuters reports that the Wikimedia Foundation has once again been fined by Russia. For detailed coverage see this issue's In the media section.
• Annual reports: Tanzania User Group, Democratic Republic of Congo User Group, Wikimedia Norway.
• Impact report: Wikimedia Serbia.
• Global bans: ByteOr, believed to have used dozens of accounts for vandalism.
• Articles for Improvement: This week's Article for Improvement is island, to be followed by manufacturing on the 6th, and food on the 13th. Please be bold in helping improve these articles!