> The money was transferred to an outside organisation, Tides Advocacy, sometime in the 2019–2020 financial year when the Foundation found it had a large amount of money left over because of an underspend
This is the root of the problem. Wikimedia rises too much money, and instead of putting it in a fund they "need" to find projects, programmes and - now apparently - outside organization that are in no way accountable to Wikimedia.
Instead of burning all the money they are donated, Wikimedia should first and foremost strive to secure the technical and financial continuity of the project by e.g. investing a lion's share of the donations to a distributing fund that provides perpetual passive income from e.g. stock market dividends. Only once that passive income surpasses the current and foreseeable technical running costs (hosting, bandwidth, project and engineering staff) should they start giving money to external organizations.
This is the root of the problem. Wikimedia rises too much money
100% agree and it’s endemic to the people running any organization not held accountable. There’s a port authority near me that was formed to maintain key bridges. The tolls on these bridges is exorbitant.
The people who run the authority use it as their own personal slush fund, donating money to things like ballet schools and other pet projects.
Maybe these projects are the most worthy thing in the world but forcing people to donate to them under threat of arrest (for not paying bridge tolls) is immoral.
“Non-profits” in general are very poorly understood and seem to slip under the radar of accountability at the governmental and board levels.
501c3 has the household name, “non-profit.” It is a case study of an extraordinarily well-branded idea and how that shapes perception.
My experience with these types of organizations and their governance puts me in a default defensive default posture. Too many have found out ways to exploit the capabilities.
At least with a regular corporate entity, there is no mistake the company is out to reward its ownership.
People were able to re-brand "charity" to "non-profit" in the US as well -- in part because if you have a $500k salary as CEO of a charity that looks like you're taking money, but if you have a $500k salary as the CEO of a non-profit...
I don't know whether they needed to "find projects":
> the fact that the transfer coincided with Amanda Keton's move in the 2019–2020 financial year from General Counsel of the Tides Network and CEO of Tides Advocacy to General Counsel of the Wikimedia Foundation.
Sounds like someone got into power at Wikimedia and went ahead and moved a few millions to their project.
This is how most large non-profits work. They start out from building something genuinely successful, like Wikipedia, and from that visibility they raise more donations than they know how to spend. So naturally they want to expand their work. But it's very rare that the founders also happen to have the skills to run a large organization, so they need to bring in "professional management."
And who could be better than someone who has previously run a large non-profit? They are now run by some career non-profit manager, and the first thing they will do is focus on fundraising. They will pay large salaries to professional fundraisers who are, you guessed it, their friends from previous organizations they have worked at. Their jobs will be easy and their salaries fat. Then they will build an expensive administration structure whose salaries will eat up an ever increasing share of donation income.
The non-profit becomes essentially a feudal structure, with idealistic volunteers doing all of the productive work while highly paid managers consume all of the donation income. As long as fundraising investment has a positive ROI in terms of donations, management will find new ways to spend it. They will hire more and more parasitic administrators, and if things are particularly lucrative, they will donate to other organizations run by people they know in the industry. Always good to have someone else owe you a favor when times get tough.
This will continue until the organization grows so big that it collapses under the weight of its own structure. In the case of Wikipedia, some of the serf volunteers have figured this out and described it as "Wikipedia has Cancer" https://en.wikipedia.org/wiki/User:Guy_Macon/Wikipedia_has_C...
this is a very interesting take. Is it a sample of personal research or is it based on some external source?
I have this exact view that "everything is politics". For profit businesses are just a particular case of a top down authoritarian political structure, but they work politically too in the broad sense, people fighting for power, influence and resources. it's the only constant i can think of regarding human behavior across cultures and types of organizations.
No, the difference is meaningful because as soon as you swap out owners for "board of directors" it changes the scenario from "outrageously normal" to "outrageous fraud".
A director is not an owner who has any legitimate claim to funds they manage on behalf of the owner or the charity, quite the opposite, they have a legal fiduciary duty to act in the interests of the owner or the charitable purpose, not their own. If they funnel the company's money to themselves, that's outright fraud (or embezzlement, depending on details) and they deserve to be in jail and a civil claim to compensate for breach of fiduciary duty, there's nothing normal or tolerable about that.
I'm not discussing the way things should be, but the way they are. There are numerous public charities who get a significant amount of funding because of who's on their board.
They're not funneling money to themselves, they're funneling it to other charities that they work with.
> Wikimedia should first and foremost strive to secure the technical and financial continuity of the project by e.g. investing a lion's share of the donations to a distributing fund that provides perpetual passive income from e.g. stock market dividends.
Stock investment funds are a favorite American pastime, but when shit hits the fan you get wiped out pretty easily. No matter if you're looking at heavyweights like Facebook (-68% YTD) or even the S&P 500 (-19% YTD). With interest rates going up across the board, IMHO I think we're in even worse times for shareholder investors, simply because the free money well that drove the last ten years worth of "gains" has been turned off and won't be re-activated any time soon.
The poster mentioned long-term passive income, which to me is spot on. The strategy used to generate it can be debated, but the goal is very common and many methods, while not guaranteed stood the test of time pretty well. For example, look at university endowments and various privately-funded research fellowships that run for many decades, through booms and busts of the stock markets.
IIRC these are usually required to only invest into super secure stock classes like government bonds - which actually was a problem on its own during the last years as most of the government bonds considered secure enough were ultra low or even negative (Germany!) yield, so the funds and endowments actually lost money due to inflation.
Not really, at least not for all of them. US college endowments, for example, invest into all sorts of things, from highly illiquid developing market investments to options, ventures and hedge funds.
A couple of times at MIT I saw an overview with a general allocation. I do not remember the details and was not particularly curious, but it certainly had "we can invest in whatever we need and want" flair. It got a >14% average annual investment return for the last 10 years, not something one could get with government bonds. You can look at the endowment reports of the Ivies; many publish some outlines every year.
Malinvestment is a problem at any large organization. I don't see any reason to believe this is nefarious or unethical. Nor do I grudge Wikipedia for being to incredibly efficient at running their core business that they so easily outraise their needs. Raising money to grant to other organizations is a very common model in the charity world so it's hardly unprecedented either.
I think a distinction should be made between a foundation and a charity. A foundation uses an endowment to fulfill the agenda defined by its charter on the society. Only a small portion of the foundation's capital is used each year, as the foundation aims to be a more or less a perpetual organization.
A charity generally uses all of its annual income on its "cause", and needs to constantly raise more capital. Wikimedia sure seems to behave more like a charity than a foundation despite its name. I find this regrettable because it is probably the only non-profit internet organizations whose fundraising volume would allow it to behave more like a true foundation if it chose so.
This is the root of the problem. Wikimedia rises too much money, and instead of putting it in a fund they "need" to find projects, programmes and - now apparently - outside organization that are in no way accountable to Wikimedia.
Instead of burning all the money they are donated, Wikimedia should first and foremost strive to secure the technical and financial continuity of the project by e.g. investing a lion's share of the donations to a distributing fund that provides perpetual passive income from e.g. stock market dividends. Only once that passive income surpasses the current and foreseeable technical running costs (hosting, bandwidth, project and engineering staff) should they start giving money to external organizations.