Wikipedia:Wikipedia Signpost/2022-05-29/Opinion

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Opinion

The Wikimedia Endowment – a lack of transparency

Andreas Kolbe is a former co-editor-in-chief of The Signpost and has been a Wikipedia contributor since 2006. The views expressed in this opinion article are those of the author and do not necessarily reflect the views of The Signpost. Responses and critical commentary are invited in the comments section.E
A Wikimedia email encouraging a donor to make a will, with the Wikimedia Endowment as a beneficiary.

In 2016, the Wikimedia Foundation established the Wikimedia Endowment, designed to "serve as a perpetual source of support for Wikipedia and the Wikimedia Foundation". The Endowment's target was to raise $100 million by 2026, and it has been hosted as a "Collective Action Fund" at the Tides Foundation.

Financially, the Endowment appears to have been a runaway success, far exceeding communicated expectations.

Hosting by the Tides Foundation was intended to be a temporary arrangement, and the WMF has promised for more than five years now to transfer the Endowment to a standalone 501(c)(3) organization, which would then be legally required to make its own Form 990 disclosures of financial data each year – revenue, expenditure, salary costs, highest-paid contractors, grants, etc. – in line with the minimum standards of transparency for US non-profits.

On 29 March 2017, for example, Lisa Seitz answered community questions about the Endowment on Meta as follows:

"The WMF board has already given us the direction to move it into a separate 501c3 once the endowment reaches $33 million. ... WMF's Executive Director is supportive of moving it to a new 501c3 once it reaches $33 million."

But as the Foundation proudly announced last September, the Endowment passed $100 million in June 2021, five years early. The $33 million mark came and went years ago. The move to a standalone non-profit never happened.

Fast forward a few years, and WMF staff were still making the same sorts of public statements about moving to a 501(c)(3) soon. As Endowment Director Amy Parker and Director of Development Caitlin Virtue told me on Meta in April 2021:

"No grants will be made from the Endowment until its total revenue surpasses $100 million. Updates on funds raised are posted to this page. We are in the process of transitioning the Endowment to a new US 501c3 charity, after which it will begin making grants and will publish its own Form 990. ... As we approach the $100 million funding milestone, we are in the process of establishing the Endowment as a separate 501c3. ..."

"We are in the process of establishing a new home for the endowment in a stand-alone 501(c)(3) public charity. We will move the endowment in its entirety to this new entity once the new charity receives its IRS 501(c)(3) determination letter."

This was more than a year ago.

Promises, promises ...

Note that the promise to post updates on funds raised is no longer kept. The last update on Meta as of this writing was to say that the Endowment had surpassed $100 million in June 2021. There has been no update on funds raised since then. We, and donors around the world who are asked to contribute, or to include the Wikimedia Endowment in their wills, don't know if the Endowment now stands at $120 million, $150 million, $200 million, or higher ...

The Wikimedia Foundation also refuses to disclose how much money it has paid the Tides Foundation (incidentally, an organization the WMF's General Counsel Amanda Keton used to head before she moved to the WMF in 2019) for its administration and management of the Endowment since 2016, or indeed whether – and how much – any other consultants, law firms, advisors, staff, or other help have been paid from Endowment funds.

Asking about these matters yields the terse response:

"As a matter of practice, we do not disclose specific terms of contracts with our vendors."

We also don't know whether grants have already been made – as Amy Parker said could happen upon reaching the $100 million mark – nor do we know who may have received those grants. There isn't a lack of precedent: we have already seen millions of dollars of Wikimedia money being given to outside organizations via Tides without disclosure until months later.

Matters would be considerably more transparent if the Wikimedia Foundation had done what it said it would do years ago: transfer the Wikimedia Endowment to a standalone non-profit publishing its own annual Form 990, with a binding commitment to follow the guidelines of the Uniform Prudent Management of Institutional Funds Act (UPMIFA).

What is the delay? Is the Wikimedia Foundation having trouble getting the IRS to recognise the Endowment's qualifications for non-profit status? When will we see a Form 990? Will the Foundation make a retrospective declaration of all costs and expenses since 2016, if the Endowment is ever transferred to a 501(c)(3) non-profit?

How about voluntarily publishing properly audited financial statements for the Endowment, covering the period from 2016 to today?

As long as there is no such transparent accounting, anybody donating funds to the Wikimedia Endowment is effectively throwing money into a black hole.