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Wikimedia Executives Receive Six-figure Golden Handshakes (theregister.co.uk)
Andreas Kolbe writes: The Wikimedia Foundation's (WMF) recently released Form 990 shows that the organisation has developed a practice of handing outgoing managers six-figure severance payments, The Register reports. The foundation, which relies entirely on unpaid volunteers to generate the content of its websites, has taken around $300 million dollars over the past five years through fundraising banners placed on Wikipedia. The WMF says it is "committed to communicating with our volunteers, donors, and stakeholders in an open, accountable, and timely manner", but has long been criticised for providing little transparency on the salaries of its executives, limiting itself to the legally required Form 990 disclosures that only become public two years after the event.
Actually, internet hosting costs them only $2 million a year. See page no. 3 in this document. Total support and revenue, for comparison, stood at $81.9 million last year. So 2.5% of the fundraising income is spent on hosting.
WMF operates their charitable, non-profit business in the same world as everyone else. Their headquarters is in the USA and their charitable status does not exempt them from employment law. Employment law dictates severance pay on an increasing scale based on a number of factors, including:
1) the wages at time of severance (executives have high wages);
2) the seniority of the employee (executives are most senior); and
3) the age of the employee (executives tend to be closer to retirement).
Executives get large severance payouts awarded by the courts because of their age (fewer working years left) and the scarcity of executive jobs (it takes longer to find similar work). At the same time, executives have the means to take severance pay disputes to the courts.
WMF would be foolish to deny severance packages commensurate with those awarded by the courts. Underpaying would land the WMF in court where further donation monies would be needlessly exhausted.
Looking at what was actually paid, I would not classify these as golden parachutes. The amounts would have to be closer to seven figures. These severance packages are simply the cost of doing business.
Much the same traffic? Does it have much the same content?
Every article retains its full history, from its creation to present state. Every edit. That means their database must handle an enormous amount of data, ever-growing, edit after edit. It never changes; it adds.
In 2007, Wikipedia's english site had 1.5 million articles; in 2015 it had 4.6 million. That's three times as many individual articles, with every edit to every article stored forever. The number of pieces and sheer amount of data stored and indexed is a complex, temporal function. For the number of articles, it's (time x rate[article creation]); for the number of pieces of data created, it's (time x rate[edits per article] x articles). Because the number of articles is increasing over time, you're looking at an exponential growth function. Note that it's exponential and not geometric because the rate of edits is related to a polynomial exponent of t, since the number of edits per time increases with time thus (t*(t*r)).
WMF also runs Wikinews, which carries news articles in dozens of languages. It runs Wikipedia in many languages all over the world. Every time it adds a new language, there's a new regional user base. If each language Wikipedia grows as above, then you have cubic growth until the rate of new Wikipedia languages slows.
The volume of data managed, the computer power required to manage that data, back-ups, administration costs, all of that is growing. It's growing faster every day.
As for the "unstable donation-based revenue stream", revenue has been on the up and up for every year of the foundation's existence
As per IRS NPO rules, the organization must show stability in the face of reasonable risks. Revenue streams from donations are not predictable; a sudden recession can slow the revenue stream while not slowing the expenses. As such, Wikipedia is legally required to maintain cash reserves some degree beyond their yearly expenses. When those expenses increase, they need to carry bigger cash reserves.
It looks to me the spending is not driven by need, but by the availability of cash, including cash to pay managers the payments disclosed in the Form 990
Out of $83 million, managers get less than $1 million. Product manager ~$100k, software engineer ~$144k. Management? Executive director $344k; General Counsel (lawyer) $258k; Deputy Director $302k; VP of Engineering $282k; Chief Operating Officer $250k. The executive compensations total about $2 million.
They also spent $3 on a post-it note pad, because that's included in spending of course.
whenever revenue has increased, spending has increased proportionally
From a legal perspective, IRS NPO rules require retention of a certain risk buffer, as well as limits to the amount of cash holding. You can't have revenues that much larger than your expenses.
That's not why spending increases with revenue, though, is it?
Revenue comes from donations. WMF gets donations from users. Users only donate so much. More users means more donations--also, more load, more costs in running the service. Being driven entirely on donations from people looking right at your site, revenue would be directly tied to how much load is on your site and, thus, the cost to support that load, wouldn't it?
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They deserve it, honestly.
Since they are not transparent about what they spend the money on, you don't know if they deserve it or not. All you know for sure is that WMF's foundation thinks it is best to obscure the truth.
There are several organizations that rate charities. You should do your research before you donate.
At the very least you should do this. But charity ratings have serious limitations. They are limited mostly based on certain standardized transparency criteria - budget reporting and the like, to ensure that the money is not just being deposited in someones private bank account, for example. Wikimedia has a high charity rating, which puzzled me since I could not find out what they were actually doing with the money they bring in. Digging a little deeper, I concluded that Jimmy has broken new ground in "charity engineering", working out how to structure the organization to get a high rating - but rendering those standards absolutely meaningless.
Consider all the money being spent on "engineering".
Is any meaningful engineering actually being done? Where is the value being added? What deficiencies in Wikipedia were that have been remedied by this "engineering"? What enhancements? Since this is charity for educational purposes, maybe all the "engineering" could be put on Github, or open sourced like for-profit companies are know to do. And then they could leverage volunteer developers like Linux and other open source projects do, and make Wikimedia's funds go farther.
If that "engineering" even exists.
But if instead fat "engineering" salaries are being paid out to FOJ ("friends of Jimmy") for doing nothing, the charity rating organizations would not know or care, and would (and do) give them high marks simply by providing that line item in public reports. And as the business with the 990 forms shows, Wikimedia only seems to "care" about transparency when it is just checking off the list of things that charity raters use for compiling scores.
Looking at Wikimedia's "roadmaps" that they share over the last several years a key point are plans for 20% revenue increase every year, year after year. No rationale is offered for why this aggressive growth is "needed". This is a plan for an aggressively expanding start up, not a charity.
Many, many non-profits are not what they seem. They divert huge amounts of money into salary, perks, and fund raising, while only a small fraction is spent on the supposed beneficiaries. I once visited the United Way offices in Alexandria VA, and marveled at all the beautiful Italian marble tiling. How many children went hungry to pay for that?
The United Way has long disturbed me. It is not really charity itself, it is a "bundler" for other charities. I have worked at companies where United Way was the quasi-official charity for the company, which sponsored contribution drives, and pressured employees to donate. In recent years Untied Way has paid incredible salaries to its CEO, at a time of poor organizational performance.
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