Wikimedia Foundation Annual Plan/2024-2025/Financial Model

Continued modest budget growth

This time last year, we found ourselves in an uncertain environment with expected flattening revenue growth into the future. Our projections indicated that, for a range of reasons, fundraising online and through banners would not continue to grow at the same rate as in past years.

As a result, we reduced internal expenses and found cost efficiencies in some areas to fund increases in other areas, including funding increases in grants and maintaining funding for Product & Technology.

As we plan for 2024–2025 and beyond, we expect to continue to contend with a period of economic, socio-cultural, and technical uncertainty. Several external trends we noted this year are ongoing, and new ones are emerging. While inflation appears to be moderating in some places, it remains elevated in others.

Planning our future income streams and becoming more cost-efficient

James Baldwin and Megan Hernandez

In 2024-2025 we are further developing our multi-year financial models to prepare plans and scenarios ready to respond to a changing and uncertain environment.

Our current modeling suggests that we can expect modest revenue growth of about 5% in 2024-2025 and by +/-5% for the following two years.

We have several long-term initiatives underway to help mitigate this risk and diversify our revenue streams, including the following.

We are enabling the essential role of the Wikimedia Endowment in growing long-term support for the projects.
We are continuing to assess Wikimedia Enterprise's ability to improve readers' user experience beyond our websites while simultaneously having very high-volume reuse companies financially support our movement.
We are testing new fundraising channels that have the opportunity to generate revenue.

On the expense side, following our work to reduce expenses last year, we are continuing to slow the rate of growth for the Foundation itself while increasing financial resources that support other movement entities. We are finding ways to become more efficient and reduce our ongoing costs. This year we will be downsizing our office space which will reduce our expenses by $500k in the Fiscal Year (FY) 2024–2025 and over $1M in future years. We are also identifying opportunities to streamline our operations, negotiate recurring contracts, and eliminate inefficiencies in how we work in order to become more cost efficient.

Our most significant investment is in our staff, and the most important decision we make is deciding what to spend our time working on. It is our staff who operate our data centers to keep a top 10 website running, build features and functionality to deliver free knowledge world-wide, provide legal defense for our people and projects, provide support to our volunteers and affiliates, and much more.

We built this multi-year model to maintain our reserve around its current level and within the Board's set policy of 12-18 months to position the Foundation well to face the expected continued uncertainty. We will also stay in line with non-profit financial best practices in areas such as the percentage of budget spent on programmatic expenses.

Revenue Strategy

Megan Hernandez

2024-2025 Revenue Objectives
Continue to improve the fundraising methods that have driven our past growth in order to meet our current needs.
Invest in longer-term strategies that will provide increased revenue in a future where Wikipedia content is primarily consumed off our platform.
Make improvements to our fundraising infrastructure to increase our efficiency.

Over the last decade, the Wikimedia Foundation has been building a robust and diversified revenue strategy that anticipates significant changes ahead for how people consume Wikipedia content. We were able to grow revenue for the movement over the last decade, driven largely through donations made by our readers via banners on Wikipedia. As the Internet has evolved and people are increasingly consuming Wikipedia content off our platform, it became clear that our revenue strategy could no longer primarily depend on donations made on Wikipedia. We began developing new revenue channels that were more resilient to changing readership trends: Wikimedia Enterprise, the Wikimedia Endowment, and a growing Major Gifts program. However, reader donations – those that come from 7.5 million people around the world and average around USD $11 – remain a vital part of our revenue mix and there is still potential to grow these channels that are so critical to our success in the near and medium-term. In FY 24-25, we will continue to optimize the reader donation channels that have been the bulk of our revenue in the past, while also further developing the long-term revenue channels that are likely to propel our revenue growth in the future.

Product and Revenue "dance partners"

Megan Hernandez In last year's plan, we introduced the concept of Product and Revenue "dance partners" to explain how Product and Revenue strategies are interconnected and rely on each other. The changing online environment and a future where readers may no longer primarily read content directly on Wikipedia requires us to lean further into this concept. We are building a unified Product and Revenue strategy for long-term resilience, especially as it relates to Wikimedia Enterprise and how Wikipedia content is reused.

Near and Medium Term Revenue Strategies

Megan Hernandez In the year ahead, the Foundation will raise $188.75 million for the annual fund, five percent more than our prior year budget. We will do this primarily through a combination of systematic improvements to banner and email fundraising. We will also improve the donor experience to further develop monthly recurring giving, and other growing channels. These improvements are aimed to improve the way we reach new donors, continue to retain them year-over-year, and build relationships for longer-term support and engagement in the movement.

The Foundation will invest in launching new fundraising channels that reach our readers off platform, including direct mail and SMS, to diversify revenue streams for a more resilient fundraising program. We will continue to explore starting fundraising campaigns in additional countries to give more readers around the world the opportunity to support our mission.

Over the past year, the Foundation and volunteer communities have worked together to include our various stakeholders in asking readers to support our mission. In the year ahead, we will further engage the communities in fundraising strategy and collaborate with key stakeholders to enable effective fundraising. Fundraising must strike the right balance in maximizing revenue and the impact of our fundraising activities on readers and volunteers.

Improvement to our Fundraising Infrastructure

Megan Hernandez The Foundation will also improve our fundraising infrastructure to make our current and future fundraising efforts more effective and efficient. This includes improvements to our payments and other technical fundraising infrastructure. As the fundraising program evolves, we will evaluate, iterate, and adapt our systems and processes to ensure maximum impact for our efforts.

Long-term Revenue Strategies

Wikimedia Endowment

Caitlin Virtue

How does the Wikimedia Endowment work?

Give: Gifts to the Endowment form the fund's principal (Principal)
Grow: The principal is invested and the fund grows over time (Earnings)
Grant: A portion of the investment earnings are granted to support Wikimedia projects - forever (Grants)

Launched in 2016, the Wikimedia Endowment is a U.S.-based 501(c)3 charity providing a permanent safekeeping fund to support the operations and activities of the Wikimedia projects in perpetuity. As a financial endowment, its principal (or "corpus") value is intended to be kept forever intact, while a portion of the fund may be spent each year. While gifts to the Wikimedia Foundation's annual fund are spent on immediate needs in the current fiscal year, gifts to the Wikimedia Endowment are never spent. Rather, they are invested alongside other endowment gifts so that they can generate returns year after year. Over the long term, every gift to the endowment will ultimately return more funds to the Wikimedia projects than if the donor had made a single gift to the annual fund. The Endowment is a vital way that we are increasing the financial sustainability of our Movement. The Wikimedia Endowment Board has authorized a second multi-year fundraising campaign that will allow the endowment to return even greater support for Wikimedia projects for years to come.

Legacy Giving

Caitlin Virtue

Legacy giving is a way of collecting pledges for future donations, most commonly through gifts in wills and beneficiary designations. The Wikimedia Endowment has partnered with FreeWill, a free online tool to create a legal will in the United States, to make it easy for those who wish to make a legacy gift to the Endowment. We will also continue to mature our legacy giving program by adding new ways to give and increasing our outreach to potential future legacy donors. We aim to build a pipeline of legacy giving commitments that will come to fruition in stages over the coming years. By 2050, legacy gifts could be the primary funding source for the Endowment.

Grants to support the Technical Innovation of the Wikimedia Projects

Caitlin Virtue The Wikimedia Endowment, still in its early years, is already providing financial support to the WIkimedia projects. In January 2023, the Endowment Board approved its first grants to fund technical innovation on Wikimedia projects, to ensure they stay relevant in a rapidly-changing technology landscape. The Wikimedia Endowment Board approves grants each year in accordance with its spending policy. More information about the Wikimedia Endowment's plans for the coming year will be released in July 2024 in its own annual plan.

Wikimedia Enterprise

Lane Becker Wikimedia Enterprise is a commercial service available to high-volume re-users of Wikimedia content. It provides improved data access, customer support, service level guarantees (SLAs), and professional consulting to high-volume re-users of Wikimedia content. Wikimedia Enterprise exists to serve three interrelated Foundation and Movement goals:

Revenue: As readership of Wikimedia projects shifts from visits to our websites to various third party environments, Wikimedia Enterprise is intended to replace at least some of the revenue lost from fundraising channels that depend on direct communication with readers, such as fundraising banners. Wikimedia Enterprise provides a consistent and predictable way for large scale re-users of Wikimedia content to reinvest back into the movement a meaningful portion of the benefit they derive from our data.
Resource Management: Commercial re-users of Wikimedia content often access Wikimedia servers at a significantly higher rate than non-commercial re-users, placing a larger burden on our computing resources than other re-users or website visitors. Wikimedia Enterprise shifts the burden of supporting high-intensity usage and site-scraping by third party reusers from our primary service onto the Enterprise platform, allowing Wikimedia resources to be more equitably distributed to all visitors to our content.
Data and Understanding: Through qualitative and quantitative data collection, Wikimedia Enterprise has begun to develop a better understanding of the contexts in which Wikimedia data is used outside our own websites. This data collection provides the Enterprise team with necessary insights needed to develop commercially desirable features, functionality, and data formats to better support content reuse. It also helps the Foundation and the Movement better understand all the ways and environments in which Wikimedia content is put into the world via third party re-use.

In the coming year, Wikimedia Enterprise will deliver two significant updates to drive future revenue growth:

Embracing the AI marketplace as a growth engine: Though initially targeted at the search engine market, recent growth in the Artificial Intelligence (AI) market provides a major opportunity for Wikimedia Enterprise. The AI marketplace, much like the search engine marketplace, requires consistent, up-to-date access to Wikimedia data on a regular and recurring basis.
Wikimedia data is used extensively by every major and minor player in the AI marketplace, and our data plays a significant role in all stages of AI development: in the training process, which is used to generate the core AI models; in post-training fine-tuning of these AI models; and via the expression of these models in tools such as generative chat, like ChatGPT. Commercial opportunities exist with both AI companies building foundational AI tools as well as companies using these tools to develop AI-powered business models.
Creating a free tier of our service to drive usage and purchase: At present, access to Wikimedia Enterprise for anything beyond lightweight trial usage requires entering into a signed contractual agreement with our team. This is a significant barrier to entry when it comes to using the service.
In the coming fiscal year, Wikimedia Enterprise will launch a "software-as-a-service" model, which will provide a consistent and highly usable free tier of access to the Wikimedia Enterprise platform. Anyone who signs up for a Wikimedia Enterprise account will be able to build their external service on top of the Enterprise APIs at no cost, as long as they stay within stated usage limits. This will provide a clear ramp to payment for those who need to exceed these limits. This approach should open up access to a much wider range of possible uses for the Wikimedia Enterprise platform, some percentage of which will expand into meaningful commercial relationships.

For the fiscal year (FY) 2022-23, Wikimedia Enterprise earned 3.2 million dollars in revenue, as detailed in the team's most recent financial report.

Culture of Philanthropy and Expanding Major Gifts

Caitlin Virtue We have been working to grow a culture of philanthropy at the Foundation. In this culture, all staff understand our commitment to financial sustainability and that each of us is an ambassador for the organization's service. In the coming year, we will create more opportunities for staff to engage in actions supporting accountability and connection to donors. Staff across the Foundation will embrace donors as key stakeholders in fulfilling our mission and take actions to serve this audience including sharing impact stories, participating in public awareness campaigns, attending donor-awareness trainings, and attending donor meetings and events. We will add an item to each Director-level, Vice President, and C-Team job description detailing their responsibilities about ambassadorship for the Foundation and our movement to donors and the general public.

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