Wikimedia Foundation Audit Committee/2016-04-26

Audit Committee Meeting

April 26, 2016 11:00 – 12:00 PDT (18:00 – 19:00 UTC)

Wikimedia Foundation San Francisco Headquarters

Participating by phone:

Alice Wiegand, Kelly Battles, Valerie Ball (KPMG), Katherine Maher, Maria Sefidari

Participating in person:

Lisa Gruwell, Ana Akhtar (KPMG), Tony Le, Jaime Villagomez, Amy Vossbrinck

Administrative Items

The agenda was reviewed for today’s meeting and the minutes from the March 22, 2016 meeting were approved.

Review of 990 and 990T

Valerie Ball (Senior Manager, Development & Tax Exempt Organizations , KPMG) and Ana Akhtar (Development and Exempt Organizations – DEO, KPMG) walked the Audit Committee through Forms 990 and 990T for the FY2015 tax year. WMF reports on 10 of the 16 schedules.

WMF reported approximately $17,000.00 in gross profit of unrelated business income for online sales (t shirts, pens, backpacks, etc.), hence the need to complete the 990T. The Foundation does not pay income tax on the unrelated business income due to the carry forward net operating losses (NOLs) generated by with the operations, which can be used to reduce the 2014 income tax liability.

After Audit Committee discussion, the Audit Committee requested that KPMG clarify one of the answers to the Form 990 questionnaire. Once clarified, the finalized drafts will be forwarded to the Audit Committee for their approval, and with their approval the Form 990 and 990T will be sent to the entire Board. The return is due May 15 and will be filed on time.

Endowment Update

Lisa Gruwell, Chief Advancement Officer, provided an update regarding the Endowment. She described the structure and strategy for the Endowment and the memorandum of understanding with the Tides Foundation. During the discussion, it was determined that documents previously shared with Board may not have been shared with the new members of the Audit Committee. This endowment proposal and its establishment is a major step for Wikimedia which will require a thorough fiduciary review prior to a final recommendation by the Audit Committee to the full Board. As a result, the Audit Committee requested that the documents be shared with them and that a follow-up session be scheduled between Geoff Brigham, Lisa Gruwell, Jaime Villagomez and the Audit Committee.

2016-17 Annual Plan Update

Jaime Villagomez, CFO presented the 2016-17 Annual Plan.

The revenue expectation for 2016-17 is $63,000.000.
The Annual Plan is designed to set a stable budget focused on investing in WMF’s strategic priorities of reach, communities and knowledge, while matching WMF’s spending plan with the revenue expectation.
WMF spends 68% on programmatic initiatives.
Growth in the area of staffing expenses of approximately 12% - Annual Plan is focused and resourced to fill a number of vacant positions, most notably: Executive Director, Chief Technology Officer, Chief Community Engagement Officer, and Vice President of Human Resources. The focus on resourcing the programmatic initiatives, including effectively resourcing the teams supporting the programs, was achieved by repurposing open positions in Admin areas, reducing non-movement specific conference and travel by 20%, and in the Tech Ops area by optimizing capital and expected big expenditures for data center upgrades next year.

The Audit Committee made inquires regarding the year over year changes to the plan including WMF’s use of comparing the Annual Plan to the prior year’s projection versus using the prior year’s budget - it was explained that the projection more fully reflected a more realistic viewpoint of the impact of the changes proposed for the Annual Plan especially since the projection is estimated to be several million dollars under the prior year budget.

Alan, Jaime and Tony were thanked for all of their hard work.

The timeline has set a Board vote prior and at the Wikimania 2016 Board Meeting.

Gift Policy – Board Approval

Report by Jaime Villagomez

A proposed revision was sent to the Audit Committee Members. The previous threshold for Board Approval (or rejection) of unrestricted gifts/donations was $100,000.00. That threshold for unrestricted has been raised to $250,000.00.

As context, in the last 3 years, there have been 8 donations above $250,000.00 and 14 between $249,000.00 and $100,000.00. WMF has never had to reject a donation based on its source.

All other provisions under the current Gift Policy stay the same including requiring Board Notice for grants with any prescribed purpose, restrictions or long term commitments regardless of dollar value (or any additional expenses associated with the grant not covered by gift itself); all donations of these types go to the Board.

This proposed revision was approved to go to the Board of Trustees for the creation of a resolution.

Selecting Advisory Board Members for the Audit Committee

Report by Kelly Battles

The process to select Volunteer/Advisory Member(s) for the Audit Committee is in process. These members are non voting members. An email was sent to the Community the first week in April. Top candidates will be interviewed by Kelly and Jaime in May, those selected will join for the July Audit Committee meeting. We will ask those who join the Audit Committee to sign a confidentially agreement.

Auditor Selection

Report by Jaime Villagomez/ Kelly Battles

Three firms have been interviewed and two finalists have been selected.

The Finance Team described the criteria applied to their recommendation: external and internal cost - including the impact of changing auditors and the sizable incremental required time from the Finance Team and others at WMF; and other qualitative factors. WMF has done projects with both finalists and Kelly has interviewed both firms. Both are solid candidates.

Regular Financial Reports

Regular financial reports will be provided to the Board as an essential update throughout the year – this will be an ongoing focus.

There was no Executive Session

Action Items:

Lisa will send the Endowment MOU, Operating Guidelines and Charter to the Audit Committee Members
Budget under runs for 2015-16 will be discussed in a separate meeting.
Kelly Battles will send the information regarding those who have expressed an interest in becoming Audit Committee Advisors to the Audit Committee Members.
Jaime Villagomez and Kelly Battles will interview the candidates for the Audit Committee Advisory Members and make recommendations to Audit Committee.
Geoff Brigham, Kelly Battles, Katherine Maher and Lisa Gruwell will meet off line for further discussion regarding the Endowment.
Jaime Villagomez to notify Stephen LaPorte that a Board Resolution is needed for the revised Gift Threshold Policy.
Jaime Villagomez will set a meeting to discuss the budget underspend for this fiscal year.

Respectfully submitted: Amy Vossbrinck