Wikimedia France/Fundraising letter March 2012
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Hi trustees and Sue,
This email intends to summarize Wikimedia France position with regards to fundraising and donation-processing.
We chose our position and our arguments to be public as it could be of interest to everyone interested in those issues from community members to chapter's board members and Wikimedia organizations employees.
First, as you may have noticed, we would like to propose to tackle donation-processing instead of payment-processing. During the Finance Meeting we noticed that the discussion was too centered on the technical side of local fundraising, i.e. payment-processing. We think this concept does not reflect the issues at stake. Reducing it to the payment-processing side is underestimating the meaning of a donation and the effort of dozens of people, both paid staff and volunteers, highly dedicated individuals working together to get enough funds and support for our movement.
That being said, we would like to state that the Finance Meeting allowed us to better understand the position and the concerns of Wikimedia Foundation's board of trustees. Back in August, we agreed with the need of better accountability. We also share the position that donation-processing does not create any entitlement over the funds raised. Acknowledging that there's no entitlement leads us to consider that no single organization should decide on how funds are disseminated throughout our movement. As a consequence, we strongly support the creation of the Fund Dissemination Committee, as discussed during the Finance Meeting and hope the idea will be set in motion during the Chapter Meeting.
Please find below our arguments regarding the forthcoming resolution on fundraising. We wrote it answering the questions in Sue's 23 February mail.
Wikimedia France has been dedicated since 2004 to support the Wikimedia projects and our Movement. Regardless of the decision made by the Board of Trustees, Wikimedia France will do its best to keep supporting the projects and the entire Movement. Should the Board of Trustees decide that Wikimedia France will do donation processing in the future, we will keep on our very best efforts to be more efficient, more transparent and more accountable. But should the Board decision be not to allow donation-processing in France, we will nonetheless do our best to support Wikimedia Foundation staff in its fundraising effort in France. In whatever situation, Wikimedia France will still be involved in fundraising.
However, we believe, in the interests of Wikimedia movement, that Wikimedia France should fundraise in 2012.
The main reason why we want to donation-process is because we believe in the subsidiarity principle. As a reminder, subsidiarity is an organizing principle that matters ought to be handled by the smallest, lowest or least centralized competent authority. According to this subsidiarity principle, the Wikimedia Foundation should only act where action of individual chapter (or other group/association/affiliate) is strongly lacking. Various criteria may be put forward to explain the principle, including the fact decisions and actions should be taken as closely as possible to the donor and should secure the greater freedom for the individual.
For 7 years now, Wikimedia France has done its best to support our movement. We also have been supporting the fundraising effort in France for 5 full years now. Most of Wikimedia France work has been achieved by highly-committed people. In return, Fundraising gave responsibility and empowered our members to use that money the best way possible. Thanks to that, we have been able to design and execute many actions, and still are, at really low costs and with unsurpassed motivation. Withdrawing that responsibility would doubtlessly weaken the empowerment fundraising provides to wikimedians.
Are there any specific local requirements or incentives that would make fundraising in France more difficult or more costly for Wikimedia Foundation?
Beyond the tax deductibility already available through Wikimedia France (2/3 of the money donated is tax-deductible, so a 300€ donation only costs the donor 100€ as ultimately they get 200€ back from the taxman), our fundraising costs are for now much lower than those of the Wikimedia Foundation. We are fully aware that participating in the coming years would generate additional costs (the security audit, the insurance, more staff...), but on the other hand, the technical improvements brought to the process will also actually increase productivity thus decreasing our office workload.
Besides, fundraising isn't really about who is payment-processing but about who is handling the relationship with our donors. Processing donations include a whole lot of interactions with donors that helps build trust and relationship. A foreign organization would be able to process donations but not with the exact same level of services, at least not at the same cost, and not with the same benefits.
- In 2011-2012, Wikimedia France proposed a dedicated phone line where donors could call to ask questions. Our fundraising project manager, Julien Fayolle, took care of answering the calls. A foreign organization, on a different time zone, would likely not provide the same level of service, at least not without the cost and pain of hiring a French speaking person in France to do so, not to mention the very high knowledge of issues Julien had.
- Each time Wikimedia France has been in contact with a donor, we tell him about our chapters, about Wikimedia France, a French organization of which he could become a member. Fundraising allows us to engage our donors much more and have them become volunteers. We believe this is a strong asset, one a foreign organization would not be able to provide (if only, in the case of Wikimedia Foundation, because it is a non-membership-based organization).
We are concerned about how the Wikimedia Foundation would intend to communicate to donors about the lack of tax deductibility. In France it is just self-evident that donations get tax deductibility, both for the 3X leverage and the associated good use of funds (external auditing is mandatory in our situation). So warning there is no tax-deduction would probably hurt, not only in donations lost but also in terms of reputation. And even with a big red warning, we expect some donors to feel mislead afterward. As you know in the past some donations from France went direct to the US and we have some experience of handling these complaints.
Now, would getting tax-deductibility statute for WM Foundation be a viable alternative? The level of requirements made mandatory by French authorities is such that we are not certain Wikimedia Foundation could easily comply. For example, any NGO launching a fundraising campaign in France has to make an official declaration at the local authorities ("préfecture"). This also assumes that the Wikimedia Foundation would choose to comply with French Law.
Does the "non-entitlement" create any new problems or impediments for Wikimedia France in donation-processing?
We do not believe not being entitled to retain money, or control its distribution, would create any new problem. As stated before, we don't believe we are entitled to donors' money. The main bump hole would be the fiscal requirement not to transfer more than 50% of our fundraised money to a single foreign organization. But the issue would be resolved with the FDC since we would be able to directly transfer some money to different organizations according to FDC granting decisions.
Practical example: in 2012 we will transfer ~50% of funds raised to Wikimedia Foundation for its core operation costs. That would not prevent us to transfer x% to a Wikimedia Chapter or specific project. In fact, we believe this would help improve trust and collaboration within the Wikimedia movement. Instead of having one central, "hub" organization banking all resources, we would have a network disseminating donations. Another advantage would be less or even no currency conversion fees.
With regards to transparency, this is a good opportunity for us to give you a snapshot of what already is in place and how Wikimedia Foundation could step in.
First, Independent Audit. As you might know, France experienced some rather bad issues with NGO's in the 80's and 90's. As a direct consequence, French non-profit organizations started to be heavily scrutinized and are now submitted to various obligations. For example, any French NGO's raising more than 153 000€ per year has to be audited by an independent "commissaire aux comptes". The "commissaire aux comptes" is hired by the General Assembly. To ensure his independency, the auditor cannot be changed for 6 years. Besides, the duties of the "Commissaire aux comptes" extend much beyond simply checking financial data and procedures; he has to certify the compliance of our organizational procedures with regards to the french law (mainly fiscal and labour laws).
Beside our Commissaire aux Comptes, we use the service of an external chartered accountant for our accounting. In 2012 we're in the process to have him check the account every 3 month instead of annually. We have started to discuss two things, the first one is to systematically translate into English our financial reports to help you understand our reports. Secondly, we started working with Garfield Byrd, about a standardized financial report that would help Wikimedia organizations to globally report the same data the same way.
Last but not least, the Wikimedia France treasurer has the legal obligation to ensure that our accounts are "true and fair" and incurs penal liability.
Just as on Wikipedia, the more eyeballs the best. We provide access for our members to all the non-confidential financial information. All board members also have a read-only access to bank accounts.
One more thing we are in the process of hiring our Executive Director (this should be effective mid-March), we are strongly considering setting up an Audit Committee. Design is still ongoing, but so far, we agreed the committee could include board members, employees, members and wikimedians outside Wikimedia France. We of course would be more than happy to grant Wikimedia Foundation a seat on that committee (and would like in return a seat on Wikimedia Foundation audit committee).
In Sue's letter she proposed that WMF would seat on Wikimedia France board. Unfortunately, this is not a viable option. Until 2007, Wikimedia Foundation had one seat on our board (held by Florence). But our statutes had to be rewritten to remove that obligation, following legal advice both from Wikimedia Foundation lawyer and our French lawyer (Olivier Hugot). This was done to ensure that no legal action could jump from one organization to another. We stand by these recommendations, but would reconsider it if you could provide any legal recommendation saying otherwise.
Regarding Wikimedia Foundation visiting Wikimedia France. We are more than happy to welcome fellow wikimedians to visit our office and quite naturally WMF staff or board members.
We cannot answer at this point about what would be the reaction of Wikimedia France should it not be allowed to donation-process. Wikimedia France is an independent association and its ultimate decision-makers are our members. We do not know at this point whether it would be legally advisable for Wikimedia France to sign the proposed Grant Agreement. Members might decide not to accept such a funding scheme. This decision cannot be made solely by the board and it would require time to fully assess the situation and get membership feedback on the matter.
Wikimedia Foundation Board of Trustees has a tough decision in its hands. The decision is made even harder by the fact the FDC is not yet set up and that it will obviously be some time before it be fully operational. Should Wikimedia Foundation board decide that Wikimedia France will not be allowed to donation-process in the future, we urge the board to delay this implementation for at least 12 months so that this delay can be used to ease the takeover by transferring our experience and knowledge to the Wikimedia Foundation fundraising team.
As explained before, fundraising is one way to help a chapter grow, to help members to feel empowered and accountable for the money they raised. It is also a way to engage donors into becoming Wikimedians. Local fundraising is also part of the solution to our editors trend issue, because it draws donors to become active for the Wikimedia Movement. Of course, not all chapters are there yet. But as said before, we believe that a decentralized donation-processing scheme will help us address long term Movement issues such as the editor decline.
Together, we have built the biggest knowledge repository in the world; we believe that we will successfully find the best system for fundraising and funds dissemination.
The WMFr Board (conseil d'administration)