Monday, December 29, 2008

Wikimedia Funding

[citation needed]If you visit Wikipedia today you'll be treated to a "personal appeal" from Wikipedia founder Jimmy Wales. This replaces the donation drive image that's been up at the top of each page for the last few months.

After reading the appeal, you may be left thinking that Wikipedia is struggling for funds. After all, its budget is in the realm of "less than six million dollars a year". That's a lot of cash.

Hang on, though. The Wikimedia Foundation is a not-for-profit organisation which employs a total staff of 23 people. Six million dollars? Is that really what it costs to run servers for the world's fifth-most-popular web service?

Let's check out the Wikimedia 07/08 Annual Report. And we'll be glad we did. It turns out that the Wikimedia budget is less than six million dollars - a lot less. Expenditure in 07/08 was only three and a half million dollars, which includes $140,000 for the Wikimania convention and $309,000 in salaries for Executive Director Sue Gardner and Deputy Director Erik Moller.

That's against income of a little over seven million in the same calendar year; in effect, Wikimedia picked up a year's forward operating costs.

Let's look at that in a historical context. At the start of 2006 Wikimedia's net assets totalled $270,000. I'm not missing a zero there. Over that year they raked in one and a half million and shelled out $790,000. By 2007 their net assets were at $1.7 million.

So they want six million in donations for this financial year. What are they going to do with it? Let's look at the annual report again.

1) They're pruning back Wikimania by about 40K. That's probably to do with reduced costs due to the next convention being in Buenos Aires but it's still a reduction in community expenditure.

2) They're expecting no significant increase in legal costs. I'm not sure that that's realistic - as Wikipedia expands you'd think that risk of legal action would rise exponentially, but whatever.

3) Gardner and Moller are getting a combined total increase in salaries of about $170,000.

4) The Wikimedia Board (including founder Jimmy Wales) are having their funding (including salaries) doubled.

5) Administration and technical costs increase by millions of dollars.

The total anticipated budget for next year sits at a little under six million dollars. Income remains stable at seven and a half million, based on an estimated community contribution of not the asked-for six million dollars, but just three million.

I, honestly, have no idea whether $2.7 million in technical expenses is a reasonable figure in order to provide something like Wikipedia. In the absence of expertise I'm going to assume it is. But this doesn't appear to be an organisation that's in shallow financial waters. It's an organisation that's doubling its executive salaries during a global recession.

This is, mind you, just a casual glance over the most shallow of financial documents. I'd assume that no one would take it as gospel, and I invite both educated lectures about Wikimedia financing and barely literate flames. If you think Wikimedia is in more need of money than I'm making out, feel free to start the debate in the comments below.


Gregory Kohs said...
This comment has been removed by a blog administrator.
Greg Tannahill said...

Gregory Kohs posted a comment here, which read in part:

Wow! Someone else has taken the red pill and discovered the truth! In my analysis over the past 2 years, I've found that the Wikimedia Foundation literally finds ways to spend the growing revenues that they manage to capture, and most often in ways that have nothing to do with building a more reliable, reputable free encyclopedia. Instead, I see lots of global jet-setting, lots of new and larger salaries, and (perhaps most notably) moving from economical St. Pete, Florida to one of the world's most expensive cities.

I shall leave you with a couple of useful links:

I've edited your comment, Gregory, to remove the paragraph relating to Erik Moeller. I don't know anything about him one way or the other, but I wasn't comfortable with hosting that particular debate on my blog. Thank you very much for the comment and the links.

Greg Tannahill said...

Also if you're hitting this post from Google, you should probably quickly glance over the follow-up post I did which puts this in, I think, some context.