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Comment by Randor | Hacker News Reader

Well,

I'm not seeing any problems. The Annual Report is available here: https://wikimediafoundation.org/about/2018-annual-report/fin...

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From my perspective:

- What is the $7 million for "Professional service expenses"? That's 8% of the budget and I've got no clue what it might have been spent on. Salaries, travel expenses and depreciation is already accounted for.

- What is the $7 million for "Other operating expenses"? Again 8% of the budget in "other" that doesn't include something that is depreciated and doesn't include travel?

- What is the $2.7 million for "In kind service expenses"? To me that sounds like internal "funny money" where you are paying for one service with another service you perform. But how are they calculating the loss and what account is that money actually coming from?

I worry that millions of dollars are being spent on consultants who are essentially just pocketing donations.

Also, I'd really like to see the operating costs broken down because it's impossible to see what's going on here. You've got $3 million in depreciation, but what is that paying for? Desks, computers, telephones? Do they pay rent, or do they own a building?

The thing that's frustrating is that there may be nothing at all wrong. For example, I can see $38 million for salaries and wages, with 300 employees. But where are the other expenses? Is that the "other expenses" section? If so, how hard would it be to break down that cost for me so that I can understand what the money is being used for?

While I disagree with the approach the author of the page is taking, I completely agree that their financial statements are as clear as mud. If this was a company I was thinking of investing in, I would give it a really wide berth based on the terrible financial reporting. As a non-profit operating on public donations they should be doing a much better job.

Depreciation is the cost that comes from the fact that the assets that they have purchased lose value over time.

Sounds of things like: trips to conferences, buying SaaS subscriptions/software licenses, consultants (for the first one), etc etc

The latter two of your questions are answered in https://meta.wikimedia.org/wiki/Wikimedia_Foundation_reports... .

>"In-kind service revenue” includes goods and services that the Wikimedia Foundation would normally pay for, but have been donated to us at no charge, such as bandwidth and hosting services and pro-bono legal services. Further detail is available in ...

> "Other operating expenses” include expenses for facilities such as rent and office and non-office supplies, insurance, annual staff meeting, recruiting, staff development, property taxes and Wikidata project funding.

You can find a more detailed audit report at https://upload.wikimedia.org/wikipedia/foundation/6/60/FY17-...

Thanks for that. I was scratching my head at the "in-kind service revenue". For others that were likewise confused, there is a line item on both sides: it's income and expenses and cancels out. So that makes sense.

The detailed audit report indicates that rent is about $1.5 million. The rest is essentially computer purchases.

I'd still like to see a better explanation of the professional services. But it definitely makes more sense.

I suspect that the majority of of professional services spending is on accountants and lawyers. The Independent Audit report itself likely costs a 6-figure sum. Depending on how much accounting is done in-house vs outsourced, some of it might also fall into professional services.

The bulk of it is likely going to lawyers. A lot of the in-kind donations fall into the same bucket:

> In-kind service revenue and expenses recorded in the statements of activities consist of contributed legal services. The amounts of specialized contributed legal services as revenue and expenses are $2,748,512 and $156,191 for the years ended June 30, 2018 and 2017, respectively. The value of contributed internet hosting services for the years ended June 30, 2018 and 2017 are $32,722 and $58,390, respectively.

Professional Service Expenses will be the lawyers, accountants, auditors, etc. That adds up quickly. I’m actually a bit surprised it’s not higher. It makes me wonder what percentage of the day the GC spends giving legal advice vs. haggling with outside counsel about billing.

When you run a large organization you can't exactly nickel and dime every line item. There's a cost to running a business. There's overhead for every employee, usually 25 to 30 percent of their gross pay. That doesn't include office space.

Me neither. Sounds like a guy with a grudge.

Organizations grow and morph over time. Assuming Wikipedia should be a barebones hosting platform like it was at it's start is probably dreaming.

Yep,

It appears that their biggest expense is the $38,597,407 in salaries distributed to ~350 employees. This makes the average salary $110,278 at the Wikimedia Foundation. I don't really have anything negative to say about that.

However I guess you could question why they need 350 employees. So I looked at the projects they are currently working on:

https://meta.wikimedia.org/wiki/Complete_list_of_Wikimedia_p...

I can see the argument for say 175 employees and a reduced scope, while building up an endowment to better weather down-years is better for WMF's long-term goals, but there's also the risk that reduced spending would cause reduced donations.

> but there's also the risk that reduced spending would cause reduced donations.

Reduced spending and reduced donations would be a good outcome for Wikipedia readers (especially in the long term). Lower running costs allows putting more current revenue towards that endowment, and means the future is a bit more sustainable in less favorable economic cycles.

Donations also don't exist in a vacuum; the best use of donors' limited money is probably not WMF burning a pile of it.

I'd encourage, for example, https://www.givewell.org/charities/top-charities in place of WMF giving.

I agree with everything you say, but presumably those in charge of the WMF believe their goals to be of sufficient importance, so arguing to them that they shouldn't spend money on those goals is silly, but one should rather couch things in terms of how best to achieve those goals.

I'm not arguing to WMF; I'm hoping to raise awareness among donors. If the WMF miss their fundraising targets due to donor displeasure, they have to come around sooner or later. Or who knows, maybe they'll run the thing into the ground. I hope not.

The worst part of it for me is that they advertise it on Wikipedia as if wikipedia were going out of business. When in reality, if you give $1.00 to WMF, ~$0.03 goes to server expenses. Wikipedia is their cash cow that funds a ton of random pet projects and a dozen or so executive staff (which seems huge for a 300 person organization).

If they were honest about that in their fundraising, I think they'd see flat or down revenue. I dislike the dishonesty used to solicit donations and then use them somewhere else. It feels similar to a con.

Is that salary, or cost of employees? I would assume that gross salaries are around half of what's spent on an employee.

From the “update” sections:

> [The 2016-2017 report] has numbers for "Grants and awards" and "Professional service expenses" but there is no obvious way of finding out the details of those expenditures

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