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Wikimedia Endowment financial statement published

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By Andreas Kolbe

Wikimedia Endowment financial statement for 2016–2023 published

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Following discussions at User talk:BilledMammal/2023 Wikimedia RfC and elsewhere (1, 2, 3), the Wikimedia Foundation has published a "Wikimedia Endowment Financial Statement" covering the period from 2016 to June 30, 2023 (pictured, click to enlarge). This is the time period during which the Endowment was held by the Tides Foundation.

The Foundation has thus fulfilled Jimmy Wales' promise to increase the Endowment's transparency (see previous Signpost coverage).

The statement was accompanied by the following summary:

This is the financial statement for the Wikimedia Endowment for its first seven years when it was housed at the Tides Foundation, an organization that helps launch nonprofit and philanthropic organizations. During this time, the Wikimedia Endowment had $15 million in investment results (12.5% of total gross revenue that was under management at Tides from inception to June 30, 2023). The Endowment paid $1.5 million in total management fees to Tides over seven years (1.29%) in addition to $132K (.11%) in payment processing fees, bank fees, and transaction fees. In 2023, the Endowment made $4.5 million in grants including $3.2 million to support technical innovation of the Wikimedia projects and a $1.3 millon grant to the Wikimedia Foundation as reimbursement for expenses the Foundation incurred serving the Endowment in FY2022-23 as it transitioned to a 501(c)3. The Wikimedia Endowment moved to an independent 501c3 charity in July 2023.

A look at the figures shows that the Endowment suffered significant unrealized losses (almost $22 million) in 2022. The investments held by the Foundation itself also suffered that year (see Wikimedia Foundation financials).

To put this in context, readers should bear in mind that 2022 was one of the worst years for the financial markets in modern history. As Fortune reported:

The U.S. stock market fell a little more than 18% in 2022, while the aggregate U.S. bond market was down 13%. Ten-year Treasuries were down more than 15%, while long-term government bonds crashed more than 30%.

According to Meta-Wiki, the Endowment is currently valued at $119 million. Documentation of the Endowment's policies and charters is available on the Wikimedia Foundation Governance Wiki; there is also a Phabricator task aimed at setting up an Endowment namespace on that wiki to house all related documentation. – AK

Knowledge Equity Fund: 6 October community call

The Wikimedia Foundation's Equity Fund Committee has announced a community call concerning the upcoming third round of grantmaking from the controversial, $4.5 million Knowledge Equity Fund that provides grants to charitable and advocacy organizations. Concerns have focused on the fact that Wikipedia donors may not be aware that the Wikimedia Foundation spends several million dollars funding organizations outside the Wikimedia movement (see previous Signpost coverage).

The announcement posted on Wikimedia-l on 23 September read as follows:

With the announcement of the Knowledge Equity Fund's round 2 grantees, we've seen a lot of questions and feedback about the Knowledge Equity Fund, how the Committee works and how the work of the grantees will contribute to the projects and to the movement. To help answer these questions, the Knowledge Equity Fund Committee will host a community conversation on Friday, October 6, 2023 at 1400 UTC to hear ideas, concerns, and to answer questions. The Committee would also like to hear ideas for how the fund should be used in the upcoming third round of grantmaking.

To register for this conversation, please email us at EquityFund(a)wikimedia.org You can also send us questions beforehand. The call will be held in English and we will have interpretation in Spanish; if you would like interpretation into other languages please let us know. If you're not able to attend, we will also share notes and a written list of Q&A after the call.

Thanks,

Nadee Gunasena, on behalf of the Equity Fund Committee

– AK

Brief notes

  • New administrators: The Signpost welcomes the English Wikipedia's newest administrator, User:Hey man im josh. His RfA passed 315/3/0.
  • Articles for Improvement: This week's Article for Improvement (beginning 2 October) is The arts. It will be followed the week after by Superstition. Please be bold in helping improve these articles!
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If I understand correctly, the claim there is that during the investment time period, the S&P 500 went up 13%, while the Wikimedia Endowment through Tides investment went down by 8%. Is that the claim? If that is the claim, does anyone have enough financial expertise to know what is normal / safe / expected for a nonprofit investment strategy? Bluerasberry (talk) 23:02, 3 October 2023 (UTC)[reply]
No, here are the salient parts:
Fiscal year ending June 2017 2018 2019 2020 2021 2022 2023 Mean return
WMF Endowment ESTIMATED* return on investment 7.1% -8.0% 18.7% 11.6% 14.7% -17.9% 9.4% 5.1%
Median Nat'l Assoc. of College and University Business Officers endowment returns 12.5% 8.0% 5.1% 1.8% 30.1% -8.7% TBD 8.1%
S&P 500 net total return 17.1% 13.7% 9.8% 6.9% 40.1% -11.0% 19.0% 13.7%
 *assuming half of all contributions were realized on the first day of the fiscal year, and the other half on the last day.
I don't think it's outside typical values, but I'm no institutional investment expert. Sandizer (talk) 00:39, 4 October 2023 (UTC)[reply]
  • 22 million lost in 2022? Why not just put the endowment in the bank and stop gambling on the markets? As I've said elsewhere, am totally in favor of WMF having as much money on hand and "banked" as possible, and hopefully quite a few billionaires will donate 25 to 100 million each. Hopefully they will also stipulate, as the WMF ought to be doing on its own, that projects put forward by the Wikipedia community, Commons, and the rest of the volunteer core that the public actually believes that they are funding, will be given, and decide among themselves, how to spend 1/3rd of all donations. Randy Kryn (talk) 23:23, 3 October 2023 (UTC)[reply]
    They did not actually lose 22 million. Its misleading to think of an unrealized loss in money that is invested in the long term as being the same as actually losing money. Bawolff (talk) 15:40, 4 October 2023 (UTC)[reply]
    In the short term, "gambling on the markets" is a bad idea. For long term investments such as this, it's the prudent choice; financial markets have a long history of rising value, even if occasionally impacted by recessions and crises, whereas cash in the bank will lose value over time due to inflation. — The Anome (talk) 08:04, 5 October 2023 (UTC)[reply]
    Generally, things like index funds have had a very good and consistent rate of return, because they represent the whole stock market, which in turn represents the whole economy (or at least the whole economy as can be measured and quantified by finance). Of course, there are incidents (1929, 2008, etc) in which every single stock eats it at the same time, but in these cases, the economy as a whole also eats it; in 1929, for example, I don't think there's any place you could have put money where it wouldn't have been substantially affected by the Depression. I believe, although I'm pulling this out of my hat, that the historic rate of return on index fund investment has been somewhere around five to seven percent. Meanwhile, average year-over-year inflation in the US has been somewhere around three to four percent -- if you just put a bunch of cash into a savings account that pays 1% interest you're actually losing money in the long run because the value gets eaten by inflation. The only real way to offset this is by investing it in something with low variange and average RoI, hence throw it in index funds and forget about it. This part, at least, makes sense to me. I don't know why the Endowment didn't do this, but then again, I'm not a finance guy, so I won't presume to know how this works or what a good idea for investing this amount of money looks like. jp×g 18:59, 5 October 2023 (UTC)[reply]
    Jimbo has provided some further information on his talk page, based on his conversation with the Endowment President: [1] Andreas JN466 19:25, 5 October 2023 (UTC)[reply]
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