Wikimedia Foundation Audit Committee/2021-02-08
February 8, 2021 Audit Committee Meeting
12:00 pm PST - 20:00 UTC
Minutes
Participants: Amanda Keton, James Baldwin, Janeen Uzzell, Jaime Villagomez, Julian Singh, Raju Narisetti, Ryan Merkley , Shani Evenstein, Tony Le, Tony Sebro, Tanya Capuano, Maria Sefidari, Michael Snow, and Amy Vossbrinck.
AGENDA:
Recording of the Approval of the Minutes of the October 4, 2020 meeting.
Motion to approve Raju Narisetti. Tanya Capuano seconded. Unanimous approval.
Foundation Gift Policy (Purpose: Policy Approval)
The Special Projects Committee of the WMF Board and the Board Liaison presented the updated Donor Policy for their review and approval. The Special Projects Committee worked with the WMF Legal and Advancement Departments and did extensive research regarding how peer organizations set their gift policies. The Audit Committee discussed the proposed policy update and suggested a few potential clarifications to the policy:
Audit Committee Recommendations
Each gift approval should be associated with a specific person. The policy should establish a review procedure for unrestricted donations between $5K and $250K. The policy in practice should include a way to determine if someone is trying to give more than $250K (the amount that requires Board approval) by splitting their donation or running it through a second person or entity. Amounts more than $250K, donated by one or related-parties should be reported out on a periodic basis. Any donation equal to or greater than $100K, should be reported to the Board at regular intervals.
The Audit Committee requested that the Donor Policy be amended to reflect the agreed on changes, and be shared again with the Audit Committee for a second review and approval.
Okapi (Status and Q&As)
Organizational and Governance Structure Update The Foundation staff shared that the LLC operating agreement and cost sharing agreement for Okapi have been ratified. The operating agreement outlines the governance structure with the oversight and reporting requirements between the LLC and WMF. The cost sharing agreement outlines the management of the costs incurred and transferred between the LLC and WMF.
Additionally, the Foundation will retain creative commons licenses on the content provided and establish terms to restrict use of service to create a competing service to protect the Okapi offering while still maintaining our commitments to free software and culture. The Foundation will draft an internal IP License agreement between the LLC and WMF to enable the LLC to provide the Okapi service.
Accounting and Finance Update
The Foundation staff highlighted that OKAPI service is a novel commercial offering and will be accounted for applying the specific guidance for this service and differently than our donations revenue stream under US Generally Accepted Accounting Principles. The revenue recognition will be complex and required thorough assessment of each contractual agreement. New policies and procedures will be created and implemented to operationalize the new activity to ensure accounting and regulatory compliance.
Taxability Update
The Foundation staff shared its initial assessment based on the consulting with its tax advisory team. The initial assessment based on the fact pattern has not provided conclusive determination on the tax position. As noted, the OKAPI serve offerings are novel and the fact pattern does not easily align to other generally available tax cases. The assessment of the OKAPI fact pattern with generally available tax cases, indicates that it is likely that a portion of the income related to the services and support will be taxable. In the future with additional facts, if it seems probable that these services could be deemed a non-taxable activity, the Foundation staff discussed the option of pursuing an Internal Revenue Services (“IRS”) ruling. The Audit Committee discussed the benefits of the Foundation seeking further tax consultation to complement the advice it has already received.
FY19-20 Form 990 Timeline
The Foundation staff provided an overview of the Form 990 timeline. The timeline reflects our process with KPMG and a filing date that are consistent with past practices.
FY20-21 Annual Plan Recalibration The Foundation staff shared the recalibration of the Annual Plan “yellow” scenario budget. A mid-year reevaluation of the annual plan was a delineated action previously described to the Board, as such in November 2020, it was determined that the fundraising outcomes were sufficiently clear to initiate this reevaluation. The recalibration involved: A reflection of the workplans and investments that had been deprioritized due to the uncertainties associated with the pandemic on fundraising outcomes and Staff. A reflection of our Tuning Session outcomes associated with Objective and Key Results (“OKR”) progress, Community investing and organizational capability. On completion of the recalibration, while the Foundation would make investments in all of the Medium Term Priorities (“MTP”), these changes could be accomplished without exceeding the Board approved budget of $108 million. The Board suggested that the Foundation staff should continue its efforts to identify additional areas for further investment during FY20-21.
Business Operations Update
The Foundation staff provided a summary of the achievements for the business operations improvement initiative that started two years ago to improve the efficiency and efficacy of a set of financial cycles and business workflows. Through this initiative and efforts, the Foundation sourced and implemented a new technology tool created the following results as well as providing the ability for the Foundation staff to work remotely due to the pandemic. Reduction in processing time to execute our business arrangements Implemented an automated Purchase Order process Ability to track commitments for our spending projection
The Foundation is continuing to expand our resources to further support this initiative to address improvements of other business operations workflows.
The meeting adjourned at 1:31 pm PST Respectfully submitted, Amy Vossbrinck