Archive:2011-2012 Annual Plan Questions and Answers

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Documents:

2011-12 Wikimedia Foundation Annual Plan (PDF)
Other financials reports (current and past)

Overview

What is the current state of this plan?

The 2011-12 plan was approved unanimously by the Board of Trustees on June 28, 2011. It is being rolled out to the staff and community members by Executive Director Sue Gardner and the rest of the senior team, on July 14, 2011. The 2011-12 fiscal year began July 1, 2011.

What's an annual plan?

An annual plan is an organization's financial plan for the year. This year, as in the prior year, the annual plan is rooted in the five-year (2010-15) Wikimedia Foundation strategy, which was developed collaboratively on the strategy wiki in 2009-10. That work formed the basis of this plan, which was created by the Wikimedia Foundation's senior leadership, with support from the staff of the Wikimedia Foundation.

The five-year strategic plan can be found at: Wikimedia Movement Strategic Plan Summary.

The annual plan of the Wikimedia Foundation is an operating budget, which means the plan doesn't include restricted grants, or any work that will be done as a result of restricted grants. In 2011-12, the Foundation will wrap up the Public Policy project funded by the Stanton Foundation, but this is not included in the 2011-12 annual plan.

In addition to reflecting only unrestricted spending, the operating budget is primarily a cash-basis budget, so it doesn't include in-kind revenue and expenses, nor non-cash expenses such as depreciation. This is fairly common for budgeting purposes. Of course, our annual audited financial statements do reflect restricted funding as well as non-cash revenue and expenses, in order to conform to generally accepted accounting principles.

What is the strategic context for this plan? How is this Wikimedia movement doing as we embark on 2011-12?

By most measures, the Wikimedia movement is flourishing. Readership continues to grow, the amount and quality of information we offer continues to increase, and our credibility is increasing over time. We are also doing very well financially, with strong continued growth in donations supporting our work. However, we have two major challenges threatening our continued success: 1) The internet is shifting from a desktop/laptop-centric space to a mobile-centric space, both in developing and developed countries. Wikipedia needs to reinvent itself to suit the way people use the internet from their phones, in addition to continuing to support desktop and laptop usage. 2) The number of active editors continues to decline. We need to attract and retain more editors, particularly women and people in the Global South.

In response to that context, what does this plan set out to achieve?

The 2011-12 plan calls for us to develop and begin deployment of a Visual Editor to make it easier for new people to edit the projects; to redevelop the mobile platform (including offering new ways to participate via phone, and launching partnerships to enable people to use Wikipedia for free from their phones); to invest further in editor recruitment in India and to begin investment in Brazil, to launch experiments and initiatives aimed at improving editor retention, such as WikiLove; to launch a Global Education Project designed to recruit editors on campuses in key geographies; to launch the Wikimedia Labs, and to put some cash into internationalization supporting non-Western languages.

By doing this, the Wikimedia Foundation intends to halt the decline in active editors and begin to push those numbers back up. We will also more than double mobile pageviews. If we achieve both those top-priority goals, we will consider 2011-12 a success. To get this done, we plan to grow the staff 50% from 78 to 117, and spending will increase 53% to $28.3 million. To pay for that and for the rest of the plan, we will increase revenues 24% to $29.5 million, thereby also putting a small amount of additional cash into our operating reserve.

What are the 2011-12 plan targets?

1) Increase the number of active editors from just under 90K in March 2011, to 95K in June 2012.¹

2) Increase the number of Global South active editors from approximately 15.7K in March 2011, to 19K in June 2012.

3) Increase the number of female editors from approximately 9K in spring 2011 to 11.7K in spring 2012.²

4) Increase page-views to mobile sites from 726M in March 2011, to 2B in June 2012. Develop Visual Editor. First opt-in user-facing production usage by December 2011, and first small wiki default deployment by June 2012.

5) Develop sandbox for research, prototyping, and tools development, with initial hardware build-out and first project access by December 2011, and full access for all qualifying individuals/projects by June 2012.

6) Increase read uptime from 99.8% in 2010-11 to 99.85% in 2011-12.

¹ Our projections say that without intervention, active editors will have declined to 79K by July 2012: this target assumes the decline is successfully reversed and new growth begins.

² As derived out of the annual Editor Survey.

Comparison to the previous year

What did the Wikimedia Foundation accomplish in 2010-11?

The 2010-11 plan called for us to make infrastructure investments such as the build-out of the Virginia data centre. We also planned to invest in mobile/offline and user experience work, to make preliminary investments in recruiting new editors in India, and to lay the groundwork for similar experimentation in Brazil and the Middle East and North Africa (MENA), as well as to support strategic activities of volunteers via grant-making.

The majority of that work got done. The new data centre is fully operational. Progress has been made in mobile/offline and the user experience. Programmatic activities have begun in India, and the groundwork has been laid for Brazil. (MENA groundwork was deferred.) We gave out $770K in grants, up from $115K the previous year.

How did 2010-11 play out from a financial perspective?

From a financial perspective, 2010-11 was an excellent year for the Wikimedia Foundation. The 2010-11 plan called for us to increase revenue 28% from 2009-10, to $20.4 million, and to increase spending 124% from 2009-10, to $20.4 million. In fact, we significantly over-achieved from a revenue perspective, and we also underspent, resulting in a larger reserve than planned. We're projecting today that 2010-11 revenue will have actually increased 49% from 2009-10 actuals, to $23.8 million. Spending is projected to have increased 103% from 2009-10 actuals, to $18.5 million. This means we added $5.3 million to the reserve, for a projected end-of-year total of $19.5 million which represents 8.3 months of reserves at the 2011-12 spending level.

How did 2010-11 play out from a revenue perspective?

The 2010 WMF fundraiser was our shortest and most successful to date, raising $15 million (up 72% from 2009's $8.7 million) in 50 days (25% fewer than 2009's 67 days). If you include the $6.5 million received by 12 chapters which acted as payment processors in 2010, the total raised by the movement was $21.5 million.

In 2010-11, the WMF refocused from a mixed revenue model towards a primary focus on the annual fundraising campaign. That was extremely successful. Other revenue sources dropped by about a quarter, but community giving grew very strongly. That said, in 2010 we began to see indicators of banner and Jimmy fatigue expressed in mainstream and social media. We see this as an early warning: we expect donations to continue strong growth, but a ceiling may be coming into view. And, we believe we will need to find alternatives to over-utilization of Jimmy, in order to preserve his appeal.

How much did the Wikimedia Foundation staff grow in 2010-11?

We started the year with an ambitious plan to grow the Wikimedia Foundation staff 82% from 50 to 91 and a decision to, if necessary, sacrifice speed for quality (“hiring well rather than hiring quickly”). We found that we could not hire as quickly as planned and still hire well, and so we slowed our hiring, and increased our spending on contractors instead. We expect to end the year with staff of 78, representing an increase over 2009-10 of 56%.

What's the upshot here; how has the organization and the annual plan changed from last year?

Last year's plan focused on putting in place solid infrastructure and creating a foundation for some of this year's key initiatives. This year, the plan calls for a focus on execution: growing, strengthening and increasing the diversity of the editing community, as well as investments in key geographic areas, mobile development and innovation.

In 2010-11, the organization successfully executed on many initiatives such as the build-out of the Virginia data center, beginning programmatic activity in India, laying the groundwork for Brazil and made good progress in mobile/offline and the user experience. The Foundation gave out almost $800K in grants-more than ever before. It also exceeded planned revenue including amounts received from Chapters. The 2011-12 plan calls for a significant increase in spending, and a moderate increase in revenue.

What's the total budget in this year's annual plan and how does it compare with previous years?

The total operating budget for the 2011-12 annual plan calls for $28.3 million in spending. In comparison, 2010-11 projected spending is $18.5 million (against a plan of $20.4 million). In 2009-10 the Foundation spent (cash expenses excluding depreciation and in-kind expenses) $9.1 million; in 2008-09, $5.2 million; in 2007-08, $3.0 million; in 2006-07, $1.4 million; in 2005-06 $0.5 million; in 2004-05 $0.1 million. In general, spending has increased every year, as the projects, the organization, and readership have grown.

What are the main increases in spending for 2011-12?

The total increase in spending in 2011-12 compared with 2010-11 is $9.8 million. Of that, $7.5 million or 77% will go to technology and other programmatic activity; in other words, activities that directly support the Wikimedia mission. That amount includes 33 new staff positions. And, $2.3 million or 23% will go to indirect support of the Wikimedia mission such as legal defence of the projects. That amount includes 2 new staff positions.

Included in the spending increases for 2011-12 are: 1) Additional spending on technology that will include funding for the development of the Visual Editor, new editor engagement features, internationalization improvements, the salary for a director of features development, staffing and contractors funding for analytics, code/security review, API development, QA, improved monitoring, failover, backups and specialized operations support. 2) Additional hosting costs to support two data centers now in parallel operation for safe failover. 3) Additional funding for improvement of the mobile platform as well as new mobile partnerships and support. 4) Additional funding for activities aimed at increasing the number of active editors in India and Brazil. 5) Expansion of the grants program.

See also the “top spending increases” section, in the appendix of the plan.

The projected budget for the 2010-11 annual plan was $20.4 million: what were the actuals?

Fiscal year 2010-11 results won't be final until end of July 2011, but we are projecting to spend $18.5 million in the operating budget (this does not include things like depreciation and spending on restricted grants). When the audited financial statements are available in fall of 2011, the total expenses reflected there will be higher because they will reflect items such as depreciation which we don't include in plan or projections.

Why is 2010-11's projected spending lower than plan?

Underspending occurred mostly due to vacancies and slowness in hiring. Hiring was slowed to ensure quality. This was partially offset by higher spending on external contractors.

Future revenues

What's the revenue target for 2011-12, and how does it compare to previous years?

The 2011-12 plan posits revenue of $29.5 million, a 24% increase over projected revenue of $23.8 million for 2010-11. The 2011-12 plan assumes $25.0 million in individual donations (including $3.5 million share from chapters), $3.0 million in foundation grants and $1.1 million from mission-friendly business partnerships and licensing agreements. Another $0.4 million is assumed from the sale of merchandise. In 2009-10, revenue was $16.0 millions; in 2008-09 it was $7.7 million; in 2007-08, it was $5.1 million (excluding $2 million of Sloan funding which is ear-marked for 2008-09 and 2009-10); in 2006-07 it was $2.7 million; in 2005-06 it was $1.5 million; in 2004-05 it was $0.4 million and in 2003-04 it was $0.1 million.

Is that target realistic?: Yes, we think so.

What is the strategy for achieving the revenue increase?

As in the prior year, we continue to focus our efforts on community giving. We like this model because it has proven to be very effective for us, and because it correctly aligns fundraising activities with our mission goals. It is global and empowers ordinary people, it ensures we stay focused on our mission and our strategy, it keeps us accountable and responsive to readers and editors, and it is stable, scalable, and efficient. In addition to seeking increased support from community donations, we will also continue to raise funds from foundations, major donors, and licensing and other business partnerships, but those areas will remain supplementary rather than primary.

In order to achieve the revenue increase, and to avoid over-exposure of our founder Jimmy Wales, we intend to develop new messaging featuring readers, editors and staff, and to broaden the emotional tone of our appeals to include humour. We will also need to continue to grapple with legal, administrative and ethical challenges posed by chapters acting as payment processors for the campaign.

Why is there a target for the chapters, and how was it developed?

Since 2006, some Wikimedia chapters have acted as payment processors for their countries during the annual fundraising campaign, and those revenues are shared with the Wikimedia Foundation. Donations to the annual campaign grow annually, and we expect that will continue to be the case in all geographies, including those in which chapters act as payment processors. The target for revenues from payment processing chapters was developed by Wikimedia Foundation staff. It is the least certain of our revenue targets, due to the complexities surrounding international money transfers and other uncertainties.

What will you do if there is a revenue shortfall?

A small revenue shortfall wouldn't cause problems, because the revenue target for 2011-12 exceeds the amount we plan to spend. We think a large revenue shortfall is unlikely, but if it happens, we have a number of ways to ensure stability. At the beginning of the fundraiser (which is the point in the year during which our cash reserves are lowest) we will have nearly six months of spending in the bank. If there is a serious revenue shortfall, the Board of Trustees will immediately be notified, and the Wikimedia Foundation will handle it via a combination of deferring future planned spending, implementing cuts to current spending, and funding the shortfall by utilizing our cash reserves.

Staffing

How many people are you planning to hire and when?

We plan to fill 39 positions in 2011-12 of which 35 are new. (The other four are existing positions that are currently vacant.)

Last year, you planned to increase staff by 82% but actually increased by 56% . This year, you plan to hire almost as many people as you planned for last year. Do you think that's realistic?

We can probably do it. In 2010-11, we grew the staff by 56%. In 2011-12, we plan to grow the staff by 50 (including filling the current vacancies). That's more attainable than our goal for 2010-11, particularly because we have more hiring managers now, and on average they have more experience hiring for the Wikimedia Foundation than they did last year.

What are the positions you will be hiring for, and what is the general thinking behind it?

The biggest increase in staffing is technology staff, which is planned to grow from 28 to 50 people. Those new hires will support our key activities: feature development including features focused on editor retention, mobile, the Visual Editor, internationalization, the Wikimedia Labs. This will indeed be a stretch for 2011-12, because there is currently a major shortage of technical talent in the San Francisco Bay Area. Even so, we feel like we're in a pretty good position to hire technology staff right now. In 2011-12, we will be dedicating more resources towards technical recruitment than in past years, and we are very clear about our value proposition: The Wikimedia Foundation is not about monetizing eyeballs, our direction isn't set by VCs, and we're financially stable. We offer a fair, friendly, fun environment for talented engineers who want their individual contribution to result in making the world a better place for hundreds of millions of people. We also hire globally, not just people who are currently located in the Bay Area, or willing to move there.

At the end of 2011-12, if we hire according to plan, technology department staff will make up 43% of total staff.

The second-largest increase in staffing is in the “other program” area (the Community department and Global Programs department), which is planned to grow to 33 people; at the end of 2011-12, Other Program staff will make up 28% of total staff if we hire according to plan. These hirings will support our strategic objectives of increasing new editor retention particularly in the Global South, expansion in mobile partnerships, and increased partnerships with educational institutions worldwide.

Will all the jobs be advertised publicly?

Yes. Our general practice, with rare exceptions, is to advertise all jobs on the Wikimedia Foundation website, as well as on relevant job sites. In some cases, we may decide not to post individual positions, but rather to announce general availability of vacancies in a certain area.

When do you expect to stop growing? In other words, how big do you plan to get, in terms of staff headcount?

The answer to that question isn't knowable at this point. The strategy plan calls for the Wikimedia Foundation to have a total staff of 138 by the end of 2015, but that is a very rough estimate and our circumstances, goals and activities will likely be quite different from what we expected when we created the plan.

The Wikimedia Foundation Board of Trustees and the Executive Director and staff of the organization continue to refine our thinking about the optimal shape and size of the organization: that will continue. Wikimedia volunteers and staff are collectively, every day, making progress figuring out how to work together well. The answers aren't known yet: we are figuring it out together.

Rate of growth

How fast is this growth? Do other organizations generally grow this quickly?

Relative to older, more established organizations, our growth is fast. Relative to successful tech start-ups, our growth is slow. Some comparatives, for what they are worth: Groupon has grown to 8,000 employees from 1,500 a year ago. Over the past couple of years, Twitter has increased its headcount to 500 from about 45. LinkedIn increased staff to 900 from 600 during 2011. Facebook currently has 4,000 employees, up from 1,000 two years ago. In 2010, Zynga had 1,000 employees, up from 561 at the end of 2009. Google had 20,222 employees at the end of 2008, up from 10,674 at the end of 2006. So by Silicon Valley standards, our growth is extremely cautious. Outside Silicon Valley and the rest of the tech sector, our growth would probably be considered pretty fast.

What are the risks of fast growth, and how will we mitigate against them?

For an organization like the Wikimedia Foundation, there are several potential risks. There is the risk of hiring poorly, as detailed above. There is the risk that the staff of the Wikimedia Foundation will develop an internal culture that doesn't fit with the culture of the Wikimedia movement. And there is the risk that the Wikimedia Foundation will end up simply replacing volunteers with staff -- rather than intelligently figuring out where staff can be strategically injected to add value and be helpful. Thus far, we haven't seen signs that any of those risks are coming to pass: we deliberately slowed our growth last year to maintain quality, and thus far the staff roles we have been filling seem to be being greeted by editors with warmth and appreciation (e.g., the bugmeister role, technical coordinator role, community communications role, various fellows, and so forth).

We will continue to manage these risks by maintaing vigilance, and course-correcting/slowing down as necessary. We will aim to hire people who --although they may be new to our world-- believe in the Wikimedia movement and in the community, and are smart about the opportunities and difficulties inherent to working inside a movement driven mainly by volunteers. We will also aim to hire people who are, by nature, flexible and experimental.

Impact

If I am a reader of the Wikimedia projects, how will my experience of them change as a result of this plan?

We're continuing to making improvements to the reader experience such as investments to ensure that pages load as quickly as possible, to make our sites easier to navigate and search, and to support our volunteer community in providing you with high quality information. We're continuing improvements to our mobile site, and we're partnering with developers of offline versions of Wikimedia content, to bring information to people without Internet connectivity. We are also going to try to engage more readers to be an active part of the Wikimedia community, including via the continued development of new feedback and rating mechanisms. Our goal for increased read uptime in 2011-12 is 99.85% up from 99.8% in 2010-11.

If I am a Wikimedia volunteer, how will my experience of the projects and/or the Wikimedia Foundation change as a result of this plan?

Volunteers will notice the same changes as readers. Additionally though, volunteers whose work brings them in touch with the Wikimedia Foundation will probably notice additional changes. These may include the availability of increased funding for volunteer activities including events, projects and scholarships to Wikimania, increased invitations to engage with the Wikimedia Foundation to partner in solving both technical and social problems, and increased communications with the Wikimedia Foundation in general, as the result of a few new hires aiming at doing that work.

If I am involved with a Wikimedia chapter, how will my experience change as a result of this plan?

The Wikimedia Foundation is increasing the amount of money it plans to make available via grants, which includes grants to chapters. Also, the Global Development department has recently added new resources to help chapters apply for grants and conduct and plan activities, as well as communicating with other chapters and with the Wikimedia Foundation.

Breakdown by function

What is included in Governance in the Annual Plan?

In 2010-11, Governance spending is projected to be $400K; in 2011-12, it is planned to be $300K. In 2011-12, governance includes costs for the Board and the Advisory Board; including, three Board meetings per year (travel and facilitation), other travel costs (e.g., conferences), and an allocation for board development. The 2011-12 amount is lower because the 2010-11 amount included costs for the controversial content project and the Movement Roles II project.

What is included in Technology in the Annual Plan?

In 2010-11, Tech spending is projected to be $8.3 million; in 2011-12, it is planned to be $12.4 million. It includes salaries for the technology department staff, costs for technical contractors and consultants, bandwidth and hardware costs, as well as other miscellaneous costs.

What is included in the “Other Programs” budget in the Annual Plan?

”Other Programs” is the combined expenses of the Community department and the Global Development department, minus all fundraising costs. In 2010-11, Other Programs is projected to be $3.1 million; in 2011-12, it is planned to be $6.5 million. It includes the staff and contractors in the Community department and the Global Development department including communications staff, global education staff, staff responsible for mobile and offline partnerships development, research and new editor recruitment in the Global South. It also includes funding for community outreach and volunteer convenings, grants to chapters and individuals, as well as other miscellaneous costs. It does not include any costs associated with fundraising, including fundraising staff.

What is included in the Fundraising budget in the Annual Plan?

In 2010-11, Fundraising spending is projected to be $1.8 million; in 2011-12, it is planned to be $2.2 million. It includes the salaries for the fundraising staff, consultant and contractor costs, Paypal fees, and other miscellaneous fundraising expenses.

What is included in the Management, Finance & Administration budget in the Annual Plan?

In 2010-11, management, finance and administration spending is projected to be $4.9 million; in 2011-12, it is planned to be $6.9 million. It includes the staff for legal, HR, finance and accounting, office administration, IT support, as well as salaries for the office of the Executive Director, and expenses for consultants and contractors. It also includes general operating expenses such as rent and other facilities costs, some staff development and staff meeting expenses, the fees for the annual audit, and other miscellaneous costs.

Risk assessment

What are the biggest risks of this plan, and how will you mitigate against them?

A detailed risk assessment can be found in the appendix of the Annual Plan.

Our most serious risks include:

It is possible that editor decline is an intractable problem. We are responding with a multi-faceted approach that blends big obvious fixes (e.g., Visual Editor) with more experimental approaches (e.g., the -1 to 100 retention projects and editor recruitment initiatives in India and Brazil). We are also putting resources towards expanding community awareness and understanding of the problem, and putting in place mechanisms for decentralized community innovation so that community initiatives can help to solve it. We will be tracking progress throughout the year, and if necessary will sacrifice other activities to increase resources dedicated to this.

Another serious risk is that ongoing, time-consuming movement tensions, particularly among the Wikimedia chapters and the Wikimedia Foundation, will distract movement participants from important programmatic work. Particularly: the flood of money into chapters acting as payment processors in the annual campaign, and the risks it poses, combined with lack of clarity around roles-and-responsibilities between the WMF and the chapters, is resulting in ongoing and time-consuming negotiations between the WMF and chapters, as well as escalating tensions. To mitigate, WMF will aim to dedicate specific bounded resources towards these important issues, in order to preserve other resources dedicated to programmatic activities.

Other important risks include the possibility that readership will begin to flatten or decline; the risk that external events will distract from programmatic work; the risk that revenue targets will not be met, or will be met only at the cost of significant goodwill; that openness about editor decline will make the problem worse; that continued international expansion will pose unacceptable legal risks; that a shortage of Bay Area technical staff will make it impossible for us to recruit according to our goals; that an unforseen financial problem will cripple the Wikimedia Foundation, and that the movement's ability to implement positive change will be constrained by actual or perceived lack of community acceptance. For more on these risks, and the strategies we're implementing to mitigate them, please see the plan.