Archive:Financial Reports/Financial Statements Ending June 30 2011 and 2010
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WIKIMEDIA FOUNDATION, INC.
Balance Sheets
June 30, 2011 and 2010
| Assets | 2011 | 2010 |
|---|---|---|
| Current Assets: | ||
| Cash and cash equivalents | $12,026,303 | $7,177,377 |
| Current portion of contributions receivable | 1,000,000 | 500,000 |
| Accounts receivable | 695,004 | 353,375 |
| Investments | 5,848,801 | 5,539,587 |
| Prepaid expenses and other current assets | 1,214,884 | 661,258 |
| Total current assets | 20,784,992 | 14,231,597 |
| Property, plant, equipment, net | 3,401,675 | 1,193,580 |
| Noncurrent portion of contributions receivable | 1,978,900 | -- |
| Total assets | $26,165,567 | $15425,177 |
| Liabilities and Net Assets | ||
| Current liabilities: | ||
| Accounts payable and accrued expenses | $1,431,138 | $743,210 |
| Deferred revenue | 374,879 | 139,236 |
| Other liabilities | 167,406 | -- |
| Total current liabilities | 1,973,423 | 882,446 |
| Total liabilities | 1,973,423 | 882,446 |
| Net assets: | ||
| Unrestricted | 20,772,126 | 13,876,828 |
| Temporarily restricted | 3,420,018 | 665,903 |
| Total net assets | 24,192,144 | 14,542,731 |
| Total liabilities and net assets | $26,165,567 | $15,425,177 |
See accompanying notes to financial statements.
WIKIMEDIA FOUNDATION, INC.
Statements of Activities
Years ended June 30, 2011 and 2010
| 2011 | 2010 | |
|---|---|---|
| Unrestricted net assets: | ||
| Support and revenue: | ||
| Contributions | $23,020,127 | 14,490,273 |
| In-kind service revenue | 349,516 | 502,558 |
| Other income, net | 712,690 | 945,968 |
| Investment income, net | 36,856 | 7,219 |
| Release of restrictions on temporarily restricted net assets | 665,903 | 2,033,294 |
| Total support and revenue | 24,785,092 | 17,979,312 |
| Expenses | ||
| Salaries and wages | 7,312,120 | 3,508,336 |
| Awards and grants | 471,060 | 208,662 |
| Internet hosting | 1,799,943 | 1,056,703 |
| In-kind service expenses | 349,516 | 502,703 |
| Operating | 5,761,273 | 3,846,420 |
| Travel | 1,159,200 | 476,663 |
| Depreciation and amortization | 1,000,400 | 524,341 |
| Special event expense, net | 36,282 | 70,407 |
| Other | -- | 72,703 |
| Total expenses | 17,889,794 | 10,266,793 |
| Increase in unrestricted net assets | 6,895,298 | 7,712,519 |
| Temporarily restricted net assets: | ||
| Contributions | 3,420,018 | 631,739 |
| Release of restrictions on temporarily restricted net assets | (665,903) | (2,033,294) |
| Increase (decrease) in temporarily restricted net assets | 2,754,115 | (1,401,555) |
| Increase in net assets | 9,649,413 | 6,310,964 |
| Net assets at beginning of year | 14,542,731 | 8,231,767 |
| Net assets at end of year | $ 24,192,144 | 14,542,731 |
See accompanying notes to financial statements.
WIKIMEDIA FOUNDATION, INC..
Statements of Cash Flows
Years ended June 30, 2011 and 2010
| 2011 | 2010 | |
|---|---|---|
| Cash flows from operating activities: | ||
| Increase in net assets | $ 9,649,413 | 6,310,964 |
| Adjustments to reconcile increase in net assets to net cash provided by operating activities: | ||
| Depreciation and amortization | 1,000,4000 | 524,341 |
| Donation of common stock | (46,122) | (253,477) |
| Loss on disposal of equipment and impairment of leasehold improvements | -- | 26,849 |
| (Gain) loss on investments | (4,412) | 5,162 |
| Changes in operating assets and liabilities: | ||
| Contributions receivable | (2,478,900) | 800,000 |
| Accounts receivable | (341,629) | (280,786) |
| Prepaid expenses | (553,626) | (474,769) |
| Accounts payable | 687,930 | 478,842 |
| Deferred revenue | 235,643 | 33,236 |
| Other liabilities | 167,406 | -- |
| Net cash provided by operating activities | 8,316,103 | 7,170,362 |
| Cash flows from investing activities: | ||
| Purchase of computer equipment and software | (3,208,495) | (945,184) |
| Purchase of investments | (8,504,617) | (11,182,815) |
| Sales of donated common stock | 45,935 | 251,543 |
| Sale of investments | 8,200,000 | 5,640,000 |
| Net cash used in investing activities | (3,467,177) | (6,236,456) |
| Net increase in cash and cash equivalents | 4,848,926 | 933,906 |
| Cash and cash equivalents at beginning of year | 7,177,377 | 6,243,471 |
| Cash and cash equivalents at end of year | $ 12,026,303 | 7,177,377 |
See accompanying notes to financial statements.
WIKIMEDIA FOUNDATION, INC.
Notes to Financial Statements
June 30, 2011 and 2010
(1) Organization and Summary of Significant Accounting Policies
- (a) Organization and Purpose
- The Wikimedia Foundation, Inc (the Foundation) is the nonprofit organization that operates Wikipedia, the free encyclopedia. According to comScore Media Metrix, Wikipedia and the other projects operated by the Foundation receive more than 399 million unique visitors per month, making them the 5th most popular Web property worldwide (June 2011). Avalable in more than 275 languages, Wikipedia contains more than 19 million articles contributed by a global volunteer community of more than 100,000 people. Based in San Francisco, California, the Foundation is a 501(c)(3) charity that is funded primarily through donations and grants.
- (b) Income Taxes
- The Foundation is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue code and from state income tax under Chapter 220.13 of the Florida Statutes and Sections 23701(d) of Revenue and Taxation Code of the State of California. The Internal Revenue Service has determined that the Foundation is not a private foundation and contributions to it qualify as charitable contribution deductions. There was no unrelated business income tax for the years ended June 30, 2011 and 2010.
- (c) Financial Statement Presentation
- Net assets, revenues, expenses, gains, and loses are classified based on the existence or absence of donor-imposed restrictions in accordance with Accounting Standards Codification (ASC) Topic 958, Not-for-Profit Entities.
- Unrestricted net assets represent unrestricted resources available to support operations and also include temporarily restrcited resources, which have become available for use by the Foundation in accordance with the intentions of donors.
- Temporarily restricted net assets represent contributions that are limited in use by the Foundation in accordance with temporary donor-imposed stipulations. The stipulations may expire with time or may be satisfied and removed by the actiosn of the Foundation according to the terms of the contribution by the donor. Once such stipulations are satisfied, the associated net assets are released from temporarily restricted net assets and recognized as unrestricted net assets.
- Permanently restricted net assets represent contributions to be held in perpetuity as stipulated by the donor. The Foundation does not have any permanently restricted net assets.
- (d) Restricted and Unrestricted Contributions
- The Foundation accounts for contributions in accordance with ASC Topic 958. Accordingly, contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions.
- Contributions that are restricted by the donor are reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the contributions are received.
- All other donor-restricted contributions are reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires (i.e., when a stipulated time restriction ends or the purpose of the restriction is accomplished), temporarily restricted contributions are reclassified and reported in the statements of activities as net assets released from restrictions.
- (e) Cash and Cash Equivalents
- The Foundation considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash equivalents of $1,721,386 and $3,960,529 as of June 30, 2011 and 2010, respectively, are considered Level 1 under ASC Topic 820, Fair Value Measurements and Disclosures.
- (f) Contributions Receivable
- Contributions receivable represent gift amounts due from various entities, which are occasionally directed at specific activities. Contribution receivables due more than one year from the contribution date are discounted to present value using a fair value rate under ASC Topic 820. Contribution receivables are subject to review and adjustment by management should amounts be deemed uncollectible.
- (g) Accounts Receivable
- Accounts receivable comprise primarily fees charged to Web sites for live-feed access to Wikipedia and licensing fees. All receivables are noninterest-bearing. Management periodically reviews receivables for past-due amounts based on payment history and adjusts for uncollectible amounts as necessary.
- (h) Investments
- The Foundation's policy regarding investments is to invest surplus cash in short-term and intermediate-term fixed income instruments (such as certificates of deposits and U.S. Treasury Bills) without assuming undue risk to principal. Preservation of principal and maintenance of liquidity are priorities over yield. Investments are reported at fair value with realized and unrealized gains and losses included as a component of the change in net assets. Additionally, the Foundation holds no shares of stock as of June 30, 2011 and 2010, consistent with it's policy to sell stock received through donations as soon as possible. Included in investment income in the statements of activities for the year ended June 30, 2011 are gains on investment of $4,412 and for the year ended June 30, 2010 are losses on investments of $5,162.
- (i) Property, Plant, and Equipment
- Expenditures for property, plant, and equipment with useful lives of one year or more are capitalized and recorded at cost. Depreciation is calculated on a straight-line basis, over the estimated useful lives of the assets. The estimated useful life of furniture is five years, while the estimated useful lives of computer equipment and software are three years. Leasehold improvements are amortized over the life of the lease. Donated computer equipment and software is recorded at the fair value of the items at the time of the donation and is deemed an unrestricted contribution in the year in which it was received. Repairs and maintenance of equipment are charged to operations. Upon retirement, sale, or other disposition of property, plant, and equipment, costs and accumulated depreciation are eliminated from the accounts and any resulting gain or loss is included in operations.
- (j) Deferred Revenue
- Deferred revenue represents payments related to live-feed and licensing agreements that have been paid or billed in advance.
- (k) Noncash Contributions
- A substantial number of volunteers make significant contributions of their time in the furtherance of the Foundation's projects. The value of this contributed time is not reflected in the accompanying financial statements.
- Contributed services are reported at fair value in the financial statements for voluntary donations of services when those services (1) create or enhance nonfinancial assets or (2) require specialized skills provided by individuals possessing those skills and are services that would be typically purchased if not provided by the donation, and (3) the services are professional in nature, and have been explicitly agreed to in advance.
- In-kind service revenue and expenses recorded on the statements of activities consist of contributed legal services and Internet hosting. The amounts of specialized contributed legal services and other consulting services recognized as revenue and expenses are $46,319 and $77,688 for the years ended June 30, 2011 and 2010, respectively. The value of contributed internet hosting services for the years ended June 30, 2011 and 2010 is $303,197 and $424,870, respectively.
- Included in the 2011 amount are donated hosting services and bandwidth from five companies: (1) Kennisnet, (2) EvoSwitch, (3) LeaseWeb, (4) Teliasonera, and (5) Tele2.
- Included in the 2010 amount are donated hosting services and bandwidth from six companies: (1) Kennisnet, (2) EvoSwitch, (3) LeaseWeb, (4) Teliasonera, and (5) Tele2, and (6) AMS-IX.
- (l) Use of Estimates
- The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the allowance for doubtful accounts, useful lives of fixed assets, and the valuation of in-kind gifts. Accordingly, actual results could differ from those estimates.
WIKIMEDIA FOUNDATION, INC.
Notes to Financial Statements
June 30, 2011 and 2010
(2) Contributions Receivable
- Contributions receivable at June 30, 2011 and 2010 consist of amounts due from one contributor as follows:
2011 2010 Amounts due in: One year $ 1,000,000 500,000 Two to three years 2,000,000 -- Less discount to net present value (21,100) -- Total 2,978,900 500,000 Less current portion 1,000,000 500,000 Noncurrent portion $ 1,978,900 --
(3) Fair Value of Investments
- ASC Topic 820 establishes a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements).
- The three levels of the fair value hierarchy are as follows:
- * Level 1 inputs are quoted prices (unadjusted) in active markets for identical investments that the Foundation has the ability to access at the measurement date.
- * Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the investment, either directly or indirectly.
- * Level 3 inputs are unobservable inputs from investments.
WIKIMEDIA FOUNDATION, INC.
Notes to Financial Statements
June 30, 2011 and 2010
- The following table presents the fair value of the investments based on hierarchical level as of June 30, 2011 and 2010:
Description June 30, 2011 Fair value measurements at reporting date using significant other observable inputs (Level 2) Certificates of deposit $ 3,499,679 3,499,679 U.S. government and agency securities 2,349,122 2,349,122 Total $ 5,848,801 5,848,801 Description June 30, 2010 Fair value measurements at reporting date using significant other observable inputs (Level 2) Certificates of deposit $ 3,839,755 3,839,755 U.S. government and agency securities 1,699,832 1,699,832 Total $ 5,539,587 5,539,587
(4) Property, Plant, and Equipment
- Property, plant and equipment at June 30, 2011 and 2010 consist of the following:
2011 2010 Furniture $ 226,866 46,888 Computer equipment and software 5,785,157 2,756,640 Total 6,012,023 2,803,528 Less accumulated depreciation and amortization (2,610,348) (1,609,948) Net $ 3,401,675 1,193,580
WIKIMEDIA FOUNDATION, INC.
Notes to Financial Statements
June 30, 2011 and 2010
(5) Net Assets
- Temporarily restricted net assets at June 30, 2011 and 2010 are available for the following purposes:
2011 2010 Restricted to future periods $ 2,978,900 -- Restricted by purpose: Stanton Foundation -- Public Policy Initiative Phase 2 441,118 565,963 Ford Foundation -- Multimedia -- 99,940 Temporarily restricted net assets $ 3,420,018 665,903
(6) Functional Allocation of Expenses
- Costs of providing the Foundation's various projects are summarized below on a functional basis. Accordingly, certain costs have been allocated among the projects benefited and supporting services for the years ended June 30, 1011 and 2010, as follows:
- 2011
Projects General and administrative Fund-raising Total Salary and wages $ 4,860,808 1,618,534 832,778 7,312,120 Awards and grants 471,060 -- -- 471,060 Internet hosting 1,799,943 -- -- 1,799,943 In-kind service expenses 326,148 23,368 -- 349,516 Operating 2,738,738 1,822,296 1,200,239 5,761,273 Travel 1,013,603 36,397 109,200 1,159,200 Depreciation and amortization 879,594 120,806 -- 1,000,400 Special event expense 31,516 4,766 -- 36,282 $ 12,121,410 3,626,167 2,142,217 17,889,794
WIKIMEDIA FOUNDATION, INC.
Notes to Financial Statements
June 30, 2011 and 2010
- 2010
Projects General and administrative Fund-raising Total Salary and wages $ 2,378,652 531,616 598,068 3,508,336 Awards and grants 208,662 -- -- 208,662 Internet hosting 1,056,703 -- -- 1,056,703 In-kind service expenses 492,702 1,178 8,678 502,558 Operating 2,828,205 372,064 646,151 3,846,420 Travel 288,069 125,291 63,303 476,663 Depreciation and amortization 471,907 26,217 26,217 524,341 Special event expense 70,407 -- -- 70,407 Other 54,693 8,476 9,534 72,703 $ 7,850,000 1,064,842 1,351,951 10,266,793
- Beginning in 2009 -- 10, the Foundation began a program of awarding grants to support chapters in projects that further the mission of the Foundation. In addition to this work, which is reflected above in the awards and grants line, an overwhelming majority of the Foundation's project activities are carried out by an international network of volunteers, whose activity is not reflected in the table above.
- For example (unaudited):
- * By the year ended June 30, 2011, the educational content of the Foundation's largest project, Wikipedia, grew by approximately 2.9 million articles to 19.0 million articles total.
- * By the year ended June 30, 2011, volunteers added approximately 3.8 million images, movies and sound files to the Foundation's multimedia repository.
- * Volunteers also contribute in several ways to the Foundation's wiki software: volunteer software developers add new functionality to the code base, and volunteer language specialists add to the code base by translating the wiki interface into different languages. By the year ended June 30, 2011 the source code hosted in the Foundation's version control repository grew by approximately 1.1 million lines of code.
(7) Operating Leases
- the Foundation has a seven-year noncancelable operating lease for it's new San Francisco location in addition to the four-year noncancelable operating lease for the Foundation's original San Francisco location. A sublease was signed for the original location effective January 1, 2010 through the remainder of the lease that ends January 31, 2012. Due to a decline in the market since the original lease was signed, the sublease rental rate is less than the rent owed on the lease by the Foundation. According to ASC Topic 840 Leases (FASB Technical Bulletin 79-15, Accounting for Loss on a Sublease Not Involving the Disposal of a Segment (FTB 79-15)), the Foundation recorded a loss for the cumulative difference of the $47,625 in other expenses for the year ended June 30, 2010. As of June 30, 2011, $9,625 remains as an accrual on the balance sheet. The original five-year lease became effective October 1, 2009. The lease expansion, signed on April 30, 2010 and effective October 1, 2010, extends the current lease from five to seven years and includes expansion to an additional floor. The lease expires on September 30, 2017.
- Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease including any periods of free rent. Rental expense for operating leases for the years ended June 30, 2011 and 2010 was $585,114 and $280,382, respectively.
- Future minimum lease payments and sublease income under noncancelable operating leases as of June 30, 2011 are:
Lease payments Sublease income Net Year ending June 30: 2012 $ 671,459 (36,750) 634,709 2013 644,881 -- 644,881 2014 667,302 -- 667,302 2015 689,725 -- 689,725 2016 712,146 -- 712,146 2017 and thereafter 919,612 -- 919,612 Total minimum lease payments $ 4,305,125 (36,750) 4,268,375
(8) Related-Party Transactions
- Beginning in January 2009 (and ending in October 2009), the Foundation rented between 400 and 600 square feet of office space from Wikia, Inc., a for-profit company founded by the same founder as the Foundation, in order to accommodate staff hired for the usability initiative. Rent paid to Wikia, Inc. for the years ended June 30, 2011 and 2010, respectively, totaled $0 and $14,800. After October 2009, the office rental with Wikia, Inc. came to an end and there is no financial relationship between the two organizations.
(9) Retirement Plan
- The Foundation offers a 401(k) plan (the Plan) to all of it's employees residing in the United States. Employees are eligible to participate in the Plan upon employment. Effective January 1, 2011, the Foundation matches employee contributions on a dollar-for-dollar basis up to 4% of the employee's compensation. The Foundation contributed $64,745 to the Plan for the year ended June 30, 2011.
(10) Contingencies
- In the normal course of business, the Foundation receives various threats of litigation. In the opinion of management, the outcome of the pending lawsuits will not materially affect operations or the financial position of the Foundation.
(11) Subsequent Events
- In August 2011, the Stanton Foundation pledged to fund the Foundation a grant of $3.6 million to support the initiative in "Making Wikipedia More User-Friendly." The amount of $1.8 million was funded in August 2011, with the remaining $1.8 million scheduled to be funded in the September 2012. The Foundation has evaluated its subsequent events through September 28, 2011, the date at which the financial statements were available to be issued.