Wikipedia:Wikipedia Signpost/2006-12-11/Financial audit
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Wikimedia Foundation releases financial audit
- By Flcelloguy, December 11, 2006
The Wikimedia Foundation released its first-ever audited financial information this week, general counsel and interim executive director Brad Patrick announced on Friday, December 8. The audit covered the financial affairs of the organization dating back to its initial formation in 2003.
"It is my pleasure to announce the public release of audited financial statements of the Wikimedia Foundation, Inc. for fiscal years 2004, 2005 and 2006 inclusive," he said. "This represents a significant step forward in the life of the Foundation." He continued by thanking Gregory, Sharer & Stuart, the accounting firm which conducted the audit, for its work, as well as the work of Danny Wool and Board member Michael Davis in helping and assisting the auditors.
Two documents were released by the Foundation, both in PDF: the management letter and the financial statement. The management letter included several graphical presentations of the Foundation's growth, seen through its increasing revenues and expenses. Breakdown of revenue sources and expenditures for each of the three years was also shown in a pie chart; private contributions accounted for over 85% of the Foundation's total income in 2006. In that same fiscal year, the Foundation spent nearly three-quarters of its expenditures on its projects; the remainder went to management and general expenses, as well as fundraising. The management letter also included a checklist of items completed by the auditing team, as well as suggestions on improving the Foundation's structure. Some of the recommendations presented included expansion of the Board of Trustees with more members from outside the organization, creation of an audit committee to ensure financial integrity, the establishment of an official whistleblower policy and accounting policies.
The financial statement, meanwhile, included more detailed breakdowns of the Foundation's finances in the three fiscal years; it first stated its finding that the Foundation operated "in conformity with accounting principles generally accepted in the United States of America" in the auditor's report. The audit found that the Foundation currently has a little over one million dollars in total assets, with approximately half in cash and the other half in computer equipment and software. The total assets in 2005, in comparison, was less than $300,000, and the total assets in June 2004 was less than $60,000, meaning that the Foundation's total assets increased by nearly 17 times from June 2004 to June 2006.
The audit also found that the Foundation raised nearly $1.3 million through contributions in 2006, an increase from the $300,000 raised in 2005 and the $70,000 raised in 2004. Despite the increasing income, expenses also jumped markedly: internet hosting costs rose from $40,000 in 2005 to nearly $200,000 in 2006, and operating costs increased by almost three times from 2005 to 2006. Depreciation of computer software and equipment cost the Foundation nearly $150,000 in 2006. The auditors also noted that this equipment is currently being depreciated based on a 5-year useful life, and recommended that this be changed to a more standard 3-year period. Since expenses overall were less than the income, the Foundation increased its total assets each fiscal year, going from about $300,000 in 2005 to $1,000,000 in 2006.
The audit concluded with notes on its findings on the Foundation; after summarizing its mission and activities, including each of the projects, the audit confirmed that the Foundation was a non-profit, tax-exempt organization in the United States. It also mentioned that the Foundation currently owns 187 shares of Google stock, which was received as a donation (as of the close of trading December 11, this would be worth just over $90,000).
Patrick finished his announcement by asking users to notice the Foundation's "[growth] at an astonishing rate." "You will also see [in the audit] 'what it takes to run Wikipedia for a year' - a glimpse of the financial challenges we face trying to maintain our role as a top website on the planet, with a skeleton staff and ever-increasing demand for the educational content created by you, our community of editors and contributors," he stated. "Anonymous visitors will also be reminded that Wikimedia Foundation is a *charitable organization*, something which distinguishes us from the YouTubes and MySpaces spoken in the same breath as Wikipedia as the 'Web 2.0' vanguard." After referencing an upcoming fundraising drive for the Foundation, Patrick continued, "We aren't for sale. There won't be a Wikipedia IPO. We can't be bought by a company, any more so than the Red Cross or Amnesty International. What sets us apart is our mission, vision and community. What keeps us going, though, requires an growing infrastructure, staff, and money."
Also this week: From the editor — Board expansion — Financial audit — Arbitration series — WikiChix — GNAA deletion — WikiWorld — News and notes — Press coverage — Features and admins — Technology — Arbitration
