It claims to have no advertising and no profit model for data trading, just purely providing users with the most truthful and credible information on the material. Among the top 50 most popular websites in the world, Wikipedia is the only non-profit website run by a non-profit organization. Wikipedia is seen as the “guardian of truth”, a rare presence on the Internet where commercial interests take precedence over everything else.
However, is this really the case?
In a recent article in the Daily Dot, Wikipedia community veteran Andreas Kolbe analyzed and criticized Wikipedia’s nonprofit organization, the Wikimedia Foundation (WMF), for deception in its fundraising practices and disclosure of the flow of donations The Wikipedia Foundation has been criticized for being opaque in its fundraising practices and for not disclosing the flow of funds.
Anyone who uses Wikipedia has seen its fundraising ads, and Kolbe points out that these messages are seriously misleading to users: Wikipedia is not short of money, but keeps acting like it is, trying to create the illusion of “we’re having a hard time” in order to morally kidnap users and consume their empathy.
Similar news has broken out in the past few years. As early as 2015, there were media reports that Wikipedia’s financial situation was far less dire than it was portrayed.
Yet years have passed, and WMF’s wallet is only bigger than it was before.
Kolbe, a former co-editor-in-chief of the community newspaper WikiBulletin, knows the inner workings of Wikipedia like the back of his hand. He says the WMF has significantly ramped up its fundraising advertising in recent years, and has exceeded its original 10-year fundraising goal of $100 million at least five years ahead of schedule and several times over.
In reality, however, “the WMF could easily keep Wikipedia afloat with just $10 million a year.”
Where did the overfunded money go? Don’t be fooled by the WMF’s “nonprofit” label; it’s actually a nonprofit that’s partly in the for-profit business, and is also providing paid API services for big tech companies to edit and use Wikipedia content, among other things.
There’s nothing wrong with WMF using for-profit programs to generate revenue, but it’s also now making money from Wikipedia, its flagship nonprofit business, and in a really unseemly way.
I. Early overfunding and lack of disclosure
In January 2016, on Wikipedia’s 15th birthday, WMF established a new endowment program, WMF Endowment, run by the Tides Foundation, a leading U.S. public charity. The goal of the endowment is to raise $100 million over 10 years, which will be used to support WMF’s projects, including and not limited to Wikipedia.
An editorial note from WMF executive Lisa Seitz-Gruwell in March of this year indicates that the WMF endowment will reach its $100 million fundraising goal this year, which is half the time it was supposed to take to raise the money over 10 years.
As WMF’s revenues have skyrocketed in recent years, particularly in the first three quarters of the past fiscal year, with revenues of $142 million, Kolbe revealed that the endowment’s net reserves are now around $300 million.
However, the total net assets disclosed by WMF were only about $180 million as of last fiscal year, which Kolbe noted was because WMF’s financial disclosures deliberately excluded the endowment, which has been a significant and substantial source of income for WMF.
WMF’s financial reports, audited by the well-known accounting firm KPMG, show a net asset appreciation of just under $100 million over the past five years. At the same time, the money that WMF itself invested in the endowment from other income was counted as a huge expense.
By doing so, WMF faked the illusion that it was “barely getting by” with decent income and high expenses.
But in fact, its true net worth is much higher than disclosed. Through this illusion, WMF can justifiably “cheat” on donations.
II. Clearly not short of money
Wikipedia uses multiple channels to send fundraising ads to regular users, including email (which contributes 32% of fundraising revenue), desktop web ads (27%), and mobile ads (26%). The ads are mainly shown in English-speaking countries, but in recent years they have also entered Hispanic countries and regions, as well as India, the most important emerging Internet market.
Wikipedia’s fundraising ad copy has had many variations over the past years, but the basic meaning hasn’t varied much. Let’s take a look at what the copy for a 2020 fundraising ad looks like.
Version 1: Hello, Wikipedia readers from Canada. It looks like you use Wikipedia a lot, which is really great! I’m sorry to say that this Tuesday, we need your help. This is the tenth time we’ve shown you this ad. We don’t have a salesperson. Thanks to donations from 2% of our readers, Wikipedia is able to remain open to all. If you can donate $2.75 Canadian this Tuesday, or whatever amount you are comfortable with, Wikipedia will be able to continue. Thank you.
Version 2: This Tuesday, Wikipedia really needs you. This is the nth time we’ve shown ads to you. 98% of our readers don’t give money, they look the other way …… We humbly (humbly) ask you not to cross out this message.
Version 3: If Wikipedia is useful to you, please take a minute and support us with a random amount to help keep the site going. We only need 1% of our readers to donate. We have not yet reached our goal. Please help us forget about fundraising so we can focus on getting Wikipedia up and running. Thank you.
Obviously, this fundraising ad gives a sense of urgency, as if Wikipedia is going to go down if we don’t reach our fundraising goal this Tuesday, as if the staff is so busy raising money every day that the site is running out of people. As well, its wording carries a veiled moral condemnation of users, as if to say, “If you don’t donate today, you’re just like the majority of people who eat for free.” ……
In addition, some other keywords in the text signal that the Wikipedia website collects data on users such as behavioral tracking and uses it for targeted fundraising ads.
After all, former WMF CEO Katherine Maher, who just stepped down, said herself that Wikipedia’s nonprofit nature is a big reason why the organization can be trusted: “We don’t do headlines, we don’t put up ads, we don’t collect and sell your data.”
What’s happening in reality doesn’t exactly match, or even directly contradict, what the WMF is claiming.
Screenshot source: The Daily Social Distancing Show on YouTube
Let’s be clear: if Wikipedia were really short of money, this would be an acceptable fundraising ad. But the problem is that it’s the “passive-aggressive” wording of WMF’s fundraising that gives the false impression that it’s financially strapped.
I don’t see too many Wikipedia fundraising ads myself, only two or three times a year, but if you consider the WMF’s approach to be deceptive, then I’m one of the victims. …… Because I’m a heavy Wikipedia user, I benefit greatly from them, so when I see them, I donate $20 to support the work of Wikipedia. I’m sure it won’t cheat me, right?
So this time I was surprised and sorry to find out that Wikipedia, or more precisely the WMF behind it, is really not short of money.
Of course, Wikipedia doesn’t force people to donate, either – but this kind of pitying look of asking people to donate money when you clearly don’t have any is not very comfortable. Even some Wikipedia community editors can’t stand it. One Brazilian editor, Felipe da Fonseca, wrote, “The beggarly posture of using other people’s work to ask for money is just too ugly and unethical.”
But why is Wikipedia bent on having its own way?
Before the WMF established its endowment in 2016, reader donations typically accounted for up to 90% of total revenue; things have gotten better since 2016, but in general, “fundraising and grants” revenue (both from individual readers and corporate organizations) is still a major component of the WMF’s annual revenue, with readers account for a large percentage of revenue.
WMF executive Seitz-Gruwell also said she wants to maintain reader donations as a major source of revenue (and thus maintain Wikipedia’s “purity” with corporate customers.) In other words, at least at this stage, WMF’s revenue would be materially affected by the loss of donations from regular users. This is the real reason why the WMF, which is not short of money, must act as if it is.
Third, where did all the money go?
According to publicly available information, WMF has enough money in reserve to run Wikipedia and its other web servers for over 70 years – and that’s just using WMF’s self-disclosed reserve amount. If you add in the aforementioned endowment funds, which are not properly disclosed, WMF’s websites will be able to operate for at least another 60 years.
Where does all the money raised by WMF go? There are several routes: money transfer, new business development, human resources, and political contributions.
- Let’s look at the money transfer first
As mentioned earlier, WMF’s endowment fund, which is close to reaching its $100 million goal, is managed not by itself but by the Tides Foundation. In addition to the daily donations from readers that end up at Tides, each year WMF transfers $5 million to Tides, and occasionally to other Tides Foundation funds and affiliates.
At the same time, however, Tides also initiates regular donations to WMF in variable amounts, from $25,000 in each of FY2015, FY20116 and FY2017, becoming nearly $900,000 in FY2018 and jumping to $2.54 million in FY2019.
This creates a bizarre situation where a charity is moving around between two organizations that are not exactly transparent. The problem is that the money WMF donates to Tides is included in expenses, while the money Tides donates to WMF is not reflected in the latter’s financial disclosures, creating a rather hidden “slush fund.
In addition, the two organizations share staff, such as Amanda Keton, WMF’s legal director who is also CEO of Tides Advocacy, a Tides affiliate (which received an $8.7 million fundraiser from WMF in 2019).
It can be said that WMF’s practices are not at all transparent and trustworthy when it comes to money transactions of affiliated foundations ……
- Let’s look at new business development
Wikipedia has several sister sites, including Wiktionary, a library of articles, quotations from famous people, travel guides, multimedia libraries, and shared editorial news feeds. These projects have the same properties as Wikipedia, and they all operate in an open editorial model. These projects also rely on WMF’s financial investment for their operation and maintenance.
As I mentioned earlier, WMF has raised enough money over the years to keep Wikipedia running for a total of a hundred years, and it wouldn’t hurt to give a little to other sister sites. However, not only does the WMF not intend to stop raising money, it will continue to develop new for-profit businesses to make even more money.
Last year, a for-profit project was formed within the WMF called Okapi, and this year it was officially spun off as Wikimedia Enterprise (hereinafter referred to as Wikimedia LLC), an independent company that provides APIs for large corporate users to help them better use and edit the content of WMF-owned sites like Wikipedia.
Wikimedia LLC’s introductory website states that the project “focuses on organizations that want to reuse Wikimedia content in other contexts, providing them with large-scale data services that make their services faster, more comprehensive, more reliable and more secure.” The project is “dedicated to improving the user experience for Wikimedia readers in scenarios beyond the website, expanding the audience for content and improving its discoverability,” among other things.
In other words, Wikimedia LLC exists to take the vast majority of content contributed by volunteers and community editors on Wikipedia and its sister sites, and turn it into a service that can be offered to large customers and generate revenue.
An overview of the WikiLLC business model
These unpaid contributors are involved in the Wikipedia project out of the same desire to make information more equal and open.
But seeing the WMF trying to make money from their unpaid contributions, and seeing former WMF owner Maher making money from big tech companies through Wikimedia LLC while claiming that Wikipedia can avoid being associated with them – it must not be easy for these contributors! ……
Incidentally, Google, one of the major donors to the WMF, is also a big moneymaker for Tides. Between these three organizations, there are also some unspoken monetary transactions. Now, Google Search and Google Assistant will also use the API provided by Wiki LLC, making Google a big customer of WMF, which makes the relationship even more complicated ……
- and then look at the manpower costs
Although it is certainly not comparable to other large companies with similar traffic, WMF is not a small agency by any stretch of the imagination.
WMF started with 3 people, grew to 240 in 2014, and today it has over 500 employees.
It is such a “humble” organization that has to be embarrassed to ask its readers for money, but the personal income of the executive team is as high as $300,000 to $400,000 per year, accounting for a large part of the $2 million in expenses disclosed each year.
Most dramatically, according to Kolbe, the number of employees dedicated to fundraising within WMF is currently over 40. From what we know, these employees’ daily work is not only to change the fundraising copy and publish the advertisement, but also to handle the aforementioned unspecified money transactions and administrative procedures with other foundations and affiliated organizations.
- Finally, political contributions
A large part of the WMF’s annual expenses is spent on lawyers and public relations. The public relations firm Minassian Media has charged the WMF a total of at least $1.58 million in public relations fees over the past four years – how can you say, the best is worth the money, after all, the company only employs three or four people… …
Minassian Media was founded by Craig Minassian, a full-time employee of the Clinton Foundation and former member of both the Bill and Hillary Clinton presidential campaigns and former Clinton White House assistant press officer. Two other employees of the firm are also closely associated with Hillary Clinton’s campaign, having written and published campaign literature for her.
The delicate relationship that WMF has formed with the Clintons through this PR firm is not hard evidence of political contributions, but it is at least enough to constitute a conflict of interest and a far cry from the neutral image that Wikipedia has been trying to project to its readers.
Of course, even if WMF did pick this PR firm for its political connections, there is nothing wrong with that, after all, its rhetoric after the discovery of its wild overfunding in recent years was “proactive and far-sighted” . In case Wikipedia is politically oppressed in the future, it is good to have more friends to talk to.
It is true that this is not the first time that WMF’s fundraising frenzy and various opaque practices have been publicly exposed and criticized, but over the past few years, WMF has not been long enough to achieve a real overhaul.
Since it is still a non-profit organization, there is no risk as long as it operates within the limits of the relevant laws. That’s why the Wikipedia volunteer community has become increasingly vocal about the WMF, and some editors have begun organizing actions to protest its practices and force it back on the right path.
For example, some editors want to organize a media action “Not in our name” to force Wikipedia to be more transparent in disclosing its true financial status by threatening to stop actively participating in editorial work.
It is worth mentioning that many of the volunteers are not so harsh: they are not interested in how much money the WMF raises or what to do with it, and they are involved in the editing process purely out of concern for equality of information or personal interest.
They just want the WMF to get rid of the moralizing and financial misrepresentations in its fundraising ads and give users a truly free and open Wikipedia.
After the article.
For me, this incident has made me more aware that those who contribute deserve more respect (and compensation, even though they work voluntarily and without pay), and of course, as the provider of the site, WMF does pay for it.
I’ve been giving money to Wikipedia every year since, after all, it’s become a habit. But I also hope that those who also donate and are of a similar mindset will join together to more actively monitor Wikipedia and the WMF in a better direction.
 https://meta.wikimedia.org/wiki/Wikimedia_Foundation_reports/Financial/Audits/2019-2020_-frequently_asked_questions#Why_is the_Wikimedia_Foundation_increasing_its_cash_and_investment_balance?
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/wikipedia-is-not-short-of-money-so-why-does-fundraising-always-have-to-be-morally-abusive/
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