As part of the Wikimedia Foundation’s ongoing series about organizational policies and practices, this Diff post shares more information about the Form 990, an informational tax form required of nonprofits in the United States. Tax Form 990 summarizes information about the Wikimedia Foundation’s financial health and governance practices, and is published each year. Our Form 990 for fiscal year 2021-2022 is now available.
This year, the Wikimedia Foundation is trying something new. By introducing the Form 990 here on Diff, we hope to make the content more accessible and understandable to anyone unfamiliar with the complexity of this document. Specifically, we highlight some of the key numbers from this year’s form, and share links to additional data sources where the Foundation regularly publishes information about our finances and practices.
Key takeaways from the Form 990
The Form 990 has twelve sections, and covers topics such as tax compliance, governance, an organization’s balance sheet, revenue, and expenses. A full description of each section is available in our FAQ. Together, these sections provide a picture of the organization’s overall financial health for the past fiscal year, with financial statements similar to those in an annual audit report. This year’s Form 990 contains several key takeaways:
- Growth in support of Wikimedia projects: In the 2021-2022 fiscal year, the Foundation invested 77% in Program Services, an increase of 4 percentage points as compared to fiscal year 2020–2021 of 73%. This measure reflects how much of the organization’s expenses are allocated towards the programs and services that it exists to deliver. This surpasses third-party standards for how much nonprofit organizations should spend on programs, which should be the majority of their budget (more than 65% according to the Better Business Bureau).
- Increase in community grants: During fiscal year 2021-2022, the Foundation’s revenue received through donations and grants, totaled $164.2 million, a roughly $9 million increase from the prior fiscal year. The Foundation increased its grants programme by 50%, from $10.1M in the prior fiscal year to $15.2M in fiscal year 2021-2022.
- Comprehensive governance policies: The Foundation follows a number of best practices for governance as an established nonprofit organization. The Form 990 includes a section confirming written policies regarding our approach to conflicts of interest, protecting whistleblowers, guidelines for data retention and governance practices, including those related to the Foundation’s Board structure, voting rights, and independence. These governance policies and practices have helped us to receive the highest rating from sites like Charity Navigator.
Reporting on leadership transitions in this year’s Form 990
The Form 990 also requires disclosure of compensation information about the highest paid individuals at an organization, including salaries as well as additional payments. This year’s Form 990 reports on a period of significant leadership transition at the Wikimedia Foundation, including the CEO stepping down. It is common practice at large organizations, including non-profits, for executives who depart voluntarily to receive separation payments as part of mutually negotiated agreements. These agreements are approved by the Board of Trustees. The amount and components of executive packages typically take into account a number of factors, including the salary, performance, level of responsibility, tenure at the organization, and other services they provide the Foundation during the transition, in addition to external market conditions for their type of role. This year’s form 990 reflects a number of such agreements with former Wikimedia executives.
Guidelines for compensation and severance policy
The Foundation’s approach to compensation is reviewed regularly and rooted in a range of factors. These factors include external benchmarks that are set using an established third party compensation survey based on median base salaries (e.g. 50th percentile) of similar roles across industries in a specific geography. The Foundation also proactively published the compensation for new executives who recently joined (CEO, CPTO), although this data is not required to be disclosed in this Form 990 due to the reporting period.
This January, the Wikimedia Foundation introduced a new standardized severance policy, which was shared in a Diff post as part of this series. Separation payments to two additional executives that precede the implementation of this standardized policy will be disclosed in future Form 990s.
A commitment to financial transparency and visibility
The Form 990 is one of several financial documents that provide information on the Foundation’s financials and organizational policies. As part of the Foundation’s commitment to accountability and transparency, we publish several other documents including our annual audit report, annual plan, and other posts in this blog series around compensation practices, global guidelines, and our approach to hiring, which provide detailed budget information and transparency on compensation principles and standardized policies.
Together, these documents are used by organizations like Charity Navigator, a non-profit rating organization, to measure an organization’s financial health. Each year, the Wikimedia Foundation receives an “Accountability & Transparency” rating from Charity Navigator. The score tracks sixteen different metrics of publicly available information and governance policies.
Year on year, the Wikimedia Foundation continues to meet all of these criteria, and to go beyond legal requirements with on-wiki documentation of the Foundation’s programs, practices, and reports. This year, we’ve shared more context and information than ever before around the Form 990, and intend to continue this Diff series with additional information in the coming months.
Can you help us translate this article?
In order for this article to reach as many people as possible we would like your help. Can you translate this article to get the message out?Start translation