Wikipedia:Wikipedia Signpost/2023-10-03/News and notes

News and notes

Wikimedia Endowment financial statement published

Wikimedia Endowment financial statement for 2016–2023 published

Following discussions at User talk:BilledMammal/2023 Wikimedia RfC and elsewhere (1, 2, 3), the Wikimedia Foundation has published a "Wikimedia Endowment Financial Statement" covering the period from 2016 to June 30, 2023 (pictured, click to enlarge). This is the time period during which the Endowment was held by the Tides Foundation.

The Foundation has thus fulfilled Jimmy Wales' promise to increase the Endowment's transparency (see previous Signpost coverage).

The statement was accompanied by the following summary:

A look at the figures shows that the Endowment suffered significant unrealized losses (almost $22 million) in 2022. The investments held by the Foundation itself also suffered that year (see Wikimedia Foundation financials).

To put this in context, readers should bear in mind that 2022 was one of the worst years for the financial markets in modern history. As Fortune reported:

According to Meta-Wiki, the Endowment is currently valued at $119 million. Documentation of the Endowment's policies and charters is available on the Wikimedia Foundation Governance Wiki; there is also a Phabricator task aimed at setting up an Endowment namespace on that wiki to house all related documentation. – AK

Knowledge Equity Fund: 6 October community call

The Wikimedia Foundation's Equity Fund Committee has announced a community call concerning the upcoming third round of grantmaking from the controversial, $4.5 million Knowledge Equity Fund that provides grants to charitable and advocacy organizations. Concerns have focused on the fact that Wikipedia donors may not be aware that the Wikimedia Foundation spends several million dollars funding organizations outside the Wikimedia movement (see previous Signpost coverage).

The announcement posted on Wikimedia-l on 23 September read as follows:

– AK

Brief notes

New administrators: The Signpost welcomes the English Wikipedia's newest administrator, User:Hey man im josh. His RfA passed 315/3/0.
Articles for Improvement: This week's Article for Improvement (beginning 2 October) is The arts. It will be followed the week after by Superstition. Please be bold in helping improve these articles!

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There is also a discussion at User talk:Jimbo Wales#Endowment financial information where I did a comparison to the S&P 500 and median NACUBO endowment returns performance. Sandizer (talk) 20:39, 3 October 2023 (UTC)[reply]

If I understand correctly, the claim there is that during the investment time period, the S&P 500 went up 13%, while the Wikimedia Endowment through Tides investment went down by 8%. Is that the claim? If that is the claim, does anyone have enough financial expertise to know what is normal / safe / expected for a nonprofit investment strategy? Bluerasberry (talk) 23:02, 3 October 2023 (UTC)[reply]

No, here are the salient parts:

*assuming half of all contributions were realized on the first day of the fiscal year, and the other half on the last day.

I don't think it's outside typical values, but I'm no institutional investment expert. Sandizer (talk) 00:39, 4 October 2023 (UTC)[reply]

22 million lost in 2022? Why not just put the endowment in the bank and stop gambling on the markets? As I've said elsewhere, am totally in favor of WMF having as much money on hand and "banked" as possible, and hopefully quite a few billionaires will donate 25 to 100 million each. Hopefully they will also stipulate, as the WMF ought to be doing on its own, that projects put forward by the Wikipedia community, Commons, and the rest of the volunteer core that the public actually believes that they are funding, will be given, and decide among themselves, how to spend 1/3rd of all donations. Randy Kryn (talk) 23:23, 3 October 2023 (UTC)[reply]
They did not actually lose 22 million. Its misleading to think of an unrealized loss in money that is invested in the long term as being the same as actually losing money. Bawolff (talk) 15:40, 4 October 2023 (UTC)[reply]
In the short term, "gambling on the markets" is a bad idea. For long term investments such as this, it's the prudent choice; financial markets have a long history of rising value, even if occasionally impacted by recessions and crises, whereas cash in the bank will lose value over time due to inflation. — The Anome (talk) 08:04, 5 October 2023 (UTC)[reply]
Generally, things like index funds have had a very good and consistent rate of return, because they represent the whole stock market, which in turn represents the whole economy (or at least the whole economy as can be measured and quantified by finance). Of course, there are incidents (1929, 2008, etc) in which every single stock eats it at the same time, but in these cases, the economy as a whole also eats it; in 1929, for example, I don't think there's any place you could have put money where it wouldn't have been substantially affected by the Depression. I believe, although I'm pulling this out of my hat, that the historic rate of return on index fund investment has been somewhere around five to seven percent. Meanwhile, average year-over-year inflation in the US has been somewhere around three to four percent -- if you just put a bunch of cash into a savings account that pays 1% interest you're actually losing money in the long run because the value gets eaten by inflation. The only real way to offset this is by investing it in something with low variange and average RoI, hence throw it in index funds and forget about it. This part, at least, makes sense to me. I don't know why the Endowment didn't do this, but then again, I'm not a finance guy, so I won't presume to know how this works or what a good idea for investing this amount of money looks like. jp×g 18:59, 5 October 2023 (UTC)[reply]
Jimbo has provided some further information on his talk page, based on his conversation with the Endowment President: [1] Andreas JN 466 19:25, 5 October 2023 (UTC)[reply]

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