July for ICANN represents the start of a new fiscal year. During the public Board meeting in Buenos Aires, the Board approved ICANN's FY16 Operating Plan and Budget, which many of you participated in creating. For those less familiar with the plan, I encourage you to review it as it contains detailed information including a list of projects with resources allocated for FY16 (1 July 2015 – 30 June 2016).
For the 2015 fiscal year ended a few days ago on 30 June, our next Quarterly Stakeholder Call is scheduled on 20 August 1400 UTC to present our FY15 Fourth Quarter activity, including an overview of unaudited financial statements for the entire fiscal year. This is a great opportunity to understand ICANN's financial position and ask any questions in the Q&A segment. You can also view the archived Quarterly calls and presentations here. Also on a quarterly basis, ICANN has been voluntarily publishing detailed financial reports in a similar fashion to publicly listed companies, which can be found here for FY15.
At the end of each fiscal year, we also publish the IRS form 990 that contains detailed financial information including revenues, expenses (such as personnel, travel and meeting costs), assets and liabilities for the fiscal year (the most recent one is from 1 July 2013 to 30 June 2014). Even though it provides information solely designed by the US Internal Revenue Service for its own tax purposes, the form 990 is a useful information to complement our Audited Financial Statement Report, also published every year.
According to IRS 2014 form 990 (pages 1 and 10) it shows that ICANN's revenues for FY14 were $127.8 million, including new gTLD program revenues of $37.2 million, and that ICANN's expenses amounted to $124.3 million, leaving a total excess of revenues over expenses of $3.5 million.
Form 990 also shows the breakdown of expenses by type (pages 1 and 11), for example:
- Personnel costs, at $46.2 million in FY14, includes an average total staff compensation of $132,800 (based on an average headcount of 246 during the period), and a 30% taxes and benefits costs. This represents an increase of 1.3% compared to FY13 where the average staff compensation was $131,000 (based on an average headcount of 175).
- Travel and meetings costs appear on several different lines in the form 990, making it a bit more challenging to understand the total spend in this area. Per the audited financial statements for FY14 (page 7) ICANN spent a total of $20.9 million in staff/constituent/Board travel and travel to the four ICANN meetings held during FY14 and many other meetings. The average cost of each of the four ICANN meetings was $3.8 million. The travel and meeting spend during FY13 was $8.7 million (or 41%) less than in FY14, primarily since only two ICANN meetings occurred during FY13.
The IRS form 990 also includes compensation information for officers, directors and key employees for the preceding calendar year (1 January 2013 to 31 December 2013), which appears pages 7 to 9, and 51 to 55. Data for individuals hired after 1 January represents only the fraction of the annual compensation and some executive employees may not appear in the list if hired after this timeframe.
In addition, the form 990 also requires indicating the compensation of the five highest paid independent contractors. In this area, thanks to useful input and interaction with George Kirikos, ICANN has included all of its vendors in the list used to determine the five highest paid, and has actually disclosed all vendors above $1 million, exceeding the IRS disclosure requirements, to a total of 13 vendors.
The Audit Financial Statement report, the latest available here, provides a breakdown of ICANN's financial statements for ICANN's Operations and the new gTLD program (see pages 17 through 22), in addition the standard financial statement schedules.
Here you can see that while ICANN held cash and investments totaling close to $310 million as of 30 June 2014 (page 6), $210 million of it is from the balance of the new gTLD application fees, unspent as of 30 June 2014 and remaining to be spent on the program, and $100 million corresponds to ICANN's Operating and Reserve funds (page 17).
Being a non-profit, traditional financial analysis metrics and ratios like profit margin or return on investment do not apply to ICANN of course, but the form 990 and the audited financial statements can provide useful understanding of the stability and security of a non-profit organization. As an example, the ratio of annual operating expenses compared to reserves (cash/investments), which helps in measuring the stability of an organization in relation to its size, is a relevant metric to a non-profit organization like ICANN. This ratio for ICANN is 97% at the end of FY14, and ideal position being around 100% or above.
There is a lot of financial information produced and published by ICANN, often complex and challenging to understand. ICANN remains committed to continue disclosing more information in a simple way, in order to continuously enhance its accountability and transparency in managing funds in the public benefit.
More Information
To learn more about ICANN's financials, you can:
- Join the next Quarterly Stakeholder Call on 20 August - register here
- View the audited financial statements in the 2014 Annual Report
- View current and historical financial information
- Participate in the Finance sessions held at ICANN Public Meetings - next one in Dublin in October, and remote participation is always available
