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Minutes | Meeting of the Finance Committee of the Board (BFC) | 28 March 2023

BFC Attendees: Becky Burr, Avri Doria, and Danko Jevtović (Chair)

BFC Member Apologies: Harald Alvestrand, Edmon Chung, and León Sánchez

Other Board Member Attendees: Patricio Poblete and Katrina Sataki

ICANN org Attendees: Michelle Bright (Board Content Coordination Director), Xavier Calvez (SVP, Planning and Chief Financial Officer), Franco Carrasco (Board Operations Specialist), Elizabeth Le (Associate General Counsel), Becky Nash (VP, Planning), Shani Quidwai (Sr. Director, Finance), and Amy Stathos (Deputy General Counsel)

The following is a summary of discussions, actions taken, and actions identified:

  1. BFC Workplan - The Committee discussed its workplan, which is on target.
  2. Public Comment Review of Draft FY24-28 Operating and Financial Plan (O&FP) FY24 Operating Plan and Budget (OP&B) - The Committee received a briefing on the public comments received on the draft FY24-28 O&FP and FY24 OP&B. A total of 81 comments were received from six groups relating to the following categories: operating initiatives; functional activities; financial management; operating plan; document structure; and other. The comments were broken down as follows: 26 comments from three groups were submitted on the operating initiatives; 23 comments from five groups were submitted on the functional activities; 15 comments from five groups were submitted on financial management; eight comments from three groups were submitted on the operating plan; seven comments from four groups were submitted on document structure; and two comments from two groups were submitted in the other category. ICANN org carefully considered all the comments received and prepared responses to each in the Public Comment Summary Report, which is scheduled for publication on 30 March 2023. ICANN org determined no significant changes are needed as a result of the public comments received. Following discussion, the BFC reviewed the next steps in the FY24 planning process. The remaining steps include: (a) publication the Public Comment Summary Report; (b) BFC consideration of FY24 Plans for recommendation to Board for adoption, which is anticipated to occur on or about 13 April 2023; (c) publication of the proposed for adoption FY24-28 O&FP and FY24 OP&B, which is anticipated to occur on or about 15 April 2023; (d) Board consideration of the FY24-28 O&FP and FY24 OP&B for adoption, which is anticipated to occur on or about 30 April 2023; and (e) the Empowered Community Period, which is anticipated to occur in May/June 2023.
  3. Changes to Draft FY24 OP&B – ICANN org reported that although no changes were made to the Draft FY24 OP&B as a result of the public comments proceeding, the following changes are required to the Draft FY24 OP&B as a result of Board decisions that occurred after the plans were published for public comment: (i) addition of the Registration Data Request Service to the budget in the amount of US$3.5 million which is to be incurred over FY23 and FY24, and is inclusive of staff resources; (ii) additional funding of US$9 million for the work on the next round of the New gTLD Program through October 2023 as reflected in Board Resolutions 2023.03.16.04 – 2023.03.16.15. Budget for Registration Data Request Service was not included in the Draft FY24 OP&B because the Board had not approved the project yet. This project is being funded by the Supplemental Fund for Implementation of Community Recommendations (SFICR). For New gTLD Program Next Round, the Draft FY24 Budget assumed a preparation phase of $13M over the entire fiscal year which has been changed to reflect the recent Board approval. The funding for source for this work is unchanged and will be the New gTLD Program remaining application fees.
  4. Auction Proceeds Discussion – The BFC discussed some public comments received on the Draft FY24 OP&B suggesting that ICANN reimburse the US$36 million Auction Proceeds funds that were transferred to the Reserve Fund to it ICANN for the expenses that were incurred during the IANA stewardship transition. ICANN org suggested that this could be considered as part of the analysis of whether there should be a maximum target level for the Reserve Fund, whereby if the Reserve Fund reaches a maximum targeted balance, then future Operating Fund excess could possibly be allocated to the Auction Proceeds to address the reimbursement request. The BFC requested that ICANN org further research establishing a possible maximum targeted level for the Reserve Fund and propose edits, as appropriate, to the ICANN Investment Policy. The BFC noted that ICANN should start this research after ICANN78 so that the org can continue making progress on prioritized work such as the next round of the New gTLD Program until then.

    • Actions: After ICANN78, ICANN org to conduct research as discussed and propose edits, as appropriate, to the ICANN Investment Policy.

  5. Investments Update - The BFC received an update on the status of the funds under management, particularly how the investments have been trending based on the recent events within the financial markets. ICANN org reported that, despite the challenges that specific banks have seen and volatility in the financial markets, ICANN's total investment balances have remained stable with gains across each Fund. ICANN org also provided the Committee with an update on recent banking market headlines. ICANN has little exposure to the banks that are experiencing challenges and ICANN's investments have not been materially impacted. ICANN org reported that it has provided the investment firms that manage the New gTLD Program and Auction Proceeds funds with temporary instructions to suspend the purchase of any securities of the impacted banks and to proactively inform ICANN if there are any securities that have been added to the credit watch list. ICANN org will continue to work with its investment consultant and the four investment managers that mange ICANN's investments to monitor the situation and to have a broader understanding of the financial markets, the impact to ICANN's investments and any potential actions for ICANN. ICANN org will continue to keep the BFC informed.
  6. FY23 Financial Forecast Update – ICANN org provided the Committee with forecast for FY23, having concluded eight months and forecasting the remaining four months of the fiscal year. The FY23 forecast projects an increase of US$4.5 million to the Operating Fund. The FY23 Forecast Funding is US$2 million lower than the FY22 Budget, due to projected economic challenges. The FY23 Forecast Expenses are US$18 million higher than the prior year, primarily due to the resumption of travel and meetings in FY23 and increases in the number of staff.

Published on 19 May 2023