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Minutes | Meeting of the Finance Committee of the Board (BFC) | 16 February 2023

BFC Attendees: Harald Alvestrand, Becky Burr, Edmon Chung, Avri Doria, Danko Jevtović (Chair), and León Sánchez

Other Board Member Attendees: Alan Barrett, Maarten Botterman, James Galvin, Manal Ismail, Patricio Poblete, Tripti Sinha, and Matthew Shears

ICANN org Attendees: Chris Bare (Director, Strategic Initiatives), Amy Bivins (Senior Counsel), Xavier Calvez (SVP, Planning and Chief Financial Officer), Franco Carrasco (Board Operations Specialist), Kim Davies (VP, IANA Services and President, PTI), Daniel Halloran (Chief Data Protection Officer and Deputy General Counsel), Aaron Hickmann (Senior Director, Operations Service Delivery and Support), Lars Hoffman (Senior Director, Policy Research and Stakeholder Programs), Elizabeth Le (Associate General Counsel), Karen Lentz (VP, Policy Research and Stakeholder Programs), Becky Nash (VP, Planning), Shani Quidwai (Sr. Director, Finance), Lisa Saulino (Board Operations Specialist), Amy Stathos (Deputy General Counsel), and Theresa Swinehart (SVP, Global Domains and Strategy)

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

  1. BFC Workplan – The BFC discussed its Workplan for the year, which is on target.
  2. New gTLD Financial Review Topics – ICANN organization (org) reviewed the topics for which it is seeking the Committee's input. The topics include: (i) financial commitments and main cost drivers; (ii) variable versus fixed costs; (iii) mitigation strategies to reduce financial risks; (iv) cadence for requesting funding approval from the Board; and (v) cash flow analysis. ICANN org noted that there are other topics that the org is researching that will be presented to the BFC for consideration at a future meeting.
  3. New gTLD Financial Commitments and Cost Drivers – The BFC received a briefing on the financial commitments and costs drivers for the next round of the New gTLD Program, noting that development and implementation expenses are the upfront financial commitments that ICANN must incur before any application fees are received. To date, ICANN has already incurred US$8 million in development costs via the Operational Design Phase (ODP). There is a cost recovery program in which application fees will repay the development and implementation costs and fund the program costs once the application window opens. The application fees do not cover the operational costs once the top-level domains have been delegated. The BFC reviewed and discussed different financial options for the program design based upon cost drivers for development and implementation as well as program operations.
  4. New gTLD Fixed versus Variable Costs - The BFC received a briefing on the fixed and variable costs for the next round of the New gTLD Program. Once an option for the program design is chosen, the development costs will be considered a fixed and committed cost that cannot be amended based on the number of applications received. The BFC discussed variable and semi-variable expenses associated with development and program operations. Examples of variable and semi-variable expenses include the following: system automating and development; communications, policy and outreach; application services and support; org support functions; evaluation costs; costs associated with quality assurance (QA), contention resolution, and pre-delegation; and infrastructure maintenance and QA.
  5. New gTLD Financial Risk Items and Mitigation Strategies - The Committee discussed the financial risks associated with operating the next round of the New gTLD Program and the mitigation measures to address such risks.
  6. New gTLD Funding Needs and Cash Flow Analysis – The Committee discussed funding needs and potential funding sources for upcoming work on the New gTLD Program until the next round application fees are collected. The intent is to repay the funding with the application fees once the fees are received. ICANN org noted that, in order to proceed with the project, additional funding will need to be considered in the reasonably short term as the funding allocated to the ODP is nearly depleted.

Published on 4 May 2023