Minutes | Meeting of the Finance Committee of the Board (BFC) | 17 April 2023

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

BFC Member Apologies: Harald Alvestrand and León Sánchez

Other Board Member Attendees: Maarten Botterman, Sally Costerton, James Galvin, 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), Carlos Reyes (Director, Policy and Strategy), 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. Proposed-for-Adoption FY24-28 Operating and Financial Plan (O&FP) FY24 Operating Plan and Budget (OP&B) (collectively, the Plans) - The Committee received a briefing on the proposed for adoption FY24-28 O&FP and FY24 OP&B (collectively Plans). There were no changes to the proposed Plans resulting from the public comment process. The proposed Plans include the following changes to the draft Plans as a result of Board decisions that occurred after the Plans were published for public comment: (i) addition of the Registration Data Request Service (RDRS) 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 as reflected in Board Resolutions 2023.02.27.01-2023.02.27.09 and accompanying materials; and (ii) 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. The budget for RDRS is being funded by the Supplemental Fund for Implementation of Community Recommendations (SFICR). For New gTLD Program Next Round, the BFC noted that the draft FY24 OP&B assumed a preparation phase of $13M over the entire FY24 and that the proposed FY24 OP&B has been changed to reflect the recent Board approval of US$9 million in funding through October 2023. The funding source for this work is unchanged and will be the New gTLD Program remaining application fees from the 2012 round. The proposed Plans also include the following prioritized activities from the FY22 through FY24 Planning Prioritization process: (i) CCWG Enhancing ICANN Accountability Work Stream 2 (WS2); and (ii) forty-five Board-approved recommendations from Specific Review Recommendations. The proposed Plans also include the following prioritized Board-approved activities from the FY24 Planning Prioritization process: (i) GNSO PDP Implementation: EPDP Temporary Specification for gTLD Registration Data – Phase 2A; (ii) ccNSO PDP Implementation: PDP 3 Retirement; (iii) ICANN Grant Program; and (iv) Specific Review: SSR2 Recommendation (outreach and education on ICANN's involvements and achievements in the security space). The Committee noted that no change is needed to the draft Plans with respect to the considerations relating to inflation and current economic challenges as these issues were already reflected in the draft Plans that were published.

   The Committee noted that the ICANN Operations Funding projections remain unchanged from the draft plans that were published for public comment. In consultation with the Global Domains and Strategy team, ICANN org is maintaining the US$145 million funding budget in FY24. The projected FY24 budget is balanced.

   The FY24-28 five-year projections remain unchanged from the draft published for public comment. The Committee noted that the biggest increase in projected Operating expenses are personnel costs, due to projected inflation area increases. The average headcount for operations is flat throughout the five-year period at 413 full time employees. While staffing is headcount is projected to increase, most of those increases are not within the org's core operations as they are to support other programs and initiatives that are separately funded, such as the Grant Program and next round of the New gTLD Program. The Committee also noted that the budget is balanced over the five-year time frame.

   Regarding the Additional Budget Request (ABR) process, there are no changes in the budgeted amount from the published draft budget. The draft budget included a placeholder of US$300K because the ABR submissions had not been received when the draft plans were published for public comment. Since the draft plans were published for public comment, ICANN org has received 18 ABR submissions from eight different groups. ICANN org collaborated with the community to evaluate the submissions. Seven requests are recommended for approval for a total of US$191K. Eleven requests are not recommended for approval because the requests: (i) did not demonstrate direct relation to current ICANN community policy development, advisory, and/or technical work; (ii) asked for additional travel to ICANN public meetings which is against the ABR principles; and (iii) should utilize other ICANN programs in place such as NextGen and Community Regional Outreach Program. ICANN org is setting aside the remaining US$109K as a placeholder for potential requests and will therefor budget for the full US$300K that was included in the draft budget.

3. Next Steps and Recommendation – Following discussion on the proposed for adoption FY24-28 O&FP and FY24 OP&B, the BFC approved a recommendation that the Board approve the proposed Plans.

   • Action: ICANN org to prepare relevant materials for Board consideration.