Truth about donating to Wikipedia

Wikipedia relies on donations from its users to fund most of its operations. However, a quick look at the company’s financials makes the desperate tone in the donation banners seem disingenuous.

Wikipedia was the brainchild of financial trader Jimmy Wales and philosopher Larry Sanger. In March 2000, they created Nupedia, a free online English encyclopedia with articles written by experts.

After Wales defined the goal of creating an encyclopedia that anyone could edit, Sanger, Nupedia’s editor-in-chief, proposed using a wiki, software designed for that type of open collaboration.

This concept was proposed in a Nupedia newsletter in early 2001, and Wikipedia was launched on 15 January as a wiki feeder project.

Eventually, given Wikipedia’s rapid growth, Nupedia had its servers permanently taken down in 2003, and its content was incorporated into Wikipedia.

That same year, the Wikimedia Foundation (WMF), the organisation responsible for hosting and funding Wikipedia, was founded.

Following fears that the website would begin using commercial advertising, Wales announced it would not display ads, and the domain was changed from wikipedia.com to wikipedia.org.

However, the company needed capital to operate. According to WMF, it has primarily financed itself through donations from the public, using email campaigns and fundraising banners.

It launched its first funding campaign in 2005 from 17 to 28 February, followed by another in August, and a third in December.

Wales personally endorsed the final fundraising campaign of 2005, and his face appeared on banners across the site.

WMF also receives grants from various tech companies and philanthropic organisations. However, these only started coming in in the late 2000s.

“The Wikimedia Foundation is primarily funded by Wikipedia readers, which allows us to maintain our independence and ensure that Wikipedia is not influenced by outside financial interests,” a WMF spokesperson told MyBroadband.

“The remainder of our day-to-day funding comes from institutional grants and gifts as well as smaller revenue-generating projects, including the Wikipedia Store.”

Finances looking stable

According to a summary of WMF’s revenue and expenses, its first few years saw it generate nearly double the money needed to cover its costs.

In the 2003/04 financial year, it generated $80,129 (R1.44 million) in revenue, comfortably covering its expenses of $23,463 (R421,630).

By 2010/11, it generated $24.8 million (R446 million), with $17.9 million (R322 million) in expenses and a $24.2 million (R435 million) net asset value.

This trend has continued ever since, with expenses remaining well below revenue generated and net asset value rising, reaching $256.3 million by the end of the 2023/24 financial year.

In 2016, the WMF established the Wikimedia Endowment, a long-term fund “to ensure the sustainability of Wikipedia and other Wikimedia projects.”

According to its 2023/24 FY financial reporting, the endowment was valued at $144 million.

The same report provides a breakdown of the company’s finances, with $168.2 million received from contributions and total support and revenue amounting to $185.4 million.

As for expenses, it says Internet hosting costs $3.1 million, less than half of “donation processing expenses,” which come in at $7.5 million.

However, most of the money is allocated to “salaries and benefits,” which WMF says it pays $106.8 million.

To better understand how it spends its money, MyBroadband contacted the WMF, which provided a breakdown for its 2024/25 budget.

Just under half of the $188.7 million budget, or $92.8 million, goes towards the foundation’s product and technology work, and providing critical functions to support its basic operations.

“This includes the costs of all of the teams that do this work, the cost of running our data centres, and more,” it said.

WMF told MyBroadband that it employs nearly 650 staff, most of whom work in product and technology. They ensure quick load times, secure connections, and better reading and editing experiences.

It’s worth noting that Wikipedia receives over 15 billion page views monthly and is available in more than 300 languages.

$44.7 million has been allocated to “effectiveness”. The foundation said this involves “focusing on sustainability, streamlining employee engagement and effectiveness, and streamlining foundation processes.”

Another $32.8 million was allocated to enabling more people to share information on Wikipedia and other WMF projects.

The final $18.5 million is allocated to “legal efforts that protect free expression, prevent censorship, and advocate for laws and regulations that keep Wikipedia accessible for all to use.”

The foundation noted that it has a working capital policy that allows for a 12 to 18-month buffer should it encounter revenue shortfalls or unplanned expenses.

Encouraging donations

Considering that the WMF relies on donations to fund its operations, it is no surprise that banners appear frequently when users access the website.

However, the tone of the banners’ copy creates the impression that Wikimedia is much worse off than it is, with banners using phrases such as “please don’t wait until tomorrow to help.”

Other banners include references to Wikipedia editors, contributors, and fact-checkers, whose “dedication ensures that the information you seek is accurate and reliable.”

Given that these individuals are volunteers who contribute to Wikipedia without being compensated, it is curious that they are referred to when seeking donations.

MyBroadband asked the WMF about the desperate tone used in its fundraising copy.

It responded without directly addressing the questions, saying that the “banner messages are crafted with feedback from donors and volunteers who edit Wikipedia to ensure they’re clear, accurate, and meaningful.”

While the WMF says that it needs these funds to keep the platforms running, Wikipedia’s VP of engineering estimated in 2013 that it could comfortably operate for $10 million per year.

Therefore, Andreas Kolbe, former co-editor-in-chief of The Signpost, a Wikipedia community newspaper, argues that the WMF is raising funds to boost its savings and fund other projects.

“The WMF’s financial independence is clearly not at any risk. So what is going on?” Kolbe says.

“The official answer is that the WMF thinks you can never have too much money put aside for a rainy day.”

“The WMF also has high-flying, global plans to ‘become the essential infrastructure of the ecosystem of free knowledge’ by 2030,” he continues.