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ICANN, with $143 million budget, running out of cash

Kevin Murphy, December 19, 2017, 16:27:38 (UTC), Domain Policy

ICANN is to tighten its belt over the coming year as lower than expected revenue from domain name registrations has caused a budget shortfall and dwindling reserves.
The organization is $1 million short so far in its fiscal 2018, which CEO Goran Marby says is forcing him to look at making cuts to staffing costs, travel expenses, and community-requested projects.
Meanwhile, chair Cherine Chalaby says the board of directors is worried that ICANN’s reserve fund is $80 million shy of where it ideally should be.
Both men outlined their priorities in separate end-of-year blog posts this week.
It does not yet appear that anyone’s job is on the line.
Marby indicated that headcount would be reduced through attrition — sometimes not replacing staff who leave — rather than lay-offs.
“The reality is, ICANN has a significant budget but not an infinite budget. We need to make some changes, and can’t do everything we are asked,” he wrote, before explaining some areas where “efficiencies” could be found.

For example, when someone leaves ICANN org, we are taking a close look at the vacancy, the team’s needs and other people’s availability and skills before deciding if we are going to fill the role. We are also looking at our staff travel practices for ICANN meetings and other ICANN org commitments, reviewing our language services support levels and offering, and trying to consolidate our collateral and the volume of reports. We are looking at what projects we could delay or stop

Some might say that this renewed focus on how ICANN manages its money is overdue. The organization has bloated fast over the last several years, as over 1,200 new gTLD registries became contracted parties and interest in ICANN’s work grew globally.
In its financial year ending June 2012, it budgeted for revenue of $69.7 million and expenses of $67 million.
For FY2017, which ended this June, it was up to revenue of $132.4 million and expenses of $126.5 million.
Over the same period, headcount swelled from 158 full-time equivalents to 365. That was anticipated to grow to 413 by next June.
For the financial year ending next June, ICANN had budgeted for $142.8 million revenue, growing from $135.9 million, but Marby said in his blog post today that it might actually be flat instead.
As much as 64% of ICANN’s revenue is driven by transaction volumes — registrations, renewals and transfers — in gTLDs. In the quarter to September, revenue was $1 million behind plan due to lower than expected transactions, Marby said.
The message is to expect cuts, possibly to projects you care about.
Adding complexity, the ICANN board has decided following public consultation at 12 months funding is the appropriate amount ICANN should be keeping in reserve — so it can continue to function for a year should its contracted parties all abruptly decide not to pay their dues.
Unfortunately, as Chalaby outlined in his post today, this reserve pool is currently at about $60 million — just five months’ worth — so the organization is going to have to figure out how to replenish it.
Building up reserves to the tune of an extra $80 million is likely to put more pressure on the regular annual budget, leeching cash from other projects.
Chalaby said that the board will discuss its options at its February 2018 workshop.
Marby, meanwhile, said that a new budget will be out for public comment in mid-January.

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Comments (3)

  1. Tripee says:
    December 19, 2017 at 5:43 pm

    It is not surprising in an organization that does not try to help and grow their main revenue drivers , registries and registrars
    It is focused on lofty policy objectives, that while nice , will not keep the lights on

    Reply
  2. Acro says:
    December 19, 2017 at 6:01 pm

    “expenses of $126.5 million”
    Do you have a breakdown of these expenses?

    Reply
  3. Ken Stubbs says:
    December 20, 2017 at 7:19 pm

    ICANN needs to start getting more realistic when it comes to meeting sites and travel.
    In the past ICANN used the far-flung sites as a method to outreach to areas underserved.This is not as necessary as it was 10 to 15 years ago due to scholarship and future leader programs (as well as remote participation structures) which go a long way towards enhancing participation from underserved areas. Let’s hope that of those parties ICANN seriously considers their ability as communicators and requires them to reach out in their communities educate and elaborate on sessions that they were able to attend during the meeting that they were subsidized for.
    For political reasons, ICANN has refused to hold meetings at venues which are much closer
    to its principle offices. (i.e. Southern California) This has resulted in millions of additional dollars in travel costs i.e. planes, rooms, etc as well as freight & transportation costs for equipment etc.
    Let’s be frank people, you need to be more realistic in managing your meeting costs.. The the majority large organizations like ICANN have a discipline when it comes to meeting venues.
    You need to start planning further out and look at minimizing costs for staff travel for these events.
    It would be very interesting to see a detailed cost breakdown for meetings held in venues like Singapore Johannesburg etc. in the case of Abu Dhabi, the overall costs had to have been significant even if partial subsidies were provided by local sponsors. .iCANN needs to consider having future SO functions like the GDD meetings etc. around the general ICANN meetings.
    These are my own personal reflections coming from attendance at some 45-50 meetings over the last 20 years

    Reply

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