[CCWG-ACCT] Budgetary veto/control solves the wrong problem and avoids solving the right one

Mathieu Weill mathieu.weill at afnic.fr
Wed Jul 29 09:31:22 UTC 2015

Hi Chris,

Thanks for starting a list of key and concrete scenarios to outline how 
the proposed measures could work. I think that's useful and am tagging 
this email for Hillary as this type of use-case would be useful to our 
communications plan.

Le 29/07/2015 06:50, Chris Disspain a écrit :
> Let’s assume that the single member has a total of 20 votes (5 each 
> for ASO, ccNSO, GNSO and ALAC) and that the threshold for the veto is 
> 75%. That means that 15 votes are required.
> Let’s assume that ALAC asks for an allocation of $2,000,000 to run an 
> At Large Summit. At the moment, that is an extraordinary item (i.e. it 
> is not automatically budgeted for each year or each X years) and the 
> process of approval involves, in essence, the Board approving it. 
> Under the veto provision, it would be possible for the ASO, ccNSO and 
> GNSO to vote against the budget because of that line item.
I note that it would require unanimity outside of ALAC to veto the 
budget in that scenario.  Worth questioning whether that is a useful 
safeguard or an interference into the matters of ALAC.

Another scenario that was considered by this group was a proposal from 
the Board to allocate a significant part of Icann funds to a summit on 
Internet governance, for example. Once again, the question is whether 
the veto and the associated threshold provide a useful safeguard or 
undue interference.
> Equally, the ALAC, ccNSO and ASO could vote against a gTLD industry 
> summit line item or a non-commercial users meeting cost. And, entirely 
> the reverse could happen with SOs and ACs 'horse-trading' with each 
> other so that they each get their (to quote you) needs, concerns, 
> demands, objections met.
Not being a native English speaker, I can't be sure of my understanding 
of horse-trading. However, once again it's worth considering whether a 
cross community discussion should take place on which needs, concerns, 
demands, from the various SOs or ACs should be funded or not, whether we 
qualify it as "horse-trading" or "cross community coordination in the 
budgetary process".

And once again, the Board gets to propose the budget, just like now, and 
the veto process would be exceptional and requiring supermajority. Only 
33% support and it moves on.

I understand the intent of the WS2 item on the budget process to be 
intended to look at these coordination issues.


> Is this really what we want to set up?
> Cheers,
> Chris
>> On 29 Jul 2015, at 03:02 , Greg Shatan <gregshatanipc at gmail.com 
>> <mailto:gregshatanipc at gmail.com>> wrote:
>> I don't think the budget veto was ever intended to substitute for 
>> community participation in the budget process, rather it was intended 
>> to encourage it (in a sort of dark and foreboding way).  There are 
>> already a number of ways in which the community in general, and SOs 
>> and ACs (and their component parts) participate in the budget 
>> process, and these have been improving over time. I'm not going to 
>> catalogue them here, but I should think it's readily available on the 
>> website or from Xavier Calvez's team.  These should continue to be 
>> improved.  One continuing shortcoming is that we are all still 
>> supplicants, beseeching ICANN finance for a little more pie.  While 
>> this is true in private (and public) entities as well, the level of 
>> influence of the community is probably lower than it should be.  As 
>> it is now, the community can register all of its needs, concerns, 
>> demands, objections, etc., and in the end there is nothing to make 
>> those anything more than "kind requests."
>> The budget veto is a final backstop in the event of a budget that 
>> fundamentally is at odds with where it should be.  The budget veto 
>> should not be viewed primarily as a power, as much as an 
>> admonishment, to add discipline the budget process.  It should 
>> constrain the Board from delivering a "veto-able" budget.  The best 
>> way to avoid that, of course, is communication with and due 
>> consideration of the need of the community throughout the process.
>> One other note -- there seems to be a misunderstanding of what a 
>> "non-profit corporation" (and why it is called "non-profit").  A 
>> "for-profit" corporation pays out net profits to its owners 
>> (shareholders or other types of owners).  A non-profit does not have 
>> owners or shareholders, so it does not pay out profits to anybody.  
>> While an entity can be " non-profit," this does not mean it is 
>> "non-surplus." "Non-profit" does not mean that it is not supposed to 
>> run an excess of revenues over expenses, or have no more assets than 
>> it has liabilities.  So, this idea of "balance" is misplaced.  A 
>> non-profit, like a for-profit, needs to balance its books in an 
>> accounting sense, but that does not in any way mean that there is a 
>> prohibition or even a presumption against having a surplus of cash 
>> over expenses.  There may be a point when sitting on a pile of cash 
>> is not consistent with the entity's goals, but that can also be true 
>> of a for-profit corporation.  It's entirely fair to talk about the 
>> numbers, but we should be careful not to bring in presumptions that 
>> don't exist.  [Caveat: I'm not referring to charitable organizations, 
>> which are often referred to as non-profits as well.]
>> Greg
>> On Tue, Jul 28, 2015 at 10:30 AM, Carlos Raúl Gutiérrez 
>> <crg at isoc-cr.org <mailto:crg at isoc-cr.org>> wrote:
>>     Dear George,
>>     I agree with you that a cumulated budget veto is a pretty useless
>>     accountability tool (independently of how difficult it would be
>>     for the sole member to exercise it…)
>>     Moreover, I think the community on the one hand should take care
>>     that the public interest objectives (policy development and
>>     compliance functions) are properly funded. It would be much more
>>     effective if those separate hose budgets (policy development and
>>     compliance functions) would be developed in a bottom up fashion,
>>     based on the needs of the community, and through the communities
>>     direct involvement. No need for a veto then since the SOs/ACs
>>     would be DIRECTLY responsible for their budgets.
>>     On the other hand, it is up to management to guarantee the
>>     financial BALANCE  of the day to day operations (yes, balance
>>     because ICANN purpose is non for profit), as well as guarantee
>>     the demands of the community for proper funding of the public
>>     interest functions (independently of the line overseer of the
>>     functions, which is another black box altogether).
>>     This would be in my view a much more effective system of so
>>     called “checks and balances”  than an absolute veto over the
>>     cumulated budget, where the community has little knowledge on the
>>     different objectives under it was produced, and remains in my
>>     eyes will very obscure, independently of the overall sum in
>>     relation to the size of the business.
>>     Best
>>     Carlos Raúl Gutiérrez
>>     _____________________
>>     email: crg at isoc-cr.org <mailto:crg at isoc-cr.org>
>>     Skype: carlos.raulg
>>     +506 8837 7173 <tel:%2B506%208837%207173> (cel)
>>     +506 4000 2000 <tel:%2B506%204000%202000> (home)
>>     +506 2290 3678 <tel:%2B506%202290%203678> (fax)
>>     _____________________
>>     Apartado 1571-1000
>>     San Jose, COSTA RICA
>>>     On Jul 27, 2015, at 9:30 AM, George Sadowsky
>>>     <george.sadowsky at gmail.com <mailto:george.sadowsky at gmail.com>>
>>>     wrote:
>>>     All,
>>>     These are my personal opinions.
>>>     I suspect that the reaction to this post will be, "we are way
>>>     past this, we've discussed this, and now just help us work on
>>>     the implementation details."  If so, I think that's a mistake,
>>>     because what I'd like to do is question one of the fundamental
>>>     assumptions behind what this group is doing.
>>>     When this process started, there was general agreement that it
>>>     was more important to do this right than to do it quickly
>>>      Unfortunately, this feeling appears to have reversed, with the
>>>     current sense that it is more important to get it done quickly
>>>     in the name of the transition than to spend the time needed to
>>>     do it right.  This process is going beyond accountability to a
>>>     fundamental redesign of ICANN, with IMO inadequate concern for
>>>     assuring inclusivity of support as well as lack of concern for
>>>     unanticipated consequences.
>>>     So here's what I'd like to contribute ...
>>>     I've been uncomfortable with the notion of budgetary
>>>     control/veto since the idea was first presented. I think that I
>>>     now know why: in my opinion it solves the wrong problem, and it
>>>     is the wrong solution to the right problem.  Let me explain.
>>>     In general, budgetary control is exercised by groups who want to
>>>     control an aggregate budget, whether for reasons of limiting
>>>     growth or ensuring that aggregate expenses for a budget do not
>>>     exceed some measure of income.  I don't think that's the case
>>>     here, although I suppose that under exceptional circumstances it
>>>     might be.
>>>     The alternative is that the control the group appears to want
>>>     must be by program or even by line item, even though you're
>>>     planning to use a very blunt instrument  --  control over
>>>     approval of the aggregate budget  --  as your tool to accomplish
>>>     this. If that's the case, then what you really want is
>>>     programatic control, not budgetary control.  If the program is
>>>     accepted, then subject to resource constraints, it's up to the
>>>     staff to deliver, and any specific line item or similar
>>>     objection, however expressed, interferes with the execution of
>>>     the activity.
>>>     If the disagreement is with the program, with the objectives to
>>>     be accomplished, and how the objectives are to be accomplished,
>>>     then that is where the control should be exercised.  Any
>>>     budgetary control after that is micromanagement.  The response
>>>     to that is if you don't trust the organization to implement a
>>>     rather well defined activity, then change the management/staff,
>>>     don't restrict their resources and let them continue anyway.
>>>     I suggest pursuing this line of argument further.  In my
>>>     opinion, our fundamental problem has two components: (1) a
>>>     persistent inadequate level of trust between groups within the
>>>     ICANN community, and (2) our inability/unwillingness to create
>>>     and use structures to deal directly with this situation and
>>>     improve it.   I see the mechanism as starting with a lack of
>>>     trust   --  in Board, management, staff, as well as the ACs and
>>>     the SOs and their constituent parts  -- that generates not only
>>>     suspicion regarding motives, non-transparent actions, and
>>>     actions that are not equally favorable to all groups involved,
>>>     but also the sense that the process is not serving "me" (whoever
>>>     I am) well and is therefore out of control.
>>>     In other words, IMO we have a fundamental problem of trust, and
>>>     we don't have an effective way to talk about it or to otherwise
>>>     address it, much less solve it.
>>>     The budget rejection process that is being defined by the group
>>>     is IMO based more upon defining ultimate ("nuclear" if you like)
>>>     confrontation mechanisms than upon finding cooperative
>>>     mechanisms to identify and resolve potential conflicts at an
>>>     earlier stage.  It does not address the trust issue, and to the
>>>     extent that my hypothesis is correct, if not addressed the trust
>>>     issue will continue to bedevil ICANN activities, in other
>>>     probably equally destructive ways.   Should not this group be
>>>     equally or more concerned about mechanisms to identify issues
>>>     and encourage cooperative-based and trust building processes to
>>>     solve problems as they arise?   It does not appear so to me.
>>>     In summary, the current approach, gaining more control over
>>>     budget approval, is based upon a model of checks and balances,
>>>     and that may be legitimate to some extent.  However, I sense
>>>     that is not the way in which it is planned to be employed.  If
>>>     so, it solves the wrong problem, nad it does not address the
>>>     real problem.   We need a different approach, one of getting to
>>>     the root of disagreements, real and perceived, that is early and
>>>     based upon increased cooperation and trust, and we need a way to
>>>     communicate that encourages this to happen.  This is not an easy
>>>     problem to solve, but IMO it's the real problem that we have to
>>>     solve, rather than some well meaning but inaccurate proxy
>>>     representation of it.
>>>     Please consider these thoughts in your discussions.
>>>     George
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Mathieu WEILL
AFNIC - directeur général
Tél: +33 1 39 30 83 06
mathieu.weill at afnic.fr
Twitter : @mathieuweill

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