<div dir="ltr"><div class="gmail_default" style="font-family:verdana,sans-serif">Carlos,</div><div class="gmail_default" style="font-family:verdana,sans-serif"><br></div><div class="gmail_default" style="font-family:verdana,sans-serif">I read what you said originally ("<span style="font-size:12.8000001907349px;font-family:arial,sans-serif">financial BALANCE of the day to day operations (yes, balance because ICANN purpose is non for profit"</span>) as being based on the incorrect idea that a non-profit can't have a profit (a common misunderstanding). Clearly, that's not what you were saying, and you understand that "non-profit" is not quite so literal a term. Sorry I misunderstood you.</div><div class="gmail_default" style="font-family:verdana,sans-serif"><br></div><div class="gmail_default" style="font-family:verdana,sans-serif">Greg</div></div><div class="gmail_extra"><br><div class="gmail_quote">On Tue, Jul 28, 2015 at 4:45 PM, Carlos Raúl Gutiérrez <span dir="ltr"><<a href="mailto:crg@isoc-cr.org" target="_blank">crg@isoc-cr.org</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">Thank you Samantha!<br>
<br>
Xavier was very clear on the Reserve funds strategies during his last presentation to the GNSO Council in Buenos Aires and I praise him for that. I don´t consider creating those reserve funds outside the good practices of Non-for-Profit corporations, like Greg Shatan tried to imply in his reply.<br>
<br>
Carlos Raúl Gutiérrez<br>
<a href="tel:%2B506%208837%207176" value="+50688377176" target="_blank">+506 8837 7176</a><br>
Skype: carlos.raulg<span class=""><br>
On 28 Jul 2015, at 13:20, Samantha Eisner wrote:<br>
<br>
</span><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><span class="">
Carlos, as a point of reference, ICANN has an investment policy in place<br></span>
(<a href="https://www.icann.org/resources/pages/investment-policy-2014-07-30-en" rel="noreferrer" target="_blank">https://www.icann.org/resources/pages/investment-policy-2014-07-30-en</a>)<span class=""><br>
that is regularly reviewed by the ICANN Board, which includes principles<br>
on how funds held by ICANN are managed, as well as the size of the reserve<br>
fund.<br>
<br></span>
On 7/28/15, 10:13 AM, "<a href="mailto:accountability-cross-community-bounces@icann.org" target="_blank">accountability-cross-community-bounces@icann.org</a> on<span class=""><br>
behalf of Carlos Raúl Gutiérrez"<br></span><span class="">
<<a href="mailto:accountability-cross-community-bounces@icann.org" target="_blank">accountability-cross-community-bounces@icann.org</a> on behalf of<br>
</span><a href="mailto:crg@isoc-cr.org" target="_blank">crg@isoc-cr.org</a>> wrote:<br>
<br>
<blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">
<br>
<br>
Carlos Raúl Gutiérrez<br>
<a href="tel:%2B506%208837%207176" value="+50688377176" target="_blank">+506 8837 7176</a><div><div class="h5"><br>
Skype: carlos.raulg<br>
On 28 Jul 2015, at 11:02, Greg Shatan wrote:<br>
<blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">
One other note -- there seems to be a misunderstanding of what a<br>
"non-profit corporation" (and why it is called "non-profit").<br>
</blockquote>
<br>
No problem with reserves, contingencies, etc. ICANN has to big ones of<br>
80 million each. But still a problem with unrealistic income<br>
projections, and optimistic spending just because we have more money<br>
coming in tomorrow.<br>
<br>
<blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">
A<br>
"for-profit" corporation pays out net profits to its owners<br>
(shareholders<br>
or other types of owners). A non-profit does not have owners or<br>
shareholders, so it does not pay out profits to anybody. While an<br>
entity<br>
can be " non-profit," this does not mean it is "non-surplus."<br>
"Non-profit"<br>
does not mean that it is not supposed to run an excess of revenues<br>
over<br>
expenses, or have no more assets than it has liabilities. So, this<br>
idea of<br>
"balance" is misplaced.<br>
</blockquote>
<br>
A healthy finial balance is always in place under the assumptions as per<br>
above.<br>
<br>
<blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">
A non-profit, like a for-profit, needs to balance<br>
its books in an accounting sense, but that does not in any way mean<br>
that<br>
there is a prohibition or even a presumption against having a surplus<br>
of<br>
cash over expenses.<br>
</blockquote>
<br>
agree. Two sets of reserves of $80million/each is quite alright<br>
<br>
<blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">
Greg<br>
</blockquote>
<br>
<br>
cheers<br>
Carlos Raul<br>
</div></div><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><div><div class="h5">
<br>
On Tue, Jul 28, 2015 at 10:30 AM, Carlos Raúl Gutiérrez<br></div></div>
<<a href="mailto:crg@isoc-cr.org" target="_blank">crg@isoc-cr.org</a>><br>
wrote:<br>
<br>
<blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><div><div class="h5">
Dear George,<br>
<br>
I agree with you that a cumulated budget veto is a pretty useless<br>
accountability tool (independently of how difficult it would be for<br>
the<br>
sole member to exercise itŠ)<br>
<br>
Moreover, I think the community on the one hand should take care that<br>
the<br>
public interest objectives (policy development and compliance<br>
functions)<br>
are properly funded. It would be much more effective if those<br>
separate hose<br>
budgets (policy development and compliance functions) would be<br>
developed in<br>
a bottom up fashion, based on the needs of the community, and through<br>
the<br>
communities direct involvement. No need for a veto then since the<br>
SOs/ACs<br>
would be DIRECTLY responsible for their budgets.<br>
<br>
On the other hand, it is up to management to guarantee the financial<br>
BALANCE of the day to day operations (yes, balance because ICANN<br>
purpose<br>
is non for profit), as well as guarantee the demands of the community<br>
for<br>
proper funding of the public interest functions (independently of the<br>
line<br>
overseer of the functions, which is another black box altogether).<br>
<br>
This would be in my view a much more effective system of so called<br>
³checks<br>
and balances² than an absolute veto over the cumulated budget,<br>
where the<br>
community has little knowledge on the different objectives under it<br>
was<br>
produced, and remains in my eyes will very obscure, independently of<br>
the<br>
overall sum in relation to the size of the business.<br>
<br>
Best<br>
<br>
<br>
Carlos Raúl Gutiérrez<br>
_____________________<br>
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San Jose, COSTA RICA<br>
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On Jul 27, 2015, at 9:30 AM, George Sadowsky<br></span>
<<a href="mailto:george.sadowsky@gmail.com" target="_blank">george.sadowsky@gmail.com</a>><div><div class="h5"><br>
wrote:<br>
<br>
All,<br>
<br>
These are my personal opinions.<br>
<br>
I suspect that the reaction to this post will be, "we are way past<br>
this,<br>
we've discussed this, and now just help us work on the implementation<br>
details." If so, I think that's a mistake, because what I'd like to<br>
do is<br>
question one of the fundamental assumptions behind what this group is<br>
doing.<br>
<br>
When this process started, there was general agreement that it was<br>
more<br>
important to do this right than to do it quickly Unfortunately, this<br>
feeling appears to have reversed, with the current sense that it is<br>
more<br>
important to get it done quickly in the name of the transition than<br>
to<br>
spend the time needed to do it right. This process is going beyond<br>
accountability to a fundamental redesign of ICANN, with IMO<br>
inadequate<br>
concern for assuring inclusivity of support as well as lack of<br>
concern for<br>
unanticipated consequences.<br>
<br>
So here's what I'd like to contribute ...<br>
<br>
I've been uncomfortable with the notion of budgetary control/veto<br>
since<br>
the idea was first presented. I think that I now know why: in my<br>
opinion<br>
it solves the wrong problem, and it is the wrong solution to the<br>
right<br>
problem. Let me explain.<br>
<br>
In general, budgetary control is exercised by groups who want to<br>
control<br>
an aggregate budget, whether for reasons of limiting growth or<br>
ensuring<br>
that aggregate expenses for a budget do not exceed some measure of<br>
income.<br>
I don't think that's the case here, although I suppose that under<br>
exceptional circumstances it might be.<br>
<br>
The alternative is that the control the group appears to want must be<br>
by<br>
program or even by line item, even though you're planning to use a<br>
very<br>
blunt instrument -- control over approval of the aggregate budget<br>
-- as<br>
your tool to accomplish this. If that's the case, then what you<br>
really<br>
want is programatic control, not budgetary control. If the program<br>
is<br>
accepted, then subject to resource constraints, it's up to the staff<br>
to<br>
deliver, and any specific line item or similar objection, however<br>
expressed, interferes with the execution of the activity.<br>
<br>
If the disagreement is with the program, with the objectives to be<br>
accomplished, and how the objectives are to be accomplished, then<br>
that is<br>
where the control should be exercised. Any budgetary control after<br>
that is<br>
micromanagement. The response to that is if you don't trust the<br>
organization to implement a rather well defined activity, then change<br>
the<br>
management/staff, don't restrict their resources and let them<br>
continue<br>
anyway.<br>
<br>
I suggest pursuing this line of argument further. In my opinion, our<br>
fundamental problem has two components: (1) a persistent inadequate<br>
level<br>
of trust between groups within the ICANN community, and (2) our<br>
inability/unwillingness to create and use structures to deal directly<br>
with<br>
this situation and improve it. I see the mechanism as starting with<br>
a<br>
lack of trust -- in Board, management, staff, as well as the ACs<br>
and the<br>
SOs and their constituent parts -- that generates not only suspicion<br>
regarding motives, non-transparent actions, and actions that are not<br>
equally favorable to all groups involved, but also the sense that the<br>
process is not serving "me" (whoever I am) well and is therefore out<br>
of<br>
control.<br>
<br>
In other words, IMO we have a fundamental problem of trust, and we<br>
don't<br>
have an effective way to talk about it or to otherwise address it,<br>
much<br>
less solve it.<br>
<br>
The budget rejection process that is being defined by the group is<br>
IMO<br>
based more upon defining ultimate ("nuclear" if you like)<br>
confrontation<br>
mechanisms than upon finding cooperative mechanisms to identify and<br>
resolve<br>
potential conflicts at an earlier stage. It does not address the<br>
trust<br>
issue, and to the extent that my hypothesis is correct, if not<br>
addressed<br>
the trust issue will continue to bedevil ICANN activities, in other<br>
probably equally destructive ways. Should not this group be equally<br>
or<br>
more concerned about mechanisms to identify issues and encourage<br>
cooperative-based and trust building processes to solve problems as<br>
they<br>
arise? It does not appear so to me.<br>
<br>
In summary, the current approach, gaining more control over budget<br>
approval, is based upon a model of checks and balances, and that may<br>
be<br>
legitimate to some extent. However, I sense that is not the way in<br>
which<br>
it is planned to be employed. If so, it solves the wrong problem,<br>
nad it<br>
does not address the real problem. We need a different approach,<br>
one of<br>
getting to the root of disagreements, real and perceived, that is<br>
early and<br>
based upon increased cooperation and trust, and we need a way to<br>
communicate that encourages this to happen. This is not an easy<br>
problem to<br>
solve, but IMO it's the real problem that we have to solve, rather<br>
than<br>
some well meaning but inaccurate proxy representation of it.<br>
<br>
Please consider these thoughts in your discussions.<br>
<br>
George<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
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