<html xmlns:o="urn:schemas-microsoft-com:office:office" xmlns:w="urn:schemas-microsoft-com:office:word" xmlns:m="http://schemas.microsoft.com/office/2004/12/omml" xmlns="http://www.w3.org/TR/REC-html40">
<head>
<meta http-equiv="Content-Type" content="text/html; charset=utf-8">
<meta name="Generator" content="Microsoft Word 15 (filtered medium)">
<style><!--
/* Font Definitions */
@font-face
{font-family:"Cambria Math";
panose-1:2 4 5 3 5 4 6 3 2 4;}
@font-face
{font-family:Calibri;
panose-1:2 15 5 2 2 2 4 3 2 4;}
/* Style Definitions */
p.MsoNormal, li.MsoNormal, div.MsoNormal
{margin:0in;
margin-bottom:.0001pt;
font-size:11.0pt;
font-family:"Calibri",sans-serif;}
a:link, span.MsoHyperlink
{mso-style-priority:99;
color:#0563C1;
text-decoration:underline;}
a:visited, span.MsoHyperlinkFollowed
{mso-style-priority:99;
color:#954F72;
text-decoration:underline;}
p.msonormal0, li.msonormal0, div.msonormal0
{mso-style-name:msonormal;
mso-margin-top-alt:auto;
margin-right:0in;
mso-margin-bottom-alt:auto;
margin-left:0in;
font-size:11.0pt;
font-family:"Calibri",sans-serif;}
span.EmailStyle19
{mso-style-type:personal-reply;
font-family:"Calibri",sans-serif;
color:windowtext;}
.MsoChpDefault
{mso-style-type:export-only;
font-size:10.0pt;}
@page WordSection1
{size:8.5in 11.0in;
margin:1.0in 1.0in 1.0in 1.0in;}
div.WordSection1
{page:WordSection1;}
--></style>
</head>
<body lang="EN-US" link="#0563C1" vlink="#954F72">
<div class="WordSection1">
<p class="MsoNormal">All,<o:p></o:p></p>
<p class="MsoNormal">You are having a great productive brainstorming about costs. To feed into this brainstorming exercise, please consider the following few comments which have been made at some point, usually verbally, by the Board liaisons, Sam and I over
the past 2.5 years:<o:p></o:p></p>
<p class="MsoNormal" style="background:white"><span style="font-size:12.0pt;color:black">1. Any estimate of costs can only be done once we know what we do. The mechanisms will need to be transformed into implementation plan with detailed design in order to
be able to evaluate the costs. An illustration of such questions (please don’t comment on this example, it just an example), is the size of the grants: 1 grant of $200m is very differently managed than 200,000 grants of $1,000, with many differences in costs.<o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-size:12.0pt;color:black">2. However, some differences and logical principles can be formulated:<o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-size:12.0pt;color:black">- mechanisms B and C would have higher overheads costs than A, because there would be some duplication of costs between ICANN and the partner organization (mechanism B)
and ICANN and the foundation (mechanism C). There is also a cost of coordinating 2 entities which exists with B and C and does not with A.<o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-size:12.0pt;color:black">- I would expect C to have, for the same reason, higher overhead costs than B, because some of the costs in B would be shared resources since the partner organization would
leverage its existing structure.<o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-size:12.0pt;color:black">- resources directly and fully allocated to the program would probably cost the same in the 3 mechanisms: there is a requirement in not-for-profit oversight that salaries
must be reasonable for the job purpose, so we would expect that across each of these mechanisms, the salaries paid to support the program itself would be somewhat similar.<o:p></o:p></span></p>
<p class="MsoNormal" style="background:white"><span style="font-size:12.0pt;color:black">- If the focus is on selecting the lowest cost mechanism, the focus would be on areas of duplication of roles and cost drivers.<o:p></o:p></span></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">I hope this helps.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<div>
<p class="MsoNormal">Thank you.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Best,<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Xavier<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#18376A">Xavier Calvez</span></b><span style="font-family:"Times New Roman",serif;color:black"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#18376A">SVP & Chief Financial Officer</span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#18376A">ICANN</span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#18376A">P: +1 (310) 301-5838 (Direct) | M: +1 (805) 312-0052</span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#18376A">E: </span><u><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#0563C1"><a href="mailto:xavier.calvez@icann.org"><span style="color:#0563C1">xavier.calvez@icann.org</span></a></span></u><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#18376A"> | <a href="http://www.icann.org/" title="http://www.icann.org/"><span style="color:#0563C1">www.icann.org</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#18376A">12025 Waterfront Drive, Ste 300, Los Angeles, CA 90094</span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"><o:p></o:p></span></p>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<div style="border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b><span style="font-size:12.0pt;color:black">From: </span></b><span style="font-size:12.0pt;color:black">Ccwg-auctionproceeds <ccwg-auctionproceeds-bounces@icann.org> on behalf of Sam Lanfranco <sam@lanfranco.net><br>
<b>Date: </b>Thursday, November 21, 2019 at 1:16 PM<br>
<b>To: </b>"ccwg-auctionproceeds@icann.org" <ccwg-auctionproceeds@icann.org><br>
<b>Subject: </b>Re: [Ccwg-auctionproceeds] Auction Proceeds Mechanisms<o:p></o:p></span></p>
</div>
<div>
<p class="MsoNormal"><o:p> </o:p></p>
</div>
<p><i>First a little humor. </i>As U.S. actor-turned-President Ronald Reagan liked to say: “<i>There you [I] go again</i>”.
<o:p></o:p></p>
<p>I would like to approach the issue of Mechanisms and Costs in a reverse order. If we start from the deliverables, they are the same for each Mechanism, and baring different Mechanisms facing different prices for similar skills, the overall dollar costs should
be about the same. Thus, costs probably should not be a deciding factor in ranking preferences for Mechanisms A, B, and C. All three options will be approached of course with “…a best practice approach with a prudent and modest administrative cost allocation.”<o:p></o:p></p>
<p>There may be some cost savings from Mechanism B depending on how partner expertise is costed out, and there may be some one-time additional cost to set up a Foundation for Mechanism C. ICANN services and staff provided for Mechanism A (and B) would probably
be costed competitively to those provided by others within Mechanisms B and C. <o:p>
</o:p></p>
<p>In my view a best practice approach to making the Mechanism choice is to complete this Work Phase focused on the complicated issues we have explored, what we want the Mechanism to do, and how we want it to work. This is then handed off to the Implementation
Phase, along with comments (and questions) about the issues relevant for ranking A, B and C. These might include elapsed time to implementation (i.e., how long to the first round of grant applications), prospects for receiving additional funds from other sources,
(to do more things or do things longer) and the like. <o:p></o:p></p>
<p>In this scenario the Implementation Phase would be where the Mechanism choice was identified, and then subject to whatever ICANN stakeholder approval process is appropriate. If we are to make that choice at this Work Phase, we need to make a list of the
factors, other than costs, about what evidence we need to assess, and what decisions (e.g. open to supplemental funding) need to be made before ranking the Mechanisms.<o:p></o:p></p>
<p class="MsoNormal">Sam L.<br>
<br>
<br>
<o:p></o:p></p>
</div>
</body>
</html>