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<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D">Regarding costs, I agree with Sam’s analysis. I also think that communications with ICANN’s Board and the community remains the same whether ICANN org has
an internal department, works with a pre-existing expert grant-making organization, or forms an ICANN Foundation. (There is nothing about the way ICANN currently works with contractors that makes everyone want to bring all RFP work in-house, though I realize
that some outside functions are being reconsidered at this time.) ICANN traditionally goes to independent contractors when it lacks in-house expertise.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D">Separately, one certainly cannot say that costs cannot be projected or estimated until we know whether the Independent Evaluation Panel will be making a few
big grants or many little ones. A mechanism must be chosen before an Independent Evaluation Panel is constituted. I cannot conclude that costs associated with Mechanism A and C are the same as Mechanism B since I don’t have the data. It is counterintuitive
to conclude that existing expert organizations would incur the same costs as start-ups, especially as to onboarding and training. These people have regular training programs already established and are receiving resumes from qualified individuals on a regular
basis. (Just ask any foundation you see on the screen when you watch Public Television in the US.)<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D">The notion that it would somehow be outside ICANN’s mission to accept donations from third parties that are directed to uses that are squarely within ICANN’s
mission does not make sense. If a third party Foundation is willing to work with ICANN to make such donations for the purpose of fulfilling ICANN’s mission, why on earth would ICANN refuse that money? Best hypothetical example Bill and Melinda Gates Foundation
wants to make grants to ICANN for purposes of Applicant Support program to encourage applications from the Global South. ICANN has an Applicant Support program and this is clearly within its mission so why would it not be in its missions to accept donations
to a 501(c) (3) that are dedicated to that purpose as long as the Independent Evaluation Panel makes a decision for such Support to be extended to an applicant? (It seems to me ICANN will look downright silly and out of touch if none of the Auction Proceeds
go to Applicant Support, but that is another topic.) <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D">Further re the possibility of donations from third party foundations, if grant-making is supposedly on the edge of ICANN’s remit as to Mission scope, then
the last thing we want to do is place the function in an internal department of ICANN. Much cleaner to transfer the “tranche” to a pre-existing expert organization or to an independent, but affiliated foundation. Once the tranche funds (assuming the amount
in the Proposed Budget is not challenged by the EC based on its powers) are placed with a different entity, the funds become irrevocable.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D">Another aspect of costing is risk. An internal department making grants is a very unusual structure for grant-making. It follows that Mechanism A creates
the greatest risk of both (a) challenges to grants made and (b) reputational risk that ICANN sees Auction Proceeds as a source of operational funding. This is the same category of risk identified by the Board when it stated that no grants should be made for
projects akin to current budget items. Here is it noteworthy that the Applicant Guidebook section on Auction Proceeds makes specific reference to a foundation.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D">Lastly, regarding any future feasibility study, based on all the comments on the list about implementation, such a study (and its parameters) should be a matter
to be handled by an Auction Proceeds IRT. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D">Anne<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#1F497D"><o:p> </o:p></span></p>
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<div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b>From:</b> Ccwg-auctionproceeds <ccwg-auctionproceeds-bounces@icann.org>
<b>On Behalf Of </b>Xavier J. Calvez<br>
<b>Sent:</b> Thursday, November 21, 2019 5:48 PM<br>
<b>To:</b> Sam Lanfranco <sam@lanfranco.net>; ccwg-auctionproceeds@icann.org<br>
<b>Subject:</b> Re: [Ccwg-auctionproceeds] [Ext] Re: Auction Proceeds Mechanisms<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal"><strong><span style="font-size:9.0pt;font-family:"Helvetica",sans-serif;color:black">[EXTERNAL]</span></strong><span style="font-size:9.0pt;font-family:"Helvetica",sans-serif;color:black"><o:p></o:p></span></p>
<div class="MsoNormal" align="center" style="text-align:center"><span style="font-size:12.0pt;font-family:"Times New Roman",serif">
<hr size="2" width="100%" align="center">
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<p class="MsoNormal">Sam,<o:p></o:p></p>
<p class="MsoNormal">I fully agree with the analysis that you provided below, but I believe your analysis is valid for what I am calling costs pertaining to the specific activities of the program. My point on costs duplication between ICANN and other parties
(for mechanism B and C) was specifically on overheads as I specified in my email, which I define as the non-direct costs to the program.<o:p></o:p></p>
<p class="MsoNormal">ICANN, the third party, and the foundation, would all have their own overheads which, to some extent would burden the program and be duplicative as a result. A limited number of program specific activities would also be duplicative: part
of the communication and reporting of grants, part of the due diligence on the verification of grants made,…
<o:p></o:p></p>
<p class="MsoNormal">See also additional comments inserted below. If further discussion would be useful, I would suggest that you and I discuss for a more productive and efficient exchange, and then bring back to the group the conclusions of our conversation.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
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<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">xavier.calvez@icann.org</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/">www.icann.org</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>
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<p class="MsoNormal"><b><span style="font-size:12.0pt;color:black">From: </span></b><span style="font-size:12.0pt;color:black">Sam Lanfranco <<a href="mailto:sam@lanfranco.net">sam@lanfranco.net</a>><br>
<b>Date: </b>Thursday, November 21, 2019 at 4:01 PM<br>
<b>To: </b>Xavier Calvez <<a href="mailto:xavier.calvez@icann.org">xavier.calvez@icann.org</a>>, "<a href="mailto:ccwg-auctionproceeds@icann.org">ccwg-auctionproceeds@icann.org</a>" <<a href="mailto:ccwg-auctionproceeds@icann.org">ccwg-auctionproceeds@icann.org</a>><br>
<b>Subject: </b>[Ext] Re: [Ccwg-auctionproceeds] Auction Proceeds Mechanisms<o:p></o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p>Thanks Xavier, <o:p></o:p></p>
<p class="MsoNormal">Your point 1, linking costs to the "products" being delivered, is well taken. However an estimate of total costs is not the central issue here.
<br>
It is, as you explore in your point 2, the relative costs of of the respective Mechanisms for supplying the same "products mix", those "products" being funded projects, evaluations, etc..
<o:p></o:p></p>
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<p class="MsoNormal">Let me take your arguments one at a time:<o:p></o:p></p>
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<ul type="disc">
<li class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;mso-list:l1 level1 lfo3">
<i>RE: suggestion</i> that A (in-house) would have lower overheads. That is not a forgone result. While ICANN might cover administrative costs at a competitive rate, it has little expertise in managing competitive grant funding
<span style="color:#00B050">[XC: this is not overheads as per my definition]</span>, and the ongoing administration of funded projects
<span style="color:#00B050">[XC: excluded from scope. ICANN org would not administrate funded projects on an on-going basis]</span>. (<i>how the funds are administered can be a nightmare</i>). It also does not have the expertise for ongoing and final project
evaluation, and for presenting those results in ways that ICANN org, its Board and the stakeholder communities can understand.
<span style="color:#00B050">[XC: while ICANN org does not have specific experience in presenting grants as you indicate, NO ONE ELSE has more expertise and experience than ICANN org to present info internally, to its Board and to the ICANN stakeholders]</span>.
All of that expertise will have to be bought, retained, and added to the ICANN payroll.
<o:p></o:p></li><li class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;mso-list:l1 level1 lfo3">
<i>RE: suggestion</i> that B will result in some duplication of costs between ICANN and partner organization. That need not be the case. A partner organization would be selected based on its competencies, and Mechanism B would benefit from having that expertise
"in-house", within Mechanism B. Each of the Mechanisms has similar internal work: funds distribution and evaluation, and an Accountability component. There is little reason to believe that costs, all assigned to the Mechanism, would be higher for B than for
A. If such costs stood out as exceptional, that would be a red flag that something is being done wrong.
<span style="color:#00B050">[XC: except for overheads as explained above]</span>.<o:p></o:p></li><li class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;mso-list:l1 level1 lfo3">
<i>RE: suggestion</i> that C would have higher overhead costs than B. I believe it is a mistake to compare operating costs for C to B, and not count partner costs in B. While it is true that a partner organization would leverage its existing structure in B,
the costs of those resources would be levied against the Mechanism's operating costs. The partner selection for B would be based on its capacity to do the work (<i>not because it is a charity providing free services</i>).
<span style="color:#00B050">[XC: I don’t understand the point you are making here]</span>.<o:p></o:p></li></ul>
<p>Lastly, one distinguishing feature as between A and B&C, especially C, is that B and C carry the potential to be ongoing activities with funding from other sources (grants, whatever). That may or may not be a significant factor<span style="color:#00B050">.[XC:
I believe that possibility has already been excluded by the CCWG in past discussions on the basis that ICANN’s role in the coordination of the unique identifiers does not require it to continuously manage a grant giving activity. Anyone who remembers better
should correct me]</span>. <o:p></o:p></p>
<p>Sam Lanfranco, NPOC<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">On 11/21/2019 5:23 PM, Xavier J. Calvez wrote:<o:p></o:p></p>
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<blockquote style="margin-top:5.0pt;margin-bottom:5.0pt">
<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.</span><o:p></o:p></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:</span><o:p></o:p></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.</span><o:p></o:p></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.</span><o:p></o:p></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.</span><o:p></o:p></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.</span><o:p></o:p></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">Xavier Calvez</span></b><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt">SVP & Chief Financial Officer</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt">ICANN</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt">P: +1 (310) 301-5838 (Direct) | M: +1 (805) 312-0052</span><o:p></o:p></p>
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[icann.org]</a></span><o:p></o:p></p>
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<p class="MsoNormal"> <o:p></o:p></p>
</blockquote>
<p class="MsoNormal" style="margin-bottom:12.0pt">< rest deleted><o:p></o:p></p>
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