According to a new post on Circle ID, ICANN lost $4.6 million last year in the stock market, which the author’s post points out is equivalent to its fee ($.20) on 23 million domain registrations.
How did this happen you ask.
Well basically, when it was formed in 1998, ICANN was allowed to set up “reasonable reserves for future expenses and contingencies reasonably related to the legitimate activities of the Corporation”.
In 2002, ICANN proposed having a $10 Million dollar reserve.
By the 2007-2008 budget year, ICANN’s reserve grew to a staggering $25 Million.
That’s $25 Million in cash, over and above operating expenses.
Profit if you will.
Apparently, the $25 Million sat in cash in money markets accounts, until November 2007, when ICANN decided to “invest it wisely”, according to a quote in the post, and in fiscal year 2008, ICANN bought $16.5 Million in Bonds and $8.5 Million in stocks of public companies.
Using ICANN own documents the author concludes that by the end 2008 ICANN lost $4.6 Million of the previous $25 Million reserve.
The author makes a great point, “If they could afford to lose $4.6M from their reserves, why did they collect it from us in the first place?”
Absolutely correct.
ICANN is a non-profit corporation, which like all non-profits, are suppose to collect fees only necessary to perform its non-profit mission and provide services required to fulfill that mission
A non-profit can and should have a reasonable reserve considering its budget in case its revenue suddenly declines.
However, once a non-profit becomes highly profitable, it needs to cut the fees it collects.
Since all of ICANN fees come from us, domain holders, their money is our money and they just lost a lot of it.
For example, my share of ICANN fees amount to $15,000 a year. If they are running at a huge profit they could, and should have cut their fees, thereby saving me thousands of dollars a year.
I can lose my own money in the stock market, i don’t need their help.
Two questions come to my mind immediately.
How much profit (cash) would ICANN have kept building up assuming the cash stayed in money markets?
I mean would they have stopped at $30 Million, $40 Million, $50 Million before saying, I think we have enough money and can cut fees?
Second, wouldn’t you love to know the actual public companies ICANN bought stock in?
VeriSign, Google, Yahoo, Tucows?
Isn’t there a conflict of interest if ICANN bought stock in company they directly or indirectly regulate?
I guess now I have a third question, what the hell is going on here?
A few weeks ago I wrote a post asking if ICANN Is In It For The Money, especially in light of allowing an unlimited number of $185,000 applications for the proposed extensions
A few days after that, a representative of ICANN responded to the post assuring myself and other readers that they are not in it for the money.
It now appears I was right the first time.
ICANN is in it for the money
And there losing it.
And you wonder why many people feel ICANN will only listen to themselves …
Have no idea what to say to this but a good read although yet another disturbing fat behind the operations of ICANN….
Maybe they think it stands for I Can do anything I want….
$25 million would help finance a private corporate jet, as one can’t expect “important” officials from ICANN to suffer in commercial flights, can one?
If ICANN is gambling the money of domain registrants while they’re under US government oversight, and paying their staff like a for-profit company already:
http://www.circleid.com/posts/20090105_icann_for_profit_companies_comparables/
instead of a non-profit, imagine what would happen if ICANN had independence from US government oversight?
“my share of ICANN fees amount to $15,000 a year.”
$15,000 / .20 = 75,000
Check: 75,000 x .20 = $15,000
Are you saying you regged 75,000 domains last year?
Or am I misunderstanding something?
Patrick
We own 75,000 domains.
Each year we pay renewal fees to the central registry and $.20 per domain to ICANN, so I pay ICANN $15K a year.
or I should say, overpay
Michael, yo comprendo.
New reg or inventory that is a very impressive amount of domains.
Maybe some time you’ll blog about how you manage them
75,000 = YIKES!!!
George
I’m not impressed with US oversight in general.
How did the US governments oversight in the form of the SEC, protect investors in Bear Stearns, or Lehman or in hundreds of other of companies.
What would happened if there was no US oversight of the markets, the stocks couldn’t go to less than zero.
This ICANN action has happened on the US watch.
If ICANN said they needed a $10M reserve where, was the US government when their bank account hit $25M?
Is there a rule that says a non-profit cannot invest in public companies they regulate?
Don’t think so
US government oversight, is overrated
It would be even worse without US oversight, though. If ICANN acted as an independent organization, they would tax domain registrants and engage in even more folly, without being accountable to anyone.
At least the NTIA/DOJ wrote against the new gTLDs, for example, and kept that in check (assuming ICANN isn’t foolish enough to ignore it), and has to approve any changes to the .com contract. Given the profligate spending of ICANN’s staff and Board, I’d imagine they’d quickly sell out .com registrants with .tv-style pricing, if they could split the extra dough with VeriSign. Then, they could fulfill their desire to be like the International Olympic Committee, non-accountable royalty that spends its time globetrotting, at our expense.
The solution isn’t removing US oversight, but making it more effective, proactive and increasing its scope.
ICANN is corrupt and have been corrupt for some time.
They need to definitely cut fees. I mean if they can lose 4.6mil and it’s ok in their eyes than they can go ahead and cut the fees so that we too can go lose money in the stock market. What a frustrating world it’s becoming! People in these high positions do things that effect the everyday people and we are supposed to sit back and take it? Someone needs to either create something new or stand up to the corporate bullies!
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