Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft
Several people have alluded to ICANN using some of the auction funds to boost the reserve and have used this as the reason why we need a separate entity. My recollection is that very early on, the Board made it clear that regardless of the mechanism, they did not foresee transferring all of the money (whether it is $100m or $235m) in one fell swoop. I believe the term "tranche" was use to say that the monet would be transferred as needed, and that ICANN would still maintain full control of the remaining funds. And ultimately if the situation warranted might redirect them (the latter part is my words, not something said by the Board). Alan At 26/07/2019 05:17 PM, Aikman-Scalese, Anne wrote: Hi all, I am writing these comments with hopes that Marilyn will post to the CCWB Auction Proceeds list. To further demonstrate this principle regarding the need for independence, I will mention that in connection with the presentation of the staffing “readiness” plan for Subsequent Procedures that was drawn up by ICANN staff, the Marrakech presentation to the Sub Pro WG included a comment from an ICANN officer that among the possible sources of funding for staffing up for the next round might be to “borrow from Auction Proceeds”. (If you don’t believe me, check the Sub Pro recording from that session in Marrakech.) I believe I had commented remotely in Marrakech that to the extent that decisions on hiring and firing of grant-making personnel would be made by ICANN staff and/or the Board, there could not possibly be a reasonable level of independence in the grant-making operation and it would be extremely difficult for ICANN to defend challenges to grants made by that department. Auction proceeds are already a controversial topic and it would be a mistake to cause that topic to become more controversial by simply setting up some department guidelines and expecting people who are hired and fired by ICANN Org and/or Board to do anything other than what they are directed to do by those who control their paycheck. The old saying goes that “There is nothing new under the sun.” Although we like to think that ICANN’s decision-making processes are entirely different from other entities, the management and risk management challenges associated with this task and the related ethical concerns have been faced by many institutions. One notable point of comparison would be universities, which generally have a number of associated entities involved in furthering their missions and which, like ICANN, operate in an environment where public trust and confidence is key. Regarding Alan’s comment about the composition of a Board in relation to Option C, I agree it’s clear that PTI is essentially controlled by ICANN. However, the non-profit corporation’s By-Laws could easily provide that the majority of directors NOT be affiliated with ICANN. This would ensure independent operation in accordance with the Foundation’s Articles and ByLaws as long as the Foundation’s staff was not hired and fired by ICANN Org staff or the ICANN Board. Regarding Option A, it seems to me that some California legal advice on the best way to effectively preserve the necessary independence would be appropriate. It may be advisable for ICANN to set up a charitable trust and to name Trustees who again, constitute a voting majority which is independent of ICANN staff and Board. The Trustees would then have their own fiduciary duty to the Trust itself (which would encompass the ICANN mission but would not owe a fiduciary duty to ICANN the corporation.) In this regard, one piece of the analysis relating to Option A that is clearly missing is the fact that each of the ICANN Directors HAS A FIDUCIARY DUTY TO THE ICANN CORPORATION ITSELF. This fiduciary duty to the ICANN corporation can easily be in conflict with the goals and purpose of the grant-making. For example, for the ICANN Board, the fiscal condition of the corporation itself is paramount. If we put ICANN Directors in the position of having to review the actions of the grant-making organization while at the same time allowing the corporation itself to go “under”, we are asking too much. The only safe way to deal with this potential conflict is to assure total independence of grant-making and many of the public comments reflect this major concern. The above considerations are not terribly different from the governance issues faced by universities and the foundations that support their mission. Certainly Option C, a separate non-profit corporation with majority independent directors would be preferable from the standpoint of public awareness and accountability. If that mechanism is seen as too unwieldy, ICANN should, at a minimum, set up a Trust mechanism to hold the funds and appoint majority independent Trustees on the Board of Trustees. These Trustees should be responsible for hiring and firing qualified grant-making personnel and the Trust operations should be independent even if housed in the same building. Best practices would dictate against sharing personnel. And yes, the Trust would need its own operating budget. If the CCWG has already examined the Trust mechanism in the context of Option A, I apologize for bring this up. It’s just completely unrealistic to think that you can establish the required independence by setting up a department within ICANN where employees responsible for grant-making are hired and fired by ICANN staff and/or Board. Anne Anne E. Aikman-Scalese Of Counsel 520.629.4428 office 520.622.3088 fax AAikman@lrrc.com<mailto:AAikman@lrrc.com> _____________________________ [[]] Lewis Roca Rothgerber Christie LLP One South Church Avenue, Suite 700 Tucson, Arizona 85701-1611 lrrc.com<http://lrrc.com/> From: Marilyn Cade <marilynscade@hotmail.com> Sent: Friday, July 26, 2019 2:09 PM To: Elliot Noss <enoss@tucows.com>; Alan Greenberg <alan.greenberg@mcgill.ca> Cc: Vanda Scartezini <vanda@scartezini.org>; ccwg-auctionproceeds@icann.org; Aikman-Scalese, Anne <AAikman@lrrc.com> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft [EXTERNAL] ________________________________ folks, we must avoid being about ourselves. We need fact based information that is not our own experience, which will always be influenced by our own experiences. I am not being critical. I am merely thinking of my mentoring professor who was trained by Sal Alenski. We all have opinions from experiences of our own. They are small and if we are independent thinkers, then we are required to think not about what we experienced, but what is "known" and documented. Let's not assume anything from our own experience. Count on facts. from others and then inform us. That was my message. We have been a bit too much opinion based in my view. Not everyone need agree with that. BUT, we had only a few advisory discussions with a young and ICANN selected expert, who then disappeared, and didn't have all the expertise we asked for in some of our questions. And we haven't even had that "expert" to query in many months. We are charged with being non biased; informed/ demanding factual information. Let's focus on whether we can deliver on that, at least on two options. And ask ourselves [and require ICANN to fund any needed independent, and totally unbiased views] quickly. ICANN has a lot of $$ tied up in their own "risk" in the event that they fall over, right? we even agreed to a contribution to that fund from the Auction Proceeds at a limited, and one time contribution. We don't want the mechanism we create to be vulnerable to more liability for ICANN, to Board or new /CEO/senior staff changes in perspective. This is external to ICANN's core mission, but needs to be consistent with ICANN's overall mission. I keep looking at attendance of all of us; I read all transcripts, when not able to attend. I read all the transcripts from the beginning before accepting he CSG membership role after meeting 17. Time to present two options. One and three. Facts are our friends. ________________________________ From: Elliot Noss <enoss@tucows.com<mailto:enoss@tucows.com>> Sent: Friday, July 26, 2019 3:33 PM To: Alan Greenberg <alan.greenberg@mcgill.ca<mailto:alan.greenberg@mcgill.ca> > Cc: Vanda Scartezini <vanda@scartezini.org<mailto:vanda@scartezini.org>>; Marilyn Cade <marilynscade@hotmail.com<mailto:marilynscade@hotmail.com> >; ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org> < ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org>>; Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft Hi Alan, I think (but could be wrong) that Vanda was agreeing with you and showing Marilyn a working example of A. EN On Jul 26, 2019, at 12:55 PM, Alan Greenberg <alan.greenberg@mcgill.ca<mailto:alan.greenberg@mcgill.ca> > wrote: Vanda, if i correctly understood you, some of your projects were sent out to existing organizations for management but that is not what we are discussing here (that is closer to Mech D which we have discarded). We are talking about first having to build then run the external organization (foundation). Alan -- Sent from my mobile. Please excuse brevity and typos. On July 26, 2019 12:13:15 PM EDT, Vanda Scartezini <vanda@scartezini.org<mailto:vanda@scartezini.org>> wrote: Dear friends As Marilyn would like to hear some fact base, below just to share my own experience : I was responsible (besides other things) during my time in the government, for some grants ( the amount was not small, around 500 millions USD a year) to select relevant projects under the Information Technology Law under the Federal Secretariat as was the head of. We were public, could not contract anyone, and should be accountable to the federal Government, Treasure and IR ( since the money was from fiscal incentives from companies) the Public Ministry ( from Judiciary) and the Account Tribunal which controls the righteous expenditure of public organs. To deal with this challenge we form a Committee of volunteers , without paying any member. Processes to receive, analyze, select and specially control the disbursement of grants demands a lot of work , people without conflict and with a clear knowledge of the theme associated to the grant to allow a fair and constructive selection of the projects. The committee had a maximum of 5% of the total $$ to do this job. The money were for staff support, legal support, travels to visit the proposed groups for any project, general costs as meals etc. registered and published detailed to be accountable to all. How we have worked: We announced the openness of the slot of time to receive proposals � 3 months � and publish the requisitestes and documentation demanded as historical, previous grants etc as well general criteria we will use for selection under the Law. Took us 2 previous months to prepare the public call then we start our job while receiving all projects - we made a pre selection into 3 categories- excellent / good / poor and then analyze overall cost of excellent and good, call the excellent to f2 f interviews/ visited their facilities, if not known etc. and start to refine the selection, calling the good ones etc till the amount available. If there were not enough good projects to reach the overall amount for the year , the difference will be transferred to FINEP ( www.finep.gov.br<https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.finep.g...>) a public Foundation, kind of Bank, to support R&D development and financing companies to improve their own R&D, as well as give grants to research centers or universities for smaller projects, still under the Law of Information Technology. Finep took about 30% of the amount to his own task. The most difficult part was to control the development of the project � committee members were assigned to follow up some projects with staff/legal support, a quarter report is demanded from the grantee, till the deliverables were done. Both alternatives were used at the time: send money to third part and just got the reports analyzed by the Committee, and an “inside” management with the committee and third part staff/ legal contracted personnel. My evaluation: Even less work sending money to the Foundation, the best results from projects ( hence better $$ expended) we got from the work of the committee. Vanda Scartezini Polo Consultores Associados Av. Paulista 1159, cj 1004 01311-200- Sao Paulo, SP, Brazil Land Line: +55 11 3266.6253 Mobile: + 55 11 98181.1464 Sorry for any typos. From: Ccwg-auctionproceeds < ccwg-auctionproceeds-bounces@icann.org<mailto:ccwg-auctionproceeds-bounces@icann.org>> on behalf of Alan Greenberg <alan.greenberg@mcgill.ca<mailto:alan.greenberg@mcgill.ca> > Date: Friday, July 26, 2019 at 12:07 To: Marilyn Cade <marilynscade@hotmail.com<mailto:marilynscade@hotmail.com> >, " ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org>" < ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org>> Cc: "Aikman-Scalese, Anne" <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft Marilyn, although I have preferences, I will not here debate the options or even how we are to decide, but I would like more clarity on how you see the Mechanism C foundation operating. The only example we have for a corporation being set up in addition to ICANN is PTI. In that case, the majority of the PTI Board is appointed by ICANN (the rest being appointed by the ICANN NomCom), so it is had to claim that there is any independence. I presume that your intent would be to have, at the least, a majority of Foundation Board members being appointed NOT by ICANN. What level of majority for non-ICANN Board members do you consider reasonable and how would you see them being selected? You talk here about the potential for ICANN chargebacks being excessive. PTI purchases (ie outsources) a variety of services from ICANN (accounting, payroll, building space, etc.) Would you foresee the Foundation doing the same or are you suggesting that this not be allowed (ie the Foundation must be truly a stand-alone body providing all of its own services, or outsourcing them to some non-ICANN entity(ies). You talk about ICANN's salaries being excessive. How would you enforce lower salary levels in the Foundation when it would likely be co-located with ICANN and Foundation employees being able to be hired by ICANN for significant pay increases? The gist of my questions are that indeed, ICANN may have high operating costs, but I am unsure how the Foundation remedies it. A foundation *may* allow us to address such issues, but without clear ground rules, an "independent" foundation affiliated with ICANN could well have all of the same issues as those you associate with Mechanism A. Alan At 26/07/2019 10:30 AM, Marilyn Cade wrote: my apologies for being off line for a couple of days as other priorities did take over my life. As I represent the CSG, which is 3 constituencies, I will restate that we have strong concerns about Mechanism A as we do not understand how to ensure complete independence, which is of critical importance. I can't say that have been able to fully consult recently with the other participants from the CSG, but the general direction has not changed. We supported Mechanism C, and our preference has not changed. Accepting that there needs to be two options, Mechanism A and Mechanism C presented to the community -- still we strongly require that there be more fact based, and not just opinions from each of us as participants, presented. Thus, while any of us may have experience or preference, the CSG prefers to see fact based and even external reports. We do not support relying on member or participant, or internal ICANN staff analysis on certain areas, as for Mechanism A, given the landfall of chargeback costs, there could be unrecognized preferences. Thus we want to see independent analysis of the key questions. and while we welcome ICANN legal and financial analysis, it is not sufficient. Further ICANN staff are not experts in grant making, grant management and while they can "count heads" and analyze certain functions such as completing the tax returns, the 990, etc., maintaining separate bank accounts, as they have done with the Auction Funds proceeds as an interim management function, this does not morph into a sophisticated grant management entity. Mechanism A: This in not the CSG preferred option. We have described our concern that there are issues about an in-house entity, with many issues related to how to be independent., lack of skills, hiring and firing of staff, increased liability to ICANN Org, overall, etc. etc It is not accurate to state that because ICANN can set up separate bank accounts and maintain independence of such, that they are experienced in operating a truly independent grant making program. AND in operating such. An internal unit will have higher costs than are being acknowledged. On'e can't work part time on policy development or at GDD or GEE and then, presto, magic, morph over to spend 4 hours per day on a grant making program, at a lower costs, or at the same, higher cost of ICANN but without any clear distinction for tax reporting purposes. ICANN pays much higher salareies/benefits than is usual in a grant making entity and has also exit costs for staff who are part of ICANN and then are "made surplus", etc. And, not it isn't sufficient to cite California laws as if an employee is based in Europe, they gain additional benefits, like announcing they want to take a sabbatical to attend an educational program, and they simply are then still able to return to ICANN with a guarantee of job, as we have expeienced in the past. ICANN pays at far above usual rates for a not for profit organization, instead benchmarking against high tech companies -- this has been noted and objected to in the Budget Comments from the community, but is relevant here only as any "internal" process brings on exceptionally higher costs than is usual in a grant making/grant oversight/management process established in an external organization. I heard statements like: these staff can apply for ICANN jobs in the future, rather than being terminated. Let's be clear: grant making is a different skill set and we need to recognize that. In addition, the internal mechanism assumes that ICANN bills the "fund" at their usual really [well, I hesitate to use the word bloated, but certainly "high cost"] for any services they provide, and any services they provide are on top of what is supposed to be a full time job [according to the ICANN budget], which means retention of contractors, external resources, or additions of staff]. All at ICANN usual "costs". Again, higher than is usual for grant making organizations. The independence of any "internal body" is highly questionable. Stating that the ICANN Board has fiduciary responsibility, etc. is factual, but does not mean day to day oversight. And in fact, should be recognized as prohibited by the need for an independent disbursement mechanism. In fact, in the view of some, including the CSG and others in the public comment process, creating a mechanism with accountability, and independence from influence from Board and staff and even community, with focus on the established criteria led to members of the community to support Mechanism C over the recommendation of Mechanism A and B. Mechanism C remains our preferred option to present but we understand that it is possibly useful to present Mechanism A and C -- both -- as there is not agreement to a single mechanism at this point, among those who are active representatives and participants in this work effort. And it is important for us all to understand that this has been a prolonged and intensive effort. And we are close to the end -- presenting, we hope -- two options, with more detailed analysis and remaining questions, and then posting for our final public comment process. Frankly, as for me, there are continued questions about the influence of the staff and even the Board from time to time on this process and whether it is appropriate to have "preferences" expressed, which occasionally I have feared that I tetected -- e.g. the Board prefers ... etc. or senior staff think... etc. I believe strongly, and advocated from when I became the CSG rep that it is essential to have a very stringent approach to fact based decision making, essential for a public service, not for profit corporation, incorporated under California law. And an independent process that does not bring into ICANN a short term process, that is clearly not part of the core mission of ICXANN -- e.g grants management of a short term/but multi million$ fund, but one that is not part of why we created ICANN. Creating a separate Foundation, with a separate independent Board, with perhaps two ex officio non voting members that are from the ICANN Board, and a community advisory group I understand that some prefer to have the function inside ICANN. That is not supported by others in the members and participants, so a compromise is submitting Mechanism A and C, but then actually doing more due diligence as needed about each. Statements that a separate foundation is more expensive or longer than an internal mechanism are speculative right now, but can be addressed by factual analysis. However, I do not agree that ICANN staff have expertise in analyzing the attributes of staff or process to manage grant solutions/review/management. ð��� Yes, they can set up separate bae bank accounts, and do other forms of administrative reporting, and of course, would have to be paid for at the usual ICANN [which is quite generous} fee basis. BUT, the background, experience, and skills to do grant solicitation,award/evalation is different. Recently an experienced colleague in grants management told me he managed a $80M grant which was dispersed in a 9 month announcement, award selection, then performance of 1 year period, with a second year management/evulation process, and described the overhead and reports. Another colleague told me about a $190M grant process -- again, dispursement/oversight/evaluation within a 3 year period. These are not trivial tasks, and the overhead is what some might think is high, but is based on what kind of evaluation is required, and whether it is a grant to do something, or a grant to effect a major change. One might be light assessment- a) hold a meeting with 50 people/address training in DNSSEC, 40 of those invited attended/ 35 received the credentials, etc. etc. versus: establish a multi year, multi country training program in capacity building in DNS issues and successfully bring in 200 attendees per year, with XX changes in skills at national level. Evaluate changes in expertise. Mechanism B had some attraction but there was not enough work on the criteria bout how to select the "partner" with experience/expertise in operating a grant making program. Thus, I hope that the CCWG-AP sending forward Mechanism A and Mechanism C -- with the clear understanding that the CSG has many concerns with Mechanism A, and prefers Mechanism C. And we will encourage informed comments during the public comment process. It is important to be clear about what the public comment process is about. I spent over an hour clarifying to Fellows and NextGen, who were encouraged by ICANN staff to express their "preference" on how to influence what is funded. This is a misunderstanding and probably on many parts. That is NOT the purpose of the CCWG-AP, and probably a misunderstanding by staff when they encouraged attending the CCWG-AP session but it is important to understand that this public comment includes a clear understandable statement that this is not a slush fund; it is not up to the ICANN Board to direct; it must be independently managed and not put ICANN's integrity, or tax status, or anti trust status at risk by any even suspicion. Boards change, so do Senior staff/executives. The community needs to have a good understanding of our responsibilities, but also our limitation, given the focused purpose of the Auction Proceeds. Marilyn Cade CSG member in the CCWG-AP From: Ccwg-auctionproceeds < ccwg-auctionproceeds-bounces@icann.org<mailto:ccwg-auctionproceeds-bounces@icann.org>> on behalf of Judith Hellerstein <judith@jhellerstein.com<mailto:judith@jhellerstein.com> > Sent: Thursday, July 25, 2019 11:25 PM To: Elliot Noss <enoss@tucows.com<mailto:enoss@tucows.com>> Cc: ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org> < ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org>> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft Hi Elliot Mechanism A is an internal icann department hired to do the evaluation and choosing of grants As such icann staff will be reviewing all grant applications and choosing the winners. This is why I said, to me it is clear, that this mechanism has the least independence and in my mind does not meet the requirements set up by the board. If icann outsourced the reviewing and selection of the grantees it us not clear to me what the difference of the mechanisms us to me. With mechanism b, this choice of reviewing and selecting the grant winners will be done by the donor advisory fund. This is and independent group where icann has no ability to influence Mechanism C is an icann foundation. Again an independent group reviews and select the grantees Hope this answers your questions Best Judith Sent from my iPhone Judith@jhellerstein.com<mailto:Judith@jhellerstein.com> Skype ID:Judithhellerstein On Jul 25, 2019, at 7:51 AM, Elliot Noss <enoss@tucows.com<mailto:enoss@tucows.com>> wrote: Hi Judith, You say " It seems clear to me that Mechanism A would not meet the independent requirements set up by the ICANN Boardâ��. This is not clear to me. Pleasse explain. Thanks. EN On Jul 24, 2019, at 11:02 PM, Judith Hellerstein <judith@jhellerstein.com<mailto:judith@jhellerstein.com> > wrote: As per Emily's request, I am forwarding my comments to the entire list. I had previously sent them just to Staff and the Co-Chairs Best, Judith _________________________________________________________________________ Judith Hellerstein, Founder & CEO Hellerstein & Associates 3001 Veazey Terrace NW, Washington DC 20008 Phone: (202) 362-5139 Skype ID: judithhellerstein Mobile/Whats app: +1202-333-6517 E-mail: Judith@jhellerstein.com<mailto:Judith@jhellerstein.com> Website: www.jhellerstein.com<https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.jheller...> Linked In: www.linkedin.com/in/jhellerstein/<https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.linkedi...> Opening Telecom & Technology Opportunities Worldwide -------- Forwarded Message -------- Subject: Re: [Ext] My comments on the Auction Proceeds Draft Date: Wed, 24 Jul 2019 18:53:06 +0000 From: Emily Barabas <emily.barabas@icann.org><mailto:emily.barabas@icann.org> To: judith@jhellerstein.com<mailto:judith@jhellerstein.com> <judith@jhellerstein.com><mailto:judith@jhellerstein.com>, Marika Konings <marika.konings@icann.org><mailto:marika.konings@icann.org>, erika@erikamann.com<mailto:erika@erikamann.com> <erika@erikamann.com><mailto:erika@erikamann.com>, Joke Braeken <joke.braeken@icann.org><mailto:joke.braeken@icann.org> , ching.chiao@gmail.com<mailto:ching.chiao@gmail.com> <ching.chiao@gmail.com><mailto:ching.chiao@gmail.com> Hi Judith, Would you mind sending your feedback to the CCWG mailing list, or if you would like staff can do so on your behalf? Just let us know which you prefer. Kind regards, Emily On 24/07/2019, 20:45, "Judith Hellerstein" <judith@jhellerstein.com><mailto:judith@jhellerstein.com> wrote: HI Marika and Emily, I am attaching my comments on the auction proceeds draft document. It seems clear to me that Mechanism A would not meet the independent requirements set up by the ICANN Board but do not see this referenced in the report. Perhaps I am misunderstanding some things. I have also added comments about Mechanism B and C as well as other issues Earlier today, I have also added comments to the google doc you posted today on the list serv Thanks for extending the deadline to Friday. Look forward to the call on Wednesday Best, Judith -- _________________________________________________________________________ Judith Hellerstein, Founder & CEO Hellerstein & Associates 3001 Veazey Terrace NW, Washington DC 20008 Phone: (202) 362-5139 Skype ID: judithhellerstein Mobile/Whats app: +1202-333-6517 E-mail: Judith@jhellerstein.com<mailto:Judith@jhellerstein.com> Website: www.jhellerstein.com<https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.jheller...> Linked In: www.linkedin.com/in/jhellerstein/<https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.linkedi...> Opening Telecom & Technology Opportunities Worldwide <new gTLD AP CCWG Draft Final Report - updated 28 June 2019-JH Rev.docx>_______________________________________________ Ccwg-auctionproceeds mailing list Ccwg-auctionproceeds@icann.org<mailto:Ccwg-auctionproceeds@icann.org> https://mm.icann.org/mailman/listinfo/ccwg-auctionproceeds _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos<https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.icann.org%2Fprivacy%2Ftos&data=02%7C01%7C%7C3ad368d6e98e4c2e1e0008d7120014d7%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C636997663881626470&sdata=gHfPcoJRI5C7CmA26NqHqqQ7QNYMlZVSlOq09HxQ6uQ%3D&reserved=0>). 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Hi Anne
From among your interesting email, I have selected one section which is what I have frequently proposed to our At-Large team and been told that it would not be possible - but there surely MUST be an alternative available to ICANN if we were to use Mechanism A that would allow ICANN to establish an independent body but in association with them somehow. I too asked if we could seek more advice on what might be possible. I mentioned the PTI structure not because of what it does, but that it was a separate autonomous structure set up for a completely specific purpose that is nothing to do with ICANN's day to day work. This new mechanism that I was hoping we might get some legal feedback on, could be similar and its link with ICANN would be the auction funds that would be transferred to it from ICANN each year or whenever. A trust would work. I think it should still be considered.
*Regarding Option A, it seems to me that some California legal advice on the best way to effectively preserve the necessary independence would be appropriate. It may be advisable for ICANN to set up a charitable trust and to name Trustees who again, constitute a voting majority which is independent of ICANN staff and Board. The Trustees would then have their own fiduciary duty to the Trust itself (which would encompass the ICANN mission but would not owe a fiduciary duty to ICANN the corporation.) * *Maureen* On Fri, Jul 26, 2019 at 12:03 PM Alan Greenberg <alan.greenberg@mcgill.ca> wrote:
Several people have alluded to ICANN using some of the auction funds to boost the reserve and have used this as the reason why we need a separate entity. My recollection is that very early on, the Board made it clear that regardless of the mechanism, they did not foresee transferring all of the money (whether it is $100m or $235m) in one fell swoop. I believe the term "tranche" was use to say that the monet would be transferred as needed, and that ICANN would still maintain full control of the remaining funds. And ultimately if the situation warranted might redirect them (the latter part is my words, not something said by the Board).
Alan
At 26/07/2019 05:17 PM, Aikman-Scalese, Anne wrote:
Hi all,
I am writing these comments with hopes that Marilyn will post to the CCWB Auction Proceeds list.
To further demonstrate this principle regarding the need for independence, I will mention that in connection with the presentation of the staffing “readiness†plan for Subsequent Procedures that was drawn up by ICANN staff, the Marrakech presentation to the Sub Pro WG included a comment from an ICANN officer that among the possible sources of funding for staffing up for the next round might be to “borrow from Auction Proceeds†. (If you don’t believe me, check the Sub Pro recording from that session in Marrakech.)
I believe I had commented remotely in Marrakech that to the extent that decisions on hiring and firing of grant-making personnel would be made by ICANN staff and/or the Board, there could not possibly be a reasonable level of independence in the grant-making operation and it would be extremely difficult for ICANN to defend challenges to grants made by that department. Auction proceeds are already a controversial topic and it would be a mistake to cause that topic to become more controversial by simply setting up some department guidelines and expecting people who are hired and fired by ICANN Org and/or Board to do anything other than what they are directed to do by those who control their paycheck.
The old saying goes that “There is nothing new under the sun.†Although we like to think that ICANN’s decision-making processes are entirely different from other entities, the management and risk management challenges associated with this task and the related ethical concerns have been faced by many institutions. One notable point of comparison would be universities, which generally have a number of associated entities involved in furthering their missions and which, like ICANN, operate in an environment where public trust and confidence is key.
Regarding Alan’s comment about the composition of a Board in relation to Option C, I agree it’s clear that PTI is essentially controlled by ICANN. However, the non-profit corporation’s By-Laws could easily provide that the majority of directors NOT be affiliated with ICANN. This would ensure independent operation in accordance with the Foundation’s Articles and ByLaws as long as the Foundation’s staff was not hired and fired by ICANN Org staff or the ICANN Board.
Regarding Option A, it seems to me that some California legal advice on the best way to effectively preserve the necessary independence would be appropriate. It may be advisable for ICANN to set up a charitable trust and to name Trustees who again, constitute a voting majority which is independent of ICANN staff and Board. The Trustees would then have their own fiduciary duty to the Trust itself (which would encompass the ICANN mission but would not owe a fiduciary duty to ICANN the corporation.) In this regard, one piece of the analysis relating to Option A that is clearly missing is the fact that each of the ICANN Directors HAS A FIDUCIARY DUTY TO THE ICANN CORPORATION ITSELF. This fiduciary duty to the ICANN corporation can easily be in conflict with the goals and purpose of the grant-making. For example, for the ICANN Board, the fiscal condition of the corporation itself is paramount. If we put ICANN Directors in the position of having to review the actions of the grant-making organization while at the same time allowing the corporation itself to go “under†, we are asking too much. The only safe way to deal with this potential conflict is to assure total independence of grant-making and many of the public comments reflect this major concern.
The above considerations are not terribly different from the governance issues faced by universities and the foundations that support their mission. Certainly Option C, a separate non-profit corporation with majority independent directors would be preferable from the standpoint of public awareness and accountability. If that mechanism is seen as too unwieldy, ICANN should, at a minimum, set up a Trust mechanism to hold the funds and appoint majority independent Trustees on the Board of Trustees. These Trustees should be responsible for hiring and firing qualified grant-making personnel and the Trust operations should be independent even if housed in the same building. Best practices would dictate against sharing personnel. And yes, the Trust would need its own operating budget.
If the CCWG has already examined the Trust mechanism in the context of Option A, I apologize for bring this up. It’s just completely unrealistic to think that you can establish the required independence by setting up a department within ICANN where employees responsible for grant-making are hired and fired by ICANN staff and/or Board.
Anne
*Anne E. Aikman-Scalese *Of Counsel 520.629.4428 office 520.622.3088 fax AAikman@lrrc.com _____________________________ [image: []] Lewis Roca Rothgerber Christie LLP One South Church Avenue, Suite 700 Tucson, Arizona 85701-1611 lrrc.com
*From:* Marilyn Cade <marilynscade@hotmail.com> *Sent:* Friday, July 26, 2019 2:09 PM *To:* Elliot Noss <enoss@tucows.com>; Alan Greenberg < alan.greenberg@mcgill.ca> *Cc:* Vanda Scartezini <vanda@scartezini.org>; ccwg-auctionproceeds@icann.org; Aikman-Scalese, Anne <AAikman@lrrc.com> *Subject:* Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft
*[EXTERNAL] ------------------------------ *
folks, we must avoid being about ourselves. We need fact based information that is not our own experience, which will always be influenced by our own experiences. I am not being critical. I am merely thinking of my mentoring professor who was trained by Sal Alenski. We all have opinions from experiences of our own. They are small and if we are independent thinkers, then we are required to think not about what we experienced, but what is "known" and documented.
Let's not assume anything from our own experience. Count on facts.
from others and then inform us. That was my message. We have been a bit too much opinion based in my view. Not everyone need agree with that. BUT, we had only a few advisory discussions with a young and ICANN selected expert, who then disappeared, and didn't have all the expertise we asked for in some of our questions. And we haven't even had that "expert" to query in many months.
We are charged with being non biased; informed/ demanding factual information. Let's focus on whether we can deliver on that, at least on two options.
And ask ourselves [and require ICANN to fund any needed independent, and totally unbiased views] quickly.
ICANN has a lot of $$ tied up in their own "risk" in the event that they fall over, right? we even agreed to a contribution to that fund from the Auction Proceeds at a limited, and one time contribution.
We don't want the mechanism we create to be vulnerable to more liability for ICANN, to Board or new /CEO/senior staff changes in perspective.
This is external to ICANN's core mission, but needs to be consistent with ICANN's overall mission.
I keep looking at attendance of all of us; I read all transcripts, when not able to attend. I read all the transcripts from the beginning before accepting he CSG membership role after meeting 17.
Time to present two options. One and three.
Facts are our friends.
------------------------------ *From:* Elliot Noss <enoss@tucows.com> *Sent:* Friday, July 26, 2019 3:33 PM *To:* Alan Greenberg <alan.greenberg@mcgill.ca > *Cc:* Vanda Scartezini <vanda@scartezini.org>; Marilyn Cade < marilynscade@hotmail.com >; ccwg-auctionproceeds@icann.org < ccwg-auctionproceeds@icann.org>; Aikman-Scalese, Anne <AAikman@lrrc.com> *Subject:* Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft
Hi Alan,
I think (but could be wrong) that Vanda was agreeing with you and showing Marilyn a working example of A.
EN
On Jul 26, 2019, at 12:55 PM, Alan Greenberg <alan.greenberg@mcgill.ca > wrote:
Vanda, if i correctly understood you, some of your projects were sent out to existing organizations for management but that is not what we are discussing here (that is closer to Mech D which we have discarded). We are talking about first having to build then run the external organization (foundation).
Alan -- Sent from my mobile. Please excuse brevity and typos.
On July 26, 2019 12:13:15 PM EDT, Vanda Scartezini <vanda@scartezini.org> wrote: Dear friends
As Marilyn would like to hear some fact base, below just to share my own experience : I was responsible (besides other things) during my time in the government, for some grants ( the amount was not small, around 500 millions USD a year) to select relevant projects under the Information Technology Law under the Federal Secretariat as was the head of. We were public, could not contract anyone, and should be accountable to the federal Government, Treasure and IR ( since the money was from fiscal incentives from companies) the Public Ministry ( from Judiciary) and the Account Tribunal which controls the righteous expenditure of public organs. To deal with this challenge we form a Committee of volunteers , without paying any member. Processes to receive, analyze, select and specially control the disbursement of grants demands a lot of work , people without conflict and with a clear knowledge of the theme associated to the grant to allow a fair and constructive selection of the projects. The committee had a maximum of 5% of the total $$ to do this job. The money were for staff support, legal support, travels to visit the proposed groups for any project, general costs as meals etc. registered and published detailed to be accountable to all. How we have worked: We announced the openness of the slot of time to receive proposals – 3 months – and publish the requisitestes and documentation demanded as historical, previous grants etc as well general criteria we will use for selection under the Law. Took us 2 previous months to prepare the public call then we start our job while receiving all projects - we made a pre selection into 3 categories- excellent / good / poor and then analyze overall cost of excellent and good, call the excellent to f2 f interviews/ visited their facilities, if not known etc. and start to refine the selection, calling the good ones etc till the amount available. If there were not enough good projects to reach the overall amount for the year , the difference will be transferred to FINEP ( www.finep.gov.br <https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.finep.g...>) a public Foundation, kind of Bank, to support R&D development and financing companies to improve their own R&D, as well as give grants to research centers or universities for smaller projects, still under the Law of Information Technology. Finep took about 30% of the amount to his own task. The most difficult part was to control the development of the project – committee members were assigned to follow up some projects with staff/legal support, a quarter report is demanded from the grantee, till the deliverables were done. Both alternatives were used at the time: send money to third part and just got the reports analyzed by the Committee, and an “inside†management with the committee and third part staff/ legal contracted personnel. My evaluation: Even less work sending money to the Foundation, the best results from projects ( hence better $$ expended) we got from the work of the committee.
Vanda Scartezini Polo Consultores Associados Av. Paulista 1159, cj 1004 01311-200- Sao Paulo, SP, Brazil Land Line: +55 11 3266.6253 Mobile: + 55 11 98181.1464 Sorry for any typos.
From: Ccwg-auctionproceeds < ccwg-auctionproceeds-bounces@icann.org> on behalf of Alan Greenberg <alan.greenberg@mcgill.ca > Date: Friday, July 26, 2019 at 12:07 To: Marilyn Cade <marilynscade@hotmail.com >, " ccwg-auctionproceeds@icann.org" < ccwg-auctionproceeds@icann.org> Cc: "Aikman-Scalese, Anne" <AAikman@lrrc.com> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft
Marilyn, although I have preferences, I will not here debate the options or even how we are to decide, but I would like more clarity on how you see the Mechanism C foundation operating.
The only example we have for a corporation being set up in addition to ICANN is PTI. In that case, the majority of the PTI Board is appointed by ICANN (the rest being appointed by the ICANN NomCom), so it is had to claim that there is any independence. I presume that your intent would be to have, at the least, a majority of Foundation Board members being appointed NOT by ICANN. What level of majority for non-ICANN Board members do you consider reasonable and how would you see them being selected?
You talk here about the potential for ICANN chargebacks being excessive. PTI purchases (ie outsources) a variety of services from ICANN (accounting, payroll, building space, etc.) Would you foresee the Foundation doing the same or are you suggesting that this not be allowed (ie the Foundation must be truly a stand-alone body providing all of its own services, or outsourcing them to some non-ICANN entity(ies).
You talk about ICANN's salaries being excessive. How would you enforce lower salary levels in the Foundation when it would likely be co-located with ICANN and Foundation employees being able to be hired by ICANN for significant pay increases?
The gist of my questions are that indeed, ICANN may have high operating costs, but I am unsure how the Foundation remedies it.
A foundation *may* allow us to address such issues, but without clear ground rules, an "independent" foundation affiliated with ICANN could well have all of the same issues as those you associate with Mechanism A.
Alan
At 26/07/2019 10:30 AM, Marilyn Cade wrote:
my apologies for being off line for a couple of days as other priorities did take over my life.
As I represent the CSG, which is 3 constituencies, I will restate that we have strong concerns about Mechanism A as we do not understand how to ensure complete independence, which is of critical importance. I can't say that have been able to fully consult recently with the other participants from the CSG, but the general direction has not changed.
We supported Mechanism C, and our preference has not changed. Accepting that there needs to be two options, Mechanism A and Mechanism C presented to the community -- still we strongly require that there be more fact based, and not just opinions from each of us as participants, presented. Thus, while any of us may have experience or preference, the CSG prefers to see fact based and even external reports. We do not support relying on member or participant, or internal ICANN staff analysis on certain areas, as for Mechanism A, given the landfall of chargeback costs, there could be unrecognized preferences.
Thus we want to see independent analysis of the key questions. and while we welcome ICANN legal and financial analysis, it is not sufficient. Further ICANN staff are not experts in grant making, grant management and while they can "count heads" and analyze certain functions such as completing the tax returns, the 990, etc., maintaining separate bank accounts, as they have done with the Auction Funds proceeds as an interim management function, this does not morph into a sophisticated grant management entity.
Mechanism A: This in not the CSG preferred option. We have described our concern that there are issues about an in-house entity, with many issues related to how to be independent., lack of skills, hiring and firing of staff, increased liability to ICANN Org, overall, etc. etc
It is not accurate to state that because ICANN can set up separate bank accounts and maintain independence of such, that they are experienced in operating a truly independent grant making program. AND in operating such.
An internal unit will have higher costs than are being acknowledged. On'e can't work part time on policy development or at GDD or GEE and then, presto, magic, morph over to spend 4 hours per day on a grant making program, at a lower costs, or at the same, higher cost of ICANN but without any clear distinction for tax reporting purposes.
ICANN pays much higher salareies/benefits than is usual in a grant making entity and has also exit costs for staff who are part of ICANN and then are "made surplus", etc. And, not it isn't sufficient to cite California laws as if an employee is based in Europe, they gain additional benefits, like announcing they want to take a sabbatical to attend an educational program, and they simply are then still able to return to ICANN with a guarantee of job, as we have expeienced in the past. ICANN pays at far above usual rates for a not for profit organization, instead benchmarking against high tech companies -- this has been noted and objected to in the Budget Comments from the community, but is relevant here only as any "internal" process brings on exceptionally higher costs than is usual in a grant making/grant oversight/management process established in an external organization.
I heard statements like: these staff can apply for ICANN jobs in the future, rather than being terminated. Let's be clear: grant making is a different skill set and we need to recognize that.
In addition, the internal mechanism assumes that ICANN bills the "fund" at their usual really [well, I hesitate to use the word bloated, but certainly "high cost"] for any services they provide, and any services they provide are on top of what is supposed to be a full time job [according to the ICANN budget], which means retention of contractors, external resources, or additions of staff]. All at ICANN usual "costs".
Again, higher than is usual for grant making organizations.
The independence of any "internal body" is highly questionable.
Stating that the ICANN Board has fiduciary responsibility, etc. is factual, but does not mean day to day oversight. And in fact, should be recognized as prohibited by the need for an independent disbursement mechanism.
In fact, in the view of some, including the CSG and others in the public comment process, creating a mechanism with accountability, and independence from influence from Board and staff and even community, with focus on the established criteria led to members of the community to support Mechanism C over the recommendation of Mechanism A and B.
Mechanism C remains our preferred option to present but we understand that it is possibly useful to present Mechanism A and C -- both -- as there is not agreement to a single mechanism at this point, among those who are active representatives and participants in this work effort. And it is important for us all to understand that this has been a prolonged and intensive effort. And we are close to the end -- presenting, we hope -- two options, with more detailed analysis and remaining questions, and then posting for our final public comment process.
Frankly, as for me, there are continued questions about the influence of the staff and even the Board from time to time on this process and whether it is appropriate to have "preferences" expressed, which occasionally I have feared that I tetected -- e.g. the Board prefers ... etc. or senior staff think... etc.
I believe strongly, and advocated from when I became the CSG rep that it is essential to have a very stringent approach to fact based decision making, essential for a public service, not for profit corporation, incorporated under California law. And an independent process that does not bring into ICANN a short term process, that is clearly not part of the core mission of ICXANN -- e.g grants management of a short term/but multi million$ fund, but one that is not part of why we created ICANN. Creating a separate Foundation, with a separate independent Board, with perhaps two ex officio non voting members that are from the ICANN Board, and a community advisory group
I understand that some prefer to have the function inside ICANN. That is not supported by others in the members and participants, so a compromise is submitting Mechanism A and C, but then actually doing more due diligence as needed about each.
Statements that a separate foundation is more expensive or longer than an internal mechanism are speculative right now, but can be addressed by factual analysis. However, I do not agree that ICANN staff have expertise in analyzing the attributes of staff or process to manage grant solutions/review/management. 🙂 Yes, they can set up separate bae bank accounts, and do other forms of administrative reporting, and of course, would have to be paid for at the usual ICANN [which is quite generous} fee basis. BUT, the background, experience, and skills to do grant solicitation,award/evalation is different.
Recently an experienced colleague in grants management told me he managed a $80M grant which was dispersed in a 9 month announcement, award selection, then performance of 1 year period, with a second year management/evulation process, and described the overhead and reports. Another colleague told me about a $190M grant process -- again, dispursement/oversight/evaluation within a 3 year period. These are not trivial tasks, and the overhead is what some might think is high, but is based on what kind of evaluation is required, and whether it is a grant to do something, or a grant to effect a major change. One might be light assessment- a) hold a meeting with 50 people/address training in DNSSEC, 40 of those invited attended/ 35 received the credentials, etc. etc. versus: establish a multi year, multi country training program in capacity building in DNS issues and successfully bring in 200 attendees per year, with XX changes in skills at national level. Evaluate changes in expertise.
Mechanism B had some attraction but there was not enough work on the criteria bout how to select the "partner" with experience/expertise in operating a grant making program.
Thus, I hope that the CCWG-AP sending forward Mechanism A and Mechanism C -- with the clear understanding that the CSG has many concerns with Mechanism A, and prefers Mechanism C. And we will encourage informed comments during the public comment process.
It is important to be clear about what the public comment process is about. I spent over an hour clarifying to Fellows and NextGen, who were encouraged by ICANN staff to express their "preference" on how to influence what is funded. This is a misunderstanding and probably on many parts. That is NOT the purpose of the CCWG-AP, and probably a misunderstanding by staff when they encouraged attending the CCWG-AP session but it is important to understand that this public comment includes a clear understandable statement that this is not a slush fund; it is not up to the ICANN Board to direct; it must be independently managed and not put ICANN's integrity, or tax status, or anti trust status at risk by any even suspicion.
Boards change, so do Senior staff/executives. The community needs to have a good understanding of our responsibilities, but also our limitation, given the focused purpose of the Auction Proceeds.
Marilyn Cade CSG member in the CCWG-AP
From: Ccwg-auctionproceeds < ccwg-auctionproceeds-bounces@icann.org> on behalf of Judith Hellerstein <judith@jhellerstein.com > Sent: Thursday, July 25, 2019 11:25 PM To: Elliot Noss <enoss@tucows.com> Cc: ccwg-auctionproceeds@icann.org < ccwg-auctionproceeds@icann.org> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft
Hi Elliot Mechanism A is an internal icann department hired to do the evaluation and choosing of grants As such icann staff will be reviewing all grant applications and choosing the winners. This is why I said, to me it is clear, that this mechanism has the least independence and in my mind does not meet the requirements set up by the board.
If icann outsourced the reviewing and selection of the grantees it us not clear to me what the difference of the mechanisms us to me.
With mechanism b, this choice of reviewing and selecting the grant winners will be done by the donor advisory fund. This is and independent group where icann has no ability to influence
Mechanism C is an icann foundation. Again an independent group reviews and select the grantees
Hope this answers your questions
Best Judith
Sent from my iPhone Judith@jhellerstein.com Skype ID:Judithhellerstein
On Jul 25, 2019, at 7:51 AM, Elliot Noss <enoss@tucows.com> wrote:
Hi Judith,
You say " It seems clear to me that Mechanism A would not meet the independent requirements set up by the ICANN Board†. This is not clear to me. Pleasse explain. Thanks.
EN
On Jul 24, 2019, at 11:02 PM, Judith Hellerstein <judith@jhellerstein.com
wrote:
As per Emily's request, I am forwarding my comments to the entire list. I had previously sent them just to Staff and the Co-Chairs
Best,
Judith
_________________________________________________________________________
Judith Hellerstein, Founder & CEO
Hellerstein & Associates
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Opening Telecom & Technology Opportunities Worldwide
-------- Forwarded Message -------- Subject: Re: [Ext] My comments on the Auction Proceeds Draft Date: Wed, 24 Jul 2019 18:53:06 +0000 From: Emily Barabas <emily.barabas@icann.org> <emily.barabas@icann.org> To: judith@jhellerstein.com <judith@jhellerstein.com> <judith@jhellerstein.com>, Marika Konings <marika.konings@icann.org> <marika.konings@icann.org>, erika@erikamann.com <erika@erikamann.com> <erika@erikamann.com>, Joke Braeken <joke.braeken@icann.org> <joke.braeken@icann.org> , ching.chiao@gmail.com <ching.chiao@gmail.com> <ching.chiao@gmail.com>
Hi Judith,
Would you mind sending your feedback to the CCWG mailing list, or if you would like staff can do so on your behalf? Just let us know which you prefer.
Kind regards, Emily
On 24/07/2019, 20:45, "Judith Hellerstein" <judith@jhellerstein.com> <judith@jhellerstein.com> wrote:
HI Marika and Emily, I am attaching my comments on the auction proceeds draft document. It seems clear to me that Mechanism A would not meet the independent requirements set up by the ICANN Board but do not see this referenced in the report. Perhaps I am misunderstanding some things. I have also added comments about Mechanism B and C as well as other issues
Earlier today, I have also added comments to the google doc you posted today on the list serv Thanks for extending the deadline to Friday. Look forward to the call on Wednesday
Best, Judith -- _________________________________________________________________________ Judith Hellerstein, Founder & CEO Hellerstein & Associates 3001 Veazey Terrace NW, Washington DC 20008 Phone: (202) 362-5139 Skype ID: judithhellerstein Mobile/Whats app: +1202-333-6517 E-mail: Judith@jhellerstein.com Website: www.jhellerstein.com <https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.jheller...> Linked In: www.linkedin.com/in/jhellerstein/ <https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.linkedi...> Opening Telecom & Technology Opportunities Worldwide
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Just to confirm Alan’s point below, the Board expects to make funding available for grants in tranches, primarily to ensure that the funds are being used properly in furtherance of ICANN’s Mission and to permit course corrections where problems arise. From: Ccwg-auctionproceeds <ccwg-auctionproceeds-bounces@icann.org> on behalf of Alan Greenberg <alan.greenberg@mcgill.ca> Date: Friday, July 26, 2019 at 6:03 PM To: "Aikman-Scalese, Anne" <AAikman@lrrc.com>, Marilyn Cade <marilynscade@hotmail.com>, Elliot Noss <enoss@tucows.com> Cc: "ccwg-auctionproceeds@icann.org" <ccwg-auctionproceeds@icann.org> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft Several people have alluded to ICANN using some of the auction funds to boost the reserve and have used this as the reason why we need a separate entity. My recollection is that very early on, the Board made it clear that regardless of the mechanism, they did not foresee transferring all of the money (whether it is $100m or $235m) in one fell swoop. I believe the term "tranche" was use to say that the monet would be transferred as needed, and that ICANN would still maintain full control of the remaining funds. And ultimately if the situation warranted might redirect them (the latter part is my words, not something said by the Board). Alan At 26/07/2019 05:17 PM, Aikman-Scalese, Anne wrote: Hi all, I am writing these comments with hopes that Marilyn will post to the CCWB Auction Proceeds list. To further demonstrate this principle regarding the need for independence, I will mention that in connection with the presentation of the staffing “readiness†plan for Subsequent Procedures that was drawn up by ICANN staff, the Marrakech presentation to the Sub Pro WG included a comment from an ICANN officer that among the possible sources of funding for staffing up for the next round might be to “borrow from Auction Proceedsâ€. (If you don’t believe me, check the Sub Pro recording from that session in Marrakech.) I believe I had commented remotely in Marrakech that to the extent that decisions on hiring and firing of grant-making personnel would be made by ICANN staff and/or the Board, there could not possibly be a reasonable level of independence in the grant-making operation and it would be extremely difficult for ICANN to defend challenges to grants made by that department. Auction proceeds are already a controversial topic and it would be a mistake to cause that topic to become more controversial by simply setting up some department guidelines and expecting people who are hired and fired by ICANN Org and/or Board to do anything other than what they are directed to do by those who control their paycheck. The old saying goes that “There is nothing new under the sun.†Although we like to think that ICANN’s decision-making processes are entirely different from other entities, the management and risk management challenges associated with this task and the related ethical concerns have been faced by many institutions. One notable point of comparison would be universities, which generally have a number of associated entities involved in furthering their missions and which, like ICANN, operate in an environment where public trust and confidence is key. Regarding Alan’s comment about the composition of a Board in relation to Option C, I agree it’s clear that PTI is essentially controlled by ICANN. However, the non-profit corporation’s By-Laws could easily provide that the majority of directors NOT be affiliated with ICANN. This would ensure independent operation in accordance with the Foundation’s Articles and ByLaws as long as the Foundation’s staff was not hired and fired by ICANN Org staff or the ICANN Board. Regarding Option A, it seems to me that some California legal advice on the best way to effectively preserve the necessary independence would be appropriate. It may be advisable for ICANN to set up a charitable trust and to name Trustees who again, constitute a voting majority which is independent of ICANN staff and Board. The Trustees would then have their own fiduciary duty to the Trust itself (which would encompass the ICANN mission but would not owe a fiduciary duty to ICANN the corporation.) In this regard, one piece of the analysis relating to Option A that is clearly missing is the fact that each of the ICANN Directors HAS A FIDUCIARY DUTY TO THE ICANN CORPORATION ITSELF. This fiduciary duty to the ICANN corporation can easily be in conflict with the goals and purpose of the grant-making. For example, for the ICANN Board, the fiscal condition of the corporation itself is paramount. If we put ICANN Directors in the position of having to review the actions of the grant-making organization while at the same time allowing the corporation itself to go “underâ€, we are asking too much. The only safe way to deal with this potential conflict is to assure total independence of grant-making and many of the public comments reflect this major concern. The above considerations are not terribly different from the governance issues faced by universities and the foundations that support their mission. Certainly Option C, a separate non-profit corporation with majority independent directors would be preferable from the standpoint of public awareness and accountability. If that mechanism is seen as too unwieldy, ICANN should, at a minimum, set up a Trust mechanism to hold the funds and appoint majority independent Trustees on the Board of Trustees. These Trustees should be responsible for hiring and firing qualified grant-making personnel and the Trust operations should be independent even if housed in the same building. Best practices would dictate against sharing personnel. And yes, the Trust would need its own operating budget. If the CCWG has already examined the Trust mechanism in the context of Option A, I apologize for bring this up. It’s just completely unrealistic to think that you can establish the required independence by setting up a department within ICANN where employees responsible for grant-making are hired and fired by ICANN staff and/or Board. Anne Anne E. Aikman-Scalese Of Counsel 520.629.4428 office 520.622.3088 fax AAikman@lrrc.com<mailto:AAikman@lrrc.com> _____________________________ [[]] Lewis Roca Rothgerber Christie LLP One South Church Avenue, Suite 700 Tucson, Arizona 85701-1611 lrrc.com<http://lrrc.com/> From: Marilyn Cade <marilynscade@hotmail.com> Sent: Friday, July 26, 2019 2:09 PM To: Elliot Noss <enoss@tucows.com>; Alan Greenberg <alan.greenberg@mcgill.ca> Cc: Vanda Scartezini <vanda@scartezini.org>; ccwg-auctionproceeds@icann.org; Aikman-Scalese, Anne <AAikman@lrrc.com> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft [EXTERNAL] ________________________________ folks, we must avoid being about ourselves. We need fact based information that is not our own experience, which will always be influenced by our own experiences. I am not being critical. I am merely thinking of my mentoring professor who was trained by Sal Alenski. We all have opinions from experiences of our own. They are small and if we are independent thinkers, then we are required to think not about what we experienced, but what is "known" and documented. Let's not assume anything from our own experience. Count on facts. from others and then inform us. That was my message. We have been a bit too much opinion based in my view. Not everyone need agree with that. BUT, we had only a few advisory discussions with a young and ICANN selected expert, who then disappeared, and didn't have all the expertise we asked for in some of our questions. And we haven't even had that "expert" to query in many months. We are charged with being non biased; informed/ demanding factual information. Let's focus on whether we can deliver on that, at least on two options. And ask ourselves [and require ICANN to fund any needed independent, and totally unbiased views] quickly. ICANN has a lot of $$ tied up in their own "risk" in the event that they fall over, right? we even agreed to a contribution to that fund from the Auction Proceeds at a limited, and one time contribution. We don't want the mechanism we create to be vulnerable to more liability for ICANN, to Board or new /CEO/senior staff changes in perspective. This is external to ICANN's core mission, but needs to be consistent with ICANN's overall mission. I keep looking at attendance of all of us; I read all transcripts, when not able to attend. I read all the transcripts from the beginning before accepting he CSG membership role after meeting 17. Time to present two options. One and three. Facts are our friends. ________________________________ From: Elliot Noss <enoss@tucows.com<mailto:enoss@tucows.com>> Sent: Friday, July 26, 2019 3:33 PM To: Alan Greenberg <alan.greenberg@mcgill.ca<mailto:alan.greenberg@mcgill.ca> > Cc: Vanda Scartezini <vanda@scartezini.org<mailto:vanda@scartezini.org>>; Marilyn Cade <marilynscade@hotmail.com<mailto:marilynscade@hotmail.com> >; ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org> < ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org>>; Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft Hi Alan, I think (but could be wrong) that Vanda was agreeing with you and showing Marilyn a working example of A. EN On Jul 26, 2019, at 12:55 PM, Alan Greenberg <alan.greenberg@mcgill.ca<mailto:alan.greenberg@mcgill.ca> > wrote: Vanda, if i correctly understood you, some of your projects were sent out to existing organizations for management but that is not what we are discussing here (that is closer to Mech D which we have discarded). We are talking about first having to build then run the external organization (foundation). Alan -- Sent from my mobile. Please excuse brevity and typos. On July 26, 2019 12:13:15 PM EDT, Vanda Scartezini <vanda@scartezini.org<mailto:vanda@scartezini.org>> wrote: Dear friends As Marilyn would like to hear some fact base, below just to share my own experience : I was responsible (besides other things) during my time in the government, for some grants ( the amount was not small, around 500 millions USD a year) to select relevant projects under the Information Technology Law under the Federal Secretariat as was the head of. We were public, could not contract anyone, and should be accountable to the federal Government, Treasure and IR ( since the money was from fiscal incentives from companies) the Public Ministry ( from Judiciary) and the Account Tribunal which controls the righteous expenditure of public organs. To deal with this challenge we form a Committee of volunteers , without paying any member. Processes to receive, analyze, select and specially control the disbursement of grants demands a lot of work , people without conflict and with a clear knowledge of the theme associated to the grant to allow a fair and constructive selection of the projects. The committee had a maximum of 5% of the total $$ to do this job. The money were for staff support, legal support, travels to visit the proposed groups for any project, general costs as meals etc. registered and published detailed to be accountable to all. How we have worked: We announced the openness of the slot of time to receive proposals – 3 months – and publish the requisitestes and documentation demanded as historical, previous grants etc as well general criteria we will use for selection under the Law. Took us 2 previous months to prepare the public call then we start our job while receiving all projects - we made a pre selection into 3 categories- excellent / good / poor and then analyze overall cost of excellent and good, call the excellent to f2 f interviews/ visited their facilities, if not known etc. and start to refine the selection, calling the good ones etc till the amount available. If there were not enough good projects to reach the overall amount for the year , the difference will be transferred to FINEP ( www.finep.gov.br<https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.finep.g...>) a public Foundation, kind of Bank, to support R&D development and financing companies to improve their own R&D, as well as give grants to research centers or universities for smaller projects, still under the Law of Information Technology. Finep took about 30% of the amount to his own task. The most difficult part was to control the development of the project – committee members were assigned to follow up some projects with staff/legal support, a quarter report is demanded from the grantee, till the deliverables were done. Both alternatives were used at the time: send money to third part and just got the reports analyzed by the Committee, and an “inside†management with the committee and third part staff/ legal contracted personnel. My evaluation: Even less work sending money to the Foundation, the best results from projects ( hence better $$ expended) we got from the work of the committee. Vanda Scartezini Polo Consultores Associados Av. Paulista 1159, cj 1004 01311-200- Sao Paulo, SP, Brazil Land Line: +55 11 3266.6253 Mobile: + 55 11 98181.1464 Sorry for any typos. From: Ccwg-auctionproceeds < ccwg-auctionproceeds-bounces@icann.org<mailto:ccwg-auctionproceeds-bounces@icann.org>> on behalf of Alan Greenberg <alan.greenberg@mcgill.ca<mailto:alan.greenberg@mcgill.ca> > Date: Friday, July 26, 2019 at 12:07 To: Marilyn Cade <marilynscade@hotmail.com<mailto:marilynscade@hotmail.com> >, " ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org>" < ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org>> Cc: "Aikman-Scalese, Anne" <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft Marilyn, although I have preferences, I will not here debate the options or even how we are to decide, but I would like more clarity on how you see the Mechanism C foundation operating. The only example we have for a corporation being set up in addition to ICANN is PTI. In that case, the majority of the PTI Board is appointed by ICANN (the rest being appointed by the ICANN NomCom), so it is had to claim that there is any independence. I presume that your intent would be to have, at the least, a majority of Foundation Board members being appointed NOT by ICANN. What level of majority for non-ICANN Board members do you consider reasonable and how would you see them being selected? You talk here about the potential for ICANN chargebacks being excessive. PTI purchases (ie outsources) a variety of services from ICANN (accounting, payroll, building space, etc.) Would you foresee the Foundation doing the same or are you suggesting that this not be allowed (ie the Foundation must be truly a stand-alone body providing all of its own services, or outsourcing them to some non-ICANN entity(ies). You talk about ICANN's salaries being excessive. How would you enforce lower salary levels in the Foundation when it would likely be co-located with ICANN and Foundation employees being able to be hired by ICANN for significant pay increases? The gist of my questions are that indeed, ICANN may have high operating costs, but I am unsure how the Foundation remedies it. A foundation *may* allow us to address such issues, but without clear ground rules, an "independent" foundation affiliated with ICANN could well have all of the same issues as those you associate with Mechanism A. Alan At 26/07/2019 10:30 AM, Marilyn Cade wrote: my apologies for being off line for a couple of days as other priorities did take over my life. As I represent the CSG, which is 3 constituencies, I will restate that we have strong concerns about Mechanism A as we do not understand how to ensure complete independence, which is of critical importance. I can't say that have been able to fully consult recently with the other participants from the CSG, but the general direction has not changed. We supported Mechanism C, and our preference has not changed. Accepting that there needs to be two options, Mechanism A and Mechanism C presented to the community -- still we strongly require that there be more fact based, and not just opinions from each of us as participants, presented. Thus, while any of us may have experience or preference, the CSG prefers to see fact based and even external reports. We do not support relying on member or participant, or internal ICANN staff analysis on certain areas, as for Mechanism A, given the landfall of chargeback costs, there could be unrecognized preferences. Thus we want to see independent analysis of the key questions. and while we welcome ICANN legal and financial analysis, it is not sufficient. Further ICANN staff are not experts in grant making, grant management and while they can "count heads" and analyze certain functions such as completing the tax returns, the 990, etc., maintaining separate bank accounts, as they have done with the Auction Funds proceeds as an interim management function, this does not morph into a sophisticated grant management entity. Mechanism A: This in not the CSG preferred option. We have described our concern that there are issues about an in-house entity, with many issues related to how to be independent., lack of skills, hiring and firing of staff, increased liability to ICANN Org, overall, etc. etc It is not accurate to state that because ICANN can set up separate bank accounts and maintain independence of such, that they are experienced in operating a truly independent grant making program. AND in operating such. An internal unit will have higher costs than are being acknowledged. On'e can't work part time on policy development or at GDD or GEE and then, presto, magic, morph over to spend 4 hours per day on a grant making program, at a lower costs, or at the same, higher cost of ICANN but without any clear distinction for tax reporting purposes. ICANN pays much higher salareies/benefits than is usual in a grant making entity and has also exit costs for staff who are part of ICANN and then are "made surplus", etc. And, not it isn't sufficient to cite California laws as if an employee is based in Europe, they gain additional benefits, like announcing they want to take a sabbatical to attend an educational program, and they simply are then still able to return to ICANN with a guarantee of job, as we have expeienced in the past. ICANN pays at far above usual rates for a not for profit organization, instead benchmarking against high tech companies -- this has been noted and objected to in the Budget Comments from the community, but is relevant here only as any "internal" process brings on exceptionally higher costs than is usual in a grant making/grant oversight/management process established in an external organization. I heard statements like: these staff can apply for ICANN jobs in the future, rather than being terminated. Let's be clear: grant making is a different skill set and we need to recognize that. In addition, the internal mechanism assumes that ICANN bills the "fund" at their usual really [well, I hesitate to use the word bloated, but certainly "high cost"] for any services they provide, and any services they provide are on top of what is supposed to be a full time job [according to the ICANN budget], which means retention of contractors, external resources, or additions of staff]. All at ICANN usual "costs". Again, higher than is usual for grant making organizations. The independence of any "internal body" is highly questionable. Stating that the ICANN Board has fiduciary responsibility, etc. is factual, but does not mean day to day oversight. And in fact, should be recognized as prohibited by the need for an independent disbursement mechanism. In fact, in the view of some, including the CSG and others in the public comment process, creating a mechanism with accountability, and independence from influence from Board and staff and even community, with focus on the established criteria led to members of the community to support Mechanism C over the recommendation of Mechanism A and B. Mechanism C remains our preferred option to present but we understand that it is possibly useful to present Mechanism A and C -- both -- as there is not agreement to a single mechanism at this point, among those who are active representatives and participants in this work effort. And it is important for us all to understand that this has been a prolonged and intensive effort. And we are close to the end -- presenting, we hope -- two options, with more detailed analysis and remaining questions, and then posting for our final public comment process. Frankly, as for me, there are continued questions about the influence of the staff and even the Board from time to time on this process and whether it is appropriate to have "preferences" expressed, which occasionally I have feared that I tetected -- e.g. the Board prefers ... etc. or senior staff think... etc. I believe strongly, and advocated from when I became the CSG rep that it is essential to have a very stringent approach to fact based decision making, essential for a public service, not for profit corporation, incorporated under California law. And an independent process that does not bring into ICANN a short term process, that is clearly not part of the core mission of ICXANN -- e.g grants management of a short term/but multi million$ fund, but one that is not part of why we created ICANN. Creating a separate Foundation, with a separate independent Board, with perhaps two ex officio non voting members that are from the ICANN Board, and a community advisory group I understand that some prefer to have the function inside ICANN. That is not supported by others in the members and participants, so a compromise is submitting Mechanism A and C, but then actually doing more due diligence as needed about each. Statements that a separate foundation is more expensive or longer than an internal mechanism are speculative right now, but can be addressed by factual analysis. However, I do not agree that ICANN staff have expertise in analyzing the attributes of staff or process to manage grant solutions/review/management. 🙂 Yes, they can set up separate bae bank accounts, and do other forms of administrative reporting, and of course, would have to be paid for at the usual ICANN [which is quite generous} fee basis. BUT, the background, experience, and skills to do grant solicitation,award/evalation is different. Recently an experienced colleague in grants management told me he managed a $80M grant which was dispersed in a 9 month announcement, award selection, then performance of 1 year period, with a second year management/evulation process, and described the overhead and reports. Another colleague told me about a $190M grant process -- again, dispursement/oversight/evaluation within a 3 year period. These are not trivial tasks, and the overhead is what some might think is high, but is based on what kind of evaluation is required, and whether it is a grant to do something, or a grant to effect a major change. One might be light assessment- a) hold a meeting with 50 people/address training in DNSSEC, 40 of those invited attended/ 35 received the credentials, etc. etc. versus: establish a multi year, multi country training program in capacity building in DNS issues and successfully bring in 200 attendees per year, with XX changes in skills at national level. Evaluate changes in expertise. Mechanism B had some attraction but there was not enough work on the criteria bout how to select the "partner" with experience/expertise in operating a grant making program. Thus, I hope that the CCWG-AP sending forward Mechanism A and Mechanism C -- with the clear understanding that the CSG has many concerns with Mechanism A, and prefers Mechanism C. And we will encourage informed comments during the public comment process. It is important to be clear about what the public comment process is about. I spent over an hour clarifying to Fellows and NextGen, who were encouraged by ICANN staff to express their "preference" on how to influence what is funded. This is a misunderstanding and probably on many parts. That is NOT the purpose of the CCWG-AP, and probably a misunderstanding by staff when they encouraged attending the CCWG-AP session but it is important to understand that this public comment includes a clear understandable statement that this is not a slush fund; it is not up to the ICANN Board to direct; it must be independently managed and not put ICANN's integrity, or tax status, or anti trust status at risk by any even suspicion. Boards change, so do Senior staff/executives. The community needs to have a good understanding of our responsibilities, but also our limitation, given the focused purpose of the Auction Proceeds. Marilyn Cade CSG member in the CCWG-AP From: Ccwg-auctionproceeds < ccwg-auctionproceeds-bounces@icann.org<mailto:ccwg-auctionproceeds-bounces@icann.org>> on behalf of Judith Hellerstein <judith@jhellerstein.com<mailto:judith@jhellerstein.com> > Sent: Thursday, July 25, 2019 11:25 PM To: Elliot Noss <enoss@tucows.com<mailto:enoss@tucows.com>> Cc: ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org> < ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org>> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft Hi Elliot Mechanism A is an internal icann department hired to do the evaluation and choosing of grants As such icann staff will be reviewing all grant applications and choosing the winners. This is why I said, to me it is clear, that this mechanism has the least independence and in my mind does not meet the requirements set up by the board. If icann outsourced the reviewing and selection of the grantees it us not clear to me what the difference of the mechanisms us to me. With mechanism b, this choice of reviewing and selecting the grant winners will be done by the donor advisory fund. This is and independent group where icann has no ability to influence Mechanism C is an icann foundation. Again an independent group reviews and select the grantees Hope this answers your questions Best Judith Sent from my iPhone Judith@jhellerstein.com<mailto:Judith@jhellerstein.com> Skype ID:Judithhellerstein On Jul 25, 2019, at 7:51 AM, Elliot Noss <enoss@tucows.com<mailto:enoss@tucows.com>> wrote: Hi Judith, You say " It seems clear to me that Mechanism A would not meet the independent requirements set up by the ICANN Boardâ€. This is not clear to me. Pleasse explain. Thanks. EN On Jul 24, 2019, at 11:02 PM, Judith Hellerstein <judith@jhellerstein.com<mailto:judith@jhellerstein.com> > wrote: As per Emily's request, I am forwarding my comments to the entire list. I had previously sent them just to Staff and the Co-Chairs Best, Judith _________________________________________________________________________ Judith Hellerstein, Founder & CEO Hellerstein & Associates 3001 Veazey Terrace NW, Washington DC 20008 Phone: (202) 362-5139 Skype ID: judithhellerstein Mobile/Whats app: +1202-333-6517 E-mail: <mailto:Judith@jhellerstein.com> Judith@jhellerstein.com<mailto:Judith@jhellerstein.com> Website: <https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.jheller...> www.jhellerstein.com<https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.jheller...> Linked In: <https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.linkedi...> www.linkedin.com/in/jhellerstein/<https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.linkedi...> Opening Telecom & Technology Opportunities Worldwide -------- Forwarded Message -------- Subject: Re: [Ext] My comments on the Auction Proceeds Draft Date: Wed, 24 Jul 2019 18:53:06 +0000 From: Emily Barabas <emily.barabas@icann.org><mailto:emily.barabas@icann.org> To: judith@jhellerstein.com<mailto:judith@jhellerstein.com> <judith@jhellerstein.com><mailto:judith@jhellerstein.com>, Marika Konings <marika.konings@icann.org><mailto:marika.konings@icann.org>, erika@erikamann.com<mailto:erika@erikamann.com> <erika@erikamann.com><mailto:erika@erikamann.com>, Joke Braeken <joke.braeken@icann.org><mailto:joke.braeken@icann.org> , ching.chiao@gmail.com<mailto:ching.chiao@gmail.com> <ching.chiao@gmail.com><mailto:ching.chiao@gmail.com> Hi Judith, Would you mind sending your feedback to the CCWG mailing list, or if you would like staff can do so on your behalf? Just let us know which you prefer. Kind regards, Emily On 24/07/2019, 20:45, "Judith Hellerstein" <judith@jhellerstein.com><mailto:judith@jhellerstein.com> wrote: HI Marika and Emily, I am attaching my comments on the auction proceeds draft document. It seems clear to me that Mechanism A would not meet the independent requirements set up by the ICANN Board but do not see this referenced in the report. Perhaps I am misunderstanding some things. I have also added comments about Mechanism B and C as well as other issues Earlier today, I have also added comments to the google doc you posted today on the list serv Thanks for extending the deadline to Friday. Look forward to the call on Wednesday Best, Judith -- _________________________________________________________________________ Judith Hellerstein, Founder & CEO Hellerstein & Associates 3001 Veazey Terrace NW, Washington DC 20008 Phone: (202) 362-5139 Skype ID: judithhellerstein Mobile/Whats app: +1202-333-6517 E-mail: Judith@jhellerstein.com<mailto:Judith@jhellerstein.com> Website: www.jhellerstein.com<https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.jheller...> Linked In: www.linkedin.com/in/jhellerstein/<https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.linkedi...> Opening Telecom & Technology Opportunities Worldwide <new gTLD AP CCWG Draft Final Report - updated 28 June 2019-JH Rev.docx>_______________________________________________ Ccwg-auctionproceeds mailing list Ccwg-auctionproceeds@icann.org<mailto:Ccwg-auctionproceeds@icann.org> https://mm.icann.org/mailman/listinfo/ccwg-auctionproceeds _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos<https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.icann.org%2Fprivacy%2Ftos&data=02%7C01%7C%7C3ad368d6e98e4c2e1e0008d7120014d7%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C636997663881626470&sdata=gHfPcoJRI5C7CmA26NqHqqQ7QNYMlZVSlOq09HxQ6uQ%3D&reserved=0>). 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This is a great idea Becky, we need to be sure before proceed kisses Vanda Scartezini Polo Consultores Associados Av. Paulista 1159, cj 1004 01311-200- Sao Paulo, SP, Brazil Land Line: +55 11 3266.6253 Mobile: + 55 11 98181.1464 Sorry for any typos. On 7/29/19, 11:21, "Ccwg-auctionproceeds on behalf of Becky Burr" <ccwg-auctionproceeds-bounces@icann.org on behalf of BBurr@hwglaw.com> wrote: Just to confirm Alan’s point below, the Board expects to make funding available for grants in tranches, primarily to ensure that the funds are being used properly in furtherance of ICANN’s Mission and to permit course corrections where problems arise. From: Ccwg-auctionproceeds <ccwg-auctionproceeds-bounces@icann.org> on behalf of Alan Greenberg <alan.greenberg@mcgill.ca> Date: Friday, July 26, 2019 at 6:03 PM To: "Aikman-Scalese, Anne" <AAikman@lrrc.com>, Marilyn Cade <marilynscade@hotmail.com>, Elliot Noss <enoss@tucows.com> Cc: "ccwg-auctionproceeds@icann.org" <ccwg-auctionproceeds@icann.org> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft Several people have alluded to ICANN using some of the auction funds to boost the reserve and have used this as the reason why we need a separate entity. My recollection is that very early on, the Board made it clear that regardless of the mechanism, they did not foresee transferring all of the money (whether it is $100m or $235m) in one fell swoop. I believe the term "tranche" was use to say that the monet would be transferred as needed, and that ICANN would still maintain full control of the remaining funds. And ultimately if the situation warranted might redirect them (the latter part is my words, not something said by the Board). Alan At 26/07/2019 05:17 PM, Aikman-Scalese, Anne wrote: Hi all, I am writing these comments with hopes that Marilyn will post to the CCWB Auction Proceeds list. To further demonstrate this principle regarding the need for independence, I will mention that in connection with the presentation of the staffing “readiness†plan for Subsequent Procedures that was drawn up by ICANN staff, the Marrakech presentation to the Sub Pro WG included a comment from an ICANN officer that among the possible sources of funding for staffing up for the next round might be to “borrow from Auction Proceedsâ€. (If you don’t believe me, check the Sub Pro recording from that session in Marrakech.) I believe I had commented remotely in Marrakech that to the extent that decisions on hiring and firing of grant-making personnel would be made by ICANN staff and/or the Board, there could not possibly be a reasonable level of independence in the grant-making operation and it would be extremely difficult for ICANN to defend challenges to grants made by that department. Auction proceeds are already a controversial topic and it would be a mistake to cause that topic to become more controversial by simply setting up some department guidelines and expecting people who are hired and fired by ICANN Org and/or Board to do anything other than what they are directed to do by those who control their paycheck. The old saying goes that “There is nothing new under the sun.†Although we like to think that ICANN’s decision-making processes are entirely different from other entities, the management and risk management challenges associated with this task and the related ethical concerns have been faced by many institutions. One notable point of comparison would be universities, which generally have a number of associated entities involved in furthering their missions and which, like ICANN, operate in an environment where public trust and confidence is key. Regarding Alan’s comment about the composition of a Board in relation to Option C, I agree it’s clear that PTI is essentially controlled by ICANN. However, the non-profit corporation’s By-Laws could easily provide that the majority of directors NOT be affiliated with ICANN. This would ensure independent operation in accordance with the Foundation’s Articles and ByLaws as long as the Foundation’s staff was not hired and fired by ICANN Org staff or the ICANN Board. Regarding Option A, it seems to me that some California legal advice on the best way to effectively preserve the necessary independence would be appropriate. It may be advisable for ICANN to set up a charitable trust and to name Trustees who again, constitute a voting majority which is independent of ICANN staff and Board. The Trustees would then have their own fiduciary duty to the Trust itself (which would encompass the ICANN mission but would not owe a fiduciary duty to ICANN the corporation.) In this regard, one piece of the analysis relating to Option A that is clearly missing is the fact that each of the ICANN Directors HAS A FIDUCIARY DUTY TO THE ICANN CORPORATION ITSELF. This fiduciary duty to the ICANN corporation can easily be in conflict with the goals and purpose of the grant-making. For example, for the ICANN Board, the fiscal condition of the corporation itself is paramount. If we put ICANN Directors in the position of having to review the actions of the grant-making organization while at the same time allowing the corporation itself to go “underâ€, we are asking too much. The only safe way to deal with this potential conflict is to assure total independence of grant-making and many of the public comments reflect this major concern. The above considerations are not terribly different from the governance issues faced by universities and the foundations that support their mission. Certainly Option C, a separate non-profit corporation with majority independent directors would be preferable from the standpoint of public awareness and accountability. If that mechanism is seen as too unwieldy, ICANN should, at a minimum, set up a Trust mechanism to hold the funds and appoint majority independent Trustees on the Board of Trustees. These Trustees should be responsible for hiring and firing qualified grant-making personnel and the Trust operations should be independent even if housed in the same building. Best practices would dictate against sharing personnel. And yes, the Trust would need its own operating budget. If the CCWG has already examined the Trust mechanism in the context of Option A, I apologize for bring this up. It’s just completely unrealistic to think that you can establish the required independence by setting up a department within ICANN where employees responsible for grant-making are hired and fired by ICANN staff and/or Board. Anne Anne E. Aikman-Scalese Of Counsel 520.629.4428 office 520.622.3088 fax AAikman@lrrc.com<mailto:AAikman@lrrc.com> _____________________________ [[]] Lewis Roca Rothgerber Christie LLP One South Church Avenue, Suite 700 Tucson, Arizona 85701-1611 lrrc.com<http://lrrc.com/> From: Marilyn Cade <marilynscade@hotmail.com> Sent: Friday, July 26, 2019 2:09 PM To: Elliot Noss <enoss@tucows.com>; Alan Greenberg <alan.greenberg@mcgill.ca> Cc: Vanda Scartezini <vanda@scartezini.org>; ccwg-auctionproceeds@icann.org; Aikman-Scalese, Anne <AAikman@lrrc.com> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft [EXTERNAL] ________________________________ folks, we must avoid being about ourselves. We need fact based information that is not our own experience, which will always be influenced by our own experiences. I am not being critical. I am merely thinking of my mentoring professor who was trained by Sal Alenski. We all have opinions from experiences of our own. They are small and if we are independent thinkers, then we are required to think not about what we experienced, but what is "known" and documented. Let's not assume anything from our own experience. Count on facts. from others and then inform us. That was my message. We have been a bit too much opinion based in my view. Not everyone need agree with that. BUT, we had only a few advisory discussions with a young and ICANN selected expert, who then disappeared, and didn't have all the expertise we asked for in some of our questions. And we haven't even had that "expert" to query in many months. We are charged with being non biased; informed/ demanding factual information. Let's focus on whether we can deliver on that, at least on two options. And ask ourselves [and require ICANN to fund any needed independent, and totally unbiased views] quickly. ICANN has a lot of $$ tied up in their own "risk" in the event that they fall over, right? we even agreed to a contribution to that fund from the Auction Proceeds at a limited, and one time contribution. We don't want the mechanism we create to be vulnerable to more liability for ICANN, to Board or new /CEO/senior staff changes in perspective. This is external to ICANN's core mission, but needs to be consistent with ICANN's overall mission. I keep looking at attendance of all of us; I read all transcripts, when not able to attend. I read all the transcripts from the beginning before accepting he CSG membership role after meeting 17. Time to present two options. One and three. Facts are our friends. ________________________________ From: Elliot Noss <enoss@tucows.com<mailto:enoss@tucows.com>> Sent: Friday, July 26, 2019 3:33 PM To: Alan Greenberg <alan.greenberg@mcgill.ca<mailto:alan.greenberg@mcgill.ca> > Cc: Vanda Scartezini <vanda@scartezini.org<mailto:vanda@scartezini.org>>; Marilyn Cade <marilynscade@hotmail.com<mailto:marilynscade@hotmail.com> >; ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org> < ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org>>; Aikman-Scalese, Anne <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft Hi Alan, I think (but could be wrong) that Vanda was agreeing with you and showing Marilyn a working example of A. EN On Jul 26, 2019, at 12:55 PM, Alan Greenberg <alan.greenberg@mcgill.ca<mailto:alan.greenberg@mcgill.ca> > wrote: Vanda, if i correctly understood you, some of your projects were sent out to existing organizations for management but that is not what we are discussing here (that is closer to Mech D which we have discarded). We are talking about first having to build then run the external organization (foundation). Alan -- Sent from my mobile. Please excuse brevity and typos. On July 26, 2019 12:13:15 PM EDT, Vanda Scartezini <vanda@scartezini.org<mailto:vanda@scartezini.org>> wrote: Dear friends As Marilyn would like to hear some fact base, below just to share my own experience : I was responsible (besides other things) during my time in the government, for some grants ( the amount was not small, around 500 millions USD a year) to select relevant projects under the Information Technology Law under the Federal Secretariat as was the head of. We were public, could not contract anyone, and should be accountable to the federal Government, Treasure and IR ( since the money was from fiscal incentives from companies) the Public Ministry ( from Judiciary) and the Account Tribunal which controls the righteous expenditure of public organs. To deal with this challenge we form a Committee of volunteers , without paying any member. Processes to receive, analyze, select and specially control the disbursement of grants demands a lot of work , people without conflict and with a clear knowledge of the theme associated to the grant to allow a fair and constructive selection of the projects. The committee had a maximum of 5% of the total $$ to do this job. The money were for staff support, legal support, travels to visit the proposed groups for any project, general costs as meals etc. registered and published detailed to be accountable to all. How we have worked: We announced the openness of the slot of time to receive proposals – 3 months – and publish the requisitestes and documentation demanded as historical, previous grants etc as well general criteria we will use for selection under the Law. Took us 2 previous months to prepare the public call then we start our job while receiving all projects - we made a pre selection into 3 categories- excellent / good / poor and then analyze overall cost of excellent and good, call the excellent to f2 f interviews/ visited their facilities, if not known etc. and start to refine the selection, calling the good ones etc till the amount available. If there were not enough good projects to reach the overall amount for the year , the difference will be transferred to FINEP ( www.finep.gov.br<https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.finep.g...>) a public Foundation, kind of Bank, to support R&D development and financing companies to improve their own R&D, as well as give grants to research centers or universities for smaller projects, still under the Law of Information Technology. Finep took about 30% of the amount to his own task. The most difficult part was to control the development of the project – committee members were assigned to follow up some projects with staff/legal support, a quarter report is demanded from the grantee, till the deliverables were done. Both alternatives were used at the time: send money to third part and just got the reports analyzed by the Committee, and an “inside†management with the committee and third part staff/ legal contracted personnel. My evaluation: Even less work sending money to the Foundation, the best results from projects ( hence better $$ expended) we got from the work of the committee. Vanda Scartezini Polo Consultores Associados Av. Paulista 1159, cj 1004 01311-200- Sao Paulo, SP, Brazil Land Line: +55 11 3266.6253 Mobile: + 55 11 98181.1464 Sorry for any typos. From: Ccwg-auctionproceeds < ccwg-auctionproceeds-bounces@icann.org<mailto:ccwg-auctionproceeds-bounces@icann.org>> on behalf of Alan Greenberg <alan.greenberg@mcgill.ca<mailto:alan.greenberg@mcgill.ca> > Date: Friday, July 26, 2019 at 12:07 To: Marilyn Cade <marilynscade@hotmail.com<mailto:marilynscade@hotmail.com> >, " ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org>" < ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org>> Cc: "Aikman-Scalese, Anne" <AAikman@lrrc.com<mailto:AAikman@lrrc.com>> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft Marilyn, although I have preferences, I will not here debate the options or even how we are to decide, but I would like more clarity on how you see the Mechanism C foundation operating. The only example we have for a corporation being set up in addition to ICANN is PTI. In that case, the majority of the PTI Board is appointed by ICANN (the rest being appointed by the ICANN NomCom), so it is had to claim that there is any independence. I presume that your intent would be to have, at the least, a majority of Foundation Board members being appointed NOT by ICANN. What level of majority for non-ICANN Board members do you consider reasonable and how would you see them being selected? You talk here about the potential for ICANN chargebacks being excessive. PTI purchases (ie outsources) a variety of services from ICANN (accounting, payroll, building space, etc.) Would you foresee the Foundation doing the same or are you suggesting that this not be allowed (ie the Foundation must be truly a stand-alone body providing all of its own services, or outsourcing them to some non-ICANN entity(ies). You talk about ICANN's salaries being excessive. How would you enforce lower salary levels in the Foundation when it would likely be co-located with ICANN and Foundation employees being able to be hired by ICANN for significant pay increases? The gist of my questions are that indeed, ICANN may have high operating costs, but I am unsure how the Foundation remedies it. A foundation *may* allow us to address such issues, but without clear ground rules, an "independent" foundation affiliated with ICANN could well have all of the same issues as those you associate with Mechanism A. Alan At 26/07/2019 10:30 AM, Marilyn Cade wrote: my apologies for being off line for a couple of days as other priorities did take over my life. As I represent the CSG, which is 3 constituencies, I will restate that we have strong concerns about Mechanism A as we do not understand how to ensure complete independence, which is of critical importance. I can't say that have been able to fully consult recently with the other participants from the CSG, but the general direction has not changed. We supported Mechanism C, and our preference has not changed. Accepting that there needs to be two options, Mechanism A and Mechanism C presented to the community -- still we strongly require that there be more fact based, and not just opinions from each of us as participants, presented. Thus, while any of us may have experience or preference, the CSG prefers to see fact based and even external reports. We do not support relying on member or participant, or internal ICANN staff analysis on certain areas, as for Mechanism A, given the landfall of chargeback costs, there could be unrecognized preferences. Thus we want to see independent analysis of the key questions. and while we welcome ICANN legal and financial analysis, it is not sufficient. Further ICANN staff are not experts in grant making, grant management and while they can "count heads" and analyze certain functions such as completing the tax returns, the 990, etc., maintaining separate bank accounts, as they have done with the Auction Funds proceeds as an interim management function, this does not morph into a sophisticated grant management entity. Mechanism A: This in not the CSG preferred option. We have described our concern that there are issues about an in-house entity, with many issues related to how to be independent., lack of skills, hiring and firing of staff, increased liability to ICANN Org, overall, etc. etc It is not accurate to state that because ICANN can set up separate bank accounts and maintain independence of such, that they are experienced in operating a truly independent grant making program. AND in operating such. An internal unit will have higher costs than are being acknowledged. On'e can't work part time on policy development or at GDD or GEE and then, presto, magic, morph over to spend 4 hours per day on a grant making program, at a lower costs, or at the same, higher cost of ICANN but without any clear distinction for tax reporting purposes. ICANN pays much higher salareies/benefits than is usual in a grant making entity and has also exit costs for staff who are part of ICANN and then are "made surplus", etc. And, not it isn't sufficient to cite California laws as if an employee is based in Europe, they gain additional benefits, like announcing they want to take a sabbatical to attend an educational program, and they simply are then still able to return to ICANN with a guarantee of job, as we have expeienced in the past. ICANN pays at far above usual rates for a not for profit organization, instead benchmarking against high tech companies -- this has been noted and objected to in the Budget Comments from the community, but is relevant here only as any "internal" process brings on exceptionally higher costs than is usual in a grant making/grant oversight/management process established in an external organization. I heard statements like: these staff can apply for ICANN jobs in the future, rather than being terminated. Let's be clear: grant making is a different skill set and we need to recognize that. In addition, the internal mechanism assumes that ICANN bills the "fund" at their usual really [well, I hesitate to use the word bloated, but certainly "high cost"] for any services they provide, and any services they provide are on top of what is supposed to be a full time job [according to the ICANN budget], which means retention of contractors, external resources, or additions of staff]. All at ICANN usual "costs". Again, higher than is usual for grant making organizations. The independence of any "internal body" is highly questionable. Stating that the ICANN Board has fiduciary responsibility, etc. is factual, but does not mean day to day oversight. And in fact, should be recognized as prohibited by the need for an independent disbursement mechanism. In fact, in the view of some, including the CSG and others in the public comment process, creating a mechanism with accountability, and independence from influence from Board and staff and even community, with focus on the established criteria led to members of the community to support Mechanism C over the recommendation of Mechanism A and B. Mechanism C remains our preferred option to present but we understand that it is possibly useful to present Mechanism A and C -- both -- as there is not agreement to a single mechanism at this point, among those who are active representatives and participants in this work effort. And it is important for us all to understand that this has been a prolonged and intensive effort. And we are close to the end -- presenting, we hope -- two options, with more detailed analysis and remaining questions, and then posting for our final public comment process. Frankly, as for me, there are continued questions about the influence of the staff and even the Board from time to time on this process and whether it is appropriate to have "preferences" expressed, which occasionally I have feared that I tetected -- e.g. the Board prefers ... etc. or senior staff think... etc. I believe strongly, and advocated from when I became the CSG rep that it is essential to have a very stringent approach to fact based decision making, essential for a public service, not for profit corporation, incorporated under California law. And an independent process that does not bring into ICANN a short term process, that is clearly not part of the core mission of ICXANN -- e.g grants management of a short term/but multi million$ fund, but one that is not part of why we created ICANN. Creating a separate Foundation, with a separate independent Board, with perhaps two ex officio non voting members that are from the ICANN Board, and a community advisory group I understand that some prefer to have the function inside ICANN. That is not supported by others in the members and participants, so a compromise is submitting Mechanism A and C, but then actually doing more due diligence as needed about each. Statements that a separate foundation is more expensive or longer than an internal mechanism are speculative right now, but can be addressed by factual analysis. However, I do not agree that ICANN staff have expertise in analyzing the attributes of staff or process to manage grant solutions/review/management. 🙂 Yes, they can set up separate bae bank accounts, and do other forms of administrative reporting, and of course, would have to be paid for at the usual ICANN [which is quite generous} fee basis. BUT, the background, experience, and skills to do grant solicitation,award/evalation is different. Recently an experienced colleague in grants management told me he managed a $80M grant which was dispersed in a 9 month announcement, award selection, then performance of 1 year period, with a second year management/evulation process, and described the overhead and reports. Another colleague told me about a $190M grant process -- again, dispursement/oversight/evaluation within a 3 year period. These are not trivial tasks, and the overhead is what some might think is high, but is based on what kind of evaluation is required, and whether it is a grant to do something, or a grant to effect a major change. One might be light assessment- a) hold a meeting with 50 people/address training in DNSSEC, 40 of those invited attended/ 35 received the credentials, etc. etc. versus: establish a multi year, multi country training program in capacity building in DNS issues and successfully bring in 200 attendees per year, with XX changes in skills at national level. Evaluate changes in expertise. Mechanism B had some attraction but there was not enough work on the criteria bout how to select the "partner" with experience/expertise in operating a grant making program. Thus, I hope that the CCWG-AP sending forward Mechanism A and Mechanism C -- with the clear understanding that the CSG has many concerns with Mechanism A, and prefers Mechanism C. And we will encourage informed comments during the public comment process. It is important to be clear about what the public comment process is about. I spent over an hour clarifying to Fellows and NextGen, who were encouraged by ICANN staff to express their "preference" on how to influence what is funded. This is a misunderstanding and probably on many parts. That is NOT the purpose of the CCWG-AP, and probably a misunderstanding by staff when they encouraged attending the CCWG-AP session but it is important to understand that this public comment includes a clear understandable statement that this is not a slush fund; it is not up to the ICANN Board to direct; it must be independently managed and not put ICANN's integrity, or tax status, or anti trust status at risk by any even suspicion. Boards change, so do Senior staff/executives. The community needs to have a good understanding of our responsibilities, but also our limitation, given the focused purpose of the Auction Proceeds. Marilyn Cade CSG member in the CCWG-AP From: Ccwg-auctionproceeds < ccwg-auctionproceeds-bounces@icann.org<mailto:ccwg-auctionproceeds-bounces@icann.org>> on behalf of Judith Hellerstein <judith@jhellerstein.com<mailto:judith@jhellerstein.com> > Sent: Thursday, July 25, 2019 11:25 PM To: Elliot Noss <enoss@tucows.com<mailto:enoss@tucows.com>> Cc: ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org> < ccwg-auctionproceeds@icann.org<mailto:ccwg-auctionproceeds@icann.org>> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft Hi Elliot Mechanism A is an internal icann department hired to do the evaluation and choosing of grants As such icann staff will be reviewing all grant applications and choosing the winners. This is why I said, to me it is clear, that this mechanism has the least independence and in my mind does not meet the requirements set up by the board. If icann outsourced the reviewing and selection of the grantees it us not clear to me what the difference of the mechanisms us to me. With mechanism b, this choice of reviewing and selecting the grant winners will be done by the donor advisory fund. This is and independent group where icann has no ability to influence Mechanism C is an icann foundation. Again an independent group reviews and select the grantees Hope this answers your questions Best Judith Sent from my iPhone Judith@jhellerstein.com<mailto:Judith@jhellerstein.com> Skype ID:Judithhellerstein On Jul 25, 2019, at 7:51 AM, Elliot Noss <enoss@tucows.com<mailto:enoss@tucows.com>> wrote: Hi Judith, You say " It seems clear to me that Mechanism A would not meet the independent requirements set up by the ICANN Boardâ€. This is not clear to me. Pleasse explain. Thanks. EN On Jul 24, 2019, at 11:02 PM, Judith Hellerstein <judith@jhellerstein.com<mailto:judith@jhellerstein.com> > wrote: As per Emily's request, I am forwarding my comments to the entire list. I had previously sent them just to Staff and the Co-Chairs Best, Judith _________________________________________________________________________ Judith Hellerstein, Founder & CEO Hellerstein & Associates 3001 Veazey Terrace NW, Washington DC 20008 Phone: (202) 362-5139 Skype ID: judithhellerstein Mobile/Whats app: +1202-333-6517 E-mail: <mailto:Judith@jhellerstein.com> Judith@jhellerstein.com<mailto:Judith@jhellerstein.com> Website: <https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.jheller...> www.jhellerstein.com<https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.jheller...> Linked In: <https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.linkedi...> www.linkedin.com/in/jhellerstein/<https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.linkedi...> Opening Telecom & Technology Opportunities Worldwide -------- Forwarded Message -------- Subject: Re: [Ext] My comments on the Auction Proceeds Draft Date: Wed, 24 Jul 2019 18:53:06 +0000 From: Emily Barabas <emily.barabas@icann.org><mailto:emily.barabas@icann.org> To: judith@jhellerstein.com<mailto:judith@jhellerstein.com> <judith@jhellerstein.com><mailto:judith@jhellerstein.com>, Marika Konings <marika.konings@icann.org><mailto:marika.konings@icann.org>, erika@erikamann.com<mailto:erika@erikamann.com> <erika@erikamann.com><mailto:erika@erikamann.com>, Joke Braeken <joke.braeken@icann.org><mailto:joke.braeken@icann.org> , ching.chiao@gmail.com<mailto:ching.chiao@gmail.com> <ching.chiao@gmail.com><mailto:ching.chiao@gmail.com> Hi Judith, Would you mind sending your feedback to the CCWG mailing list, or if you would like staff can do so on your behalf? Just let us know which you prefer. Kind regards, Emily On 24/07/2019, 20:45, "Judith Hellerstein" <judith@jhellerstein.com><mailto:judith@jhellerstein.com> wrote: HI Marika and Emily, I am attaching my comments on the auction proceeds draft document. It seems clear to me that Mechanism A would not meet the independent requirements set up by the ICANN Board but do not see this referenced in the report. Perhaps I am misunderstanding some things. I have also added comments about Mechanism B and C as well as other issues Earlier today, I have also added comments to the google doc you posted today on the list serv Thanks for extending the deadline to Friday. Look forward to the call on Wednesday Best, Judith -- _________________________________________________________________________ Judith Hellerstein, Founder & CEO Hellerstein & Associates 3001 Veazey Terrace NW, Washington DC 20008 Phone: (202) 362-5139 Skype ID: judithhellerstein Mobile/Whats app: +1202-333-6517 E-mail: Judith@jhellerstein.com<mailto:Judith@jhellerstein.com> Website: www.jhellerstein.com<https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.jheller...> Linked In: www.linkedin.com/in/jhellerstein/<https://eur02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.linkedi...> Opening Telecom & Technology Opportunities Worldwide <new gTLD AP CCWG Draft Final Report - updated 28 June 2019-JH Rev.docx>_______________________________________________ Ccwg-auctionproceeds mailing list Ccwg-auctionproceeds@icann.org<mailto:Ccwg-auctionproceeds@icann.org> https://mm.icann.org/mailman/listinfo/ccwg-auctionproceeds _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos<https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.icann.org%2Fprivacy%2Ftos&data=02%7C01%7C%7C3ad368d6e98e4c2e1e0008d7120014d7%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C636997663881626470&sdata=gHfPcoJRI5C7CmA26NqHqqQ7QNYMlZVSlOq09HxQ6uQ%3D&reserved=0>). 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I would like to pick up on what Anne E. Aikman-Scalese wrote: To wit: “/If the CCWG has already examined the Trust mechanism in the context of Option A, I apologize for bring this up.It’s just completely unrealistic to think that you can establish the required independence by setting up a department within ICANN where employees responsible for grant-making are hired and fired by ICANN staff and/or Board/.” The future for new auction revenues is highly uncertain. From an economist’s perspective, I would not be surprised to find that ICANN has reached seriously diminishing marginal returns from additional auctions, whenever the applicants elect not to hold private auctions. In addition to the auctions balance being unlikely to grow, ICANN’s own evolving financial situation means that the existing balance is not immune to appropriation for other ICANN needs, no matter what the intentions are today.
From the beginning of this discussion the implicit understanding was that the funds would be released in tranches (slices). Various “tranche models” were bandied about. For the moment the endowment preserving strategy of only allocating interest earned is essentially a dead option, given near zero and negative interest rates, the funding flow would be minimal. Other portfolio approaches may combine potentially higher yields, but also quite likely with higher risks.
These considerations lead me to believe that the auction revenues are essentially a one-time windfall, to be husbanded wisely by ICANN, with direction from the ICANN stakeholder community, and possibly used to exhaustion over some agreed upon finite time horizon. Should I be wrong, and we find that there are significant additional auction proceeds, we should consider placing them in reserve, with our decisions here to be revisited in terms of lesson learned from the handling of the first auctions balance. These are issues to be discussed among the stakeholder community. Lastly, in addition to the issue of required independence and Option A, there is the challenge of amassing the appropriate expertise to properly and efficiently administer the granting process within a unit of ICANN itself. One has to weigh those costs against Option C, where for a management fee the administrative process is transferred to a competent entity. The terms of reference for grant eligibility would be set through an ICANN policy development process. That would hold for both Option A and Option B. Assuming that it is the same for Options A and B, the core questions here are (a) the relevant costs of the administrative process as between A and B, and (b) the reality (and optics)of process independence with in-house ICANN management versus contracted outside process management. My personal views are that an in-house process will be more expensive, and more fraught with problems, than a process being run by a outside foundation or similar group. ICANN has no expertise in these areas and this is not an area where ICANN should learn while doing. Sam Lanfranco, NPOC
Sam, a few corrections. You say: Lastly, in addition to the issue of required independence and Option A, there is the challenge of amassing the appropriate expertise to properly and efficiently administer the granting process within a unit of ICANN itself. One has to weigh those costs against Option C, where for a management fee the administrative process is transferred to a competent entity. The difference between A and C is that in A, the entity administering the entire project is within ICANN (subject to what it might choose to outsource) and in C, it is in a brand new entity that we will create - no existing expertise. In both A and B, the actual application analysis and grant decision will be outside of ICANN. Although in theory there might be future auction proceeds, one of the premises of our entire work is that this is a one-time bonanza that will not be rrepeated and we should expect the funds to be used up in some (finite) time. Alan At 29/07/2019 07:09 PM, Sam Lanfranco wrote: I would like to pick up on what Anne E. Aikman-Scalese wrote: To wit: “If the CCWG has already examined the Trust mechanism in the context of Option A, I apologize for bring this up. It’s just completely unrealistic to think that you can establish the required independence by setting up a department within ICANN where employees responsible for grant-making are hired and fired by ICANN staff and/or Board.” The future for new auction revenues is highly uncertain. From an economist’s perspective, I would not be surprised to find that ICANN has reached seriously diminishing marginal returns from additional auctions, whenever the applicants elect not to hold private auctions. In addition to the auctions balance being unlikely to grow, ICANN’s own evolving financial situation means that the existing balance is not immune to appropriation for other ICANN needs, no matter what the intentions are today.
From the beginning of this discussion the implicit understanding was that the funds would be released in tranches (slices). Various “tranche models” were bandied about. For the moment the endowment preserving strategy of only allocating interest earned is essentially a dead option, given near zero and negative interest rates, the funding flow would be minimal. Other portfolio approaches may combine potentially higher yields, but also quite likely with higher risks.
These considerations lead me to believe that the auction revenues are essentially a one-time windfall, to be husbanded wisely by ICANN, with direction from the ICANN stakeholder community, and possibly used to exhaustion over some agreed upon finite time horizon. Should I be wrong, and we find that there are significant additional auction proceeds, we should consider placing them in reserve, with our decisions here to be revisited in terms of lesson learned from the handling of the first auctions balance. These are issues to be discussed among the stakeholder community. Lastly, in addition to the issue of required independence and Option A, there is the challenge of amassing the appropriate expertise to properly and efficiently administer the granting process within a unit of ICANN itself. One has to weigh those costs against Option C, where for a management fee the administrative process is transferred to a competent entity. The terms of reference for grant eligibility would be set through an ICANN policy development process. That would hold for both Option A and Option B. Assuming that it is the same for Options A and B, the core questions here are (a) the relevant costs of the administrative process as between A and B, and (b) the reality (and optics)of process independence with in-house ICANN management versus contracted outside process management. My personal views are that an in-house process will be more expensive, and more fraught with problems, than a process being run by a outside foundation or similar group. ICANN has no expertise in these areas and this is not an area where ICANN should learn while doing. Sam Lanfranco, NPOC
Thank you Alan, We mainly agree and I understand that the grant decision process will be "outside of ICANN" in the sense that in either A or C there will be no scope for interventions by any element of the ICANN community. I have suggested (just now in response to comments by Marilyn Cade) that a timeline be set for a review of lessons learned, and in the mean time if there are any subsequent auction proceeds, they be held back until after that review. My one differing view is the hope that under Option C ICANN look to the existing not-for-profit granting organizations and seek a contractual collaboration for going forward, and that it not try to set up a brand new entity. The ICANN community has already worries about challenges of ramping up, then ramping down, a unit within ICANN. The challenges of recruiting proper expertise for a completely new entity with a finite life are equally challenging. Start up costs, in money and time, would be considerable, and recruiting proper personnel would be a challenge. One strength we have within ICANN is that, even taking the private interests of some stakeholder groups into account, we tend to reach consensus and try to make the best of the policy decisions we decide on. :-) /Maybe ICANN has a future, with a new line of business, consulting with national governments to help them move beyond confrontation and stalemate to consensus and some degree of actually policy making./ :-) Sam On 7/29/2019 11:10 PM, Alan Greenberg wrote:
Sam, a few corrections.
You say:
Lastly, in addition to the issue of required independence and Option A, there is the challenge of amassing the appropriate expertise to properly and efficiently administer the granting process within a unit of ICANN itself. One has to weigh those costs against Option C, where for a management fee the administrative process is transferred to a competent entity.
The difference between A and C is that in A, the entity administering the entire project is within ICANN (subject to what it might choose to outsource) and in C, it is in a brand new entity that we will create - no existing expertise.
In both A and B, the actual application analysis and grant decision will be outside of ICANN.
Although in theory there might be future auction proceeds, one of the premises of our entire work is that this is a one-time bonanza that will not be rrepeated and we should expect the funds to be used up in some (finite) time.
Alan
Sam, Option C, but an established foundation instead of a new one is Option D which I believe we have already discarded. Sure, we can put it back on the table even though I believe it was discarded for valid reasons. I do note that as of last week, this CCWG had been meeting for exactly 2.5 years. If we continually reopen closed issues this CCWG will outlive us all! And we will never use the funds for "good stuff". Alan -- Sent from my mobile. Please excuse brevity and typos. On July 30, 2019 7:28:58 AM EDT, Sam Lanfranco <sam@lanfranco.net> wrote: Thank you Alan, We mainly agree and I understand that the grant decision process will be "outside of ICANN" in the sense that in either A or C there will be no scope for interventions by any element of the ICANN community. I have suggested (just now in response to comments by Marilyn Cade) that a timeline be set for a review of lessons learned, and in the mean time if there are any subsequent auction proceeds, they be held back until after that review. My one differing view is the hope that under Option C ICANN look to the existing not-for-profit granting organizations and seek a contractual collaboration for going forward, and that it not try to set up a brand new entity. The ICANN community has already worries about challenges of ramping up, then ramping down, a unit within ICANN. The challenges of recruiting proper expertise for a completely new entity with a finite life are equally challenging. Start up costs, in money and time, would be considerable, and recruiting proper personnel would be a challenge. One strength we have within ICANN is that, even taking the private interests of some stakeholder groups into account, we tend to reach consensus and try to make the best of the policy decisions we decide on. :-) Maybe ICANN has a future, with a new line of business, consulting with national governments to help them move beyond confrontation and stalemate to consensus and some degree of actually policy making. :-) Sam On 7/29/2019 11:10 PM, Alan Greenberg wrote: Sam, a few corrections. You say: Lastly, in addition to the issue of required independence and Option A, there is the challenge of amassing the appropriate expertise to properly and efficiently administer the granting process within a unit of ICANN itself. One has to weigh those costs against Option C, where for a management fee the administrative process is transferred to a competent entity. The difference between A and C is that in A, the entity administering the entire project is within ICANN (subject to what it might choose to outsource) and in C, it is in a brand new entity that we will create - no existing expertise. In both A and B, the actual application analysis and grant decision will be outside of ICANN. Although in theory there might be future auction proceeds, one of the premises of our entire work is that this is a one-time bonanza that will not be rrepeated and we should expect the funds to be used up in some (finite) time. Alan
Thanks Alan, I agree that closure is essential here. In my necessary absence I missed the decision to discard Option D, so of course will not press for that. The only drum I will beating is for a preset date for a [quickly carried out] review of lessons learned, and maybe sequestering new auction proceeds for use after that lessons learned review. Sam On 7/30/2019 10:40 AM, Alan Greenberg wrote:
Sam, Option C, but an established foundation instead of a new one is Option D which I believe we have already discarded.
Sure, we can put it back on the table even though I believe it was discarded for valid reasons.
I do note that as of last week, this CCWG had been meeting for exactly 2.5 years. If we continually reopen closed issues this CCWG will outlive us all! And we will never use the funds for "good stuff".
Alan
Mechanism C is a new foundation, with independence from ICANN. Mechanism D is different, but is not still under consideration. So, let's not even go there. So, we are not reopening Mechanism D, but it is important to understand that in the discussions, Mechanism C is an independent foundation, not controlled by ICANN Org; not controlled by ICANN Board, and not controlled by ICANN community, but advised by each, as is appropriate -- e.g consistent with ICANN mission; ensuring that risks do not reflect back to ICANN Org; are not influenced by Board or community other than in advisory capacity. AND, ensure that there are not anti trust or IRS implications to ICANN Org. We have still to do the due diligence work on the mechanisms that are 'nominated', and that has to be independent, not opinion based, and not limited to ICANN Org staff but uses experts who can do the due diligence needed for the mechanisms that are then put forward to the community. ________________________________ From: Alan Greenberg <alan.greenberg@mcgill.ca> Sent: Tuesday, July 30, 2019 10:40 AM To: Sam Lanfranco <sam@lanfranco.net>; Vanda Scartezini <vanda@scartezini.org>; Becky Burr <BBurr@hwglaw.com>; Aikman-Scalese, Anne <AAikman@lrrc.com>; Marilyn Cade <marilynscade@hotmail.com>; Elliot Noss <enoss@tucows.com> Cc: ccwg-auctionproceeds@icann.org <ccwg-auctionproceeds@icann.org> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft Sam, Option C, but an established foundation instead of a new one is Option D which I believe we have already discarded. Sure, we can put it back on the table even though I believe it was discarded for valid reasons. I do note that as of last week, this CCWG had been meeting for exactly 2.5 years. If we continually reopen closed issues this CCWG will outlive us all! And we will never use the funds for "good stuff". Alan -- Sent from my mobile. Please excuse brevity and typos. On July 30, 2019 7:28:58 AM EDT, Sam Lanfranco <sam@lanfranco.net> wrote: Thank you Alan, We mainly agree and I understand that the grant decision process will be "outside of ICANN" in the sense that in either A or C there will be no scope for interventions by any element of the ICANN community. I have suggested (just now in response to comments by Marilyn Cade) that a timeline be set for a review of lessons learned, and in the mean time if there are any subsequent auction proceeds, they be held back until after that review. My one differing view is the hope that under Option C ICANN look to the existing not-for-profit granting organizations and seek a contractual collaboration for going forward, and that it not try to set up a brand new entity. The ICANN community has already worries about challenges of ramping up, then ramping down, a unit within ICANN. The challenges of recruiting proper expertise for a completely new entity with a finite life are equally challenging. Start up costs, in money and time, would be considerable, and recruiting proper personnel would be a challenge. One strength we have within ICANN is that, even taking the private interests of some stakeholder groups into account, we tend to reach consensus and try to make the best of the policy decisions we decide on. :-) Maybe ICANN has a future, with a new line of business, consulting with national governments to help them move beyond confrontation and stalemate to consensus and some degree of actually policy making. :-) Sam On 7/29/2019 11:10 PM, Alan Greenberg wrote: Sam, a few corrections. You say: Lastly, in addition to the issue of required independence and Option A, there is the challenge of amassing the appropriate expertise to properly and efficiently administer the granting process within a unit of ICANN itself. One has to weigh those costs against Option C, where for a management fee the administrative process is transferred to a competent entity. The difference between A and C is that in A, the entity administering the entire project is within ICANN (subject to what it might choose to outsource) and in C, it is in a brand new entity that we will create - no existing expertise. In both A and B, the actual application analysis and grant decision will be outside of ICANN. Although in theory there might be future auction proceeds, one of the premises of our entire work is that this is a one-time bonanza that will not be rrepeated and we should expect the funds to be used up in some (finite) time. Alan
I (personally) strongly agree with Marilyn's criteria of what we are expecting of the mechanism. It is what several of us have been insisting on as a bottom line, for 2.5 years already?... how time flies. On Tue, 30 Jul 2019, 5:53 AM Marilyn Cade, <marilynscade@hotmail.com> wrote:
Mechanism C is a new foundation, with independence from ICANN. Mechanism D is different, but is not still under consideration. So, let's not even go there.
So, we are not reopening Mechanism D, but it is important to understand that in the discussions, Mechanism C is an independent foundation, not controlled by ICANN Org; not controlled by ICANN Board, and not controlled by ICANN community, but advised by each, as is appropriate -- e.g consistent with ICANN mission; ensuring that risks do not reflect back to ICANN Org; are not influenced by Board or community other than in advisory capacity. AND, ensure that there are not anti trust or IRS implications to ICANN Org.
We have still to do the due diligence work on the mechanisms that are 'nominated', and that has to be independent, not opinion based, and not limited to ICANN Org staff but uses experts who can do the due diligence needed for the mechanisms that are then put forward to the community.
------------------------------ *From:* Alan Greenberg <alan.greenberg@mcgill.ca> *Sent:* Tuesday, July 30, 2019 10:40 AM *To:* Sam Lanfranco <sam@lanfranco.net>; Vanda Scartezini < vanda@scartezini.org>; Becky Burr <BBurr@hwglaw.com>; Aikman-Scalese, Anne <AAikman@lrrc.com>; Marilyn Cade <marilynscade@hotmail.com>; Elliot Noss <enoss@tucows.com> *Cc:* ccwg-auctionproceeds@icann.org <ccwg-auctionproceeds@icann.org> *Subject:* Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft
Sam, Option C, but an established foundation instead of a new one is Option D which I believe we have already discarded.
Sure, we can put it back on the table even though I believe it was discarded for valid reasons.
I do note that as of last week, this CCWG had been meeting for exactly 2.5 years. If we continually reopen closed issues this CCWG will outlive us all! And we will never use the funds for "good stuff".
Alan
-- Sent from my mobile. Please excuse brevity and typos.
On July 30, 2019 7:28:58 AM EDT, Sam Lanfranco <sam@lanfranco.net> wrote:
Thank you Alan,
We mainly agree and I understand that the grant decision process will be "outside of ICANN" in the sense that in either A or C there will be no scope for interventions by any element of the ICANN community. I have suggested (just now in response to comments by Marilyn Cade) that a timeline be set for a review of lessons learned, and in the mean time if there are any subsequent auction proceeds, they be held back until after that review.
My one differing view is the hope that under Option C ICANN look to the existing not-for-profit granting organizations and seek a contractual collaboration for going forward, and that it not try to set up a brand new entity. The ICANN community has already worries about challenges of ramping up, then ramping down, a unit within ICANN. The challenges of recruiting proper expertise for a completely new entity with a finite life are equally challenging. Start up costs, in money and time, would be considerable, and recruiting proper personnel would be a challenge.
One strength we have within ICANN is that, even taking the private interests of some stakeholder groups into account, we tend to reach consensus and try to make the best of the policy decisions we decide on. :-) *Maybe ICANN has a future, with a new line of business, consulting with national governments to help them move beyond confrontation and stalemate to consensus and some degree of actually policy making.* :-)
Sam On 7/29/2019 11:10 PM, Alan Greenberg wrote:
Sam, a few corrections.
You say:
Lastly, in addition to the issue of required independence and Option A, there is the challenge of amassing the appropriate expertise to properly and efficiently administer the granting process within a unit of ICANN itself. One has to weigh those costs against Option C, where for a management fee the administrative process is transferred to a competent entity.
The difference between A and C is that in A, the entity administering the entire project is within ICANN (subject to what it might choose to outsource) and in C, it is in a brand new entity that we will create - no existing expertise.
In both A and B, the actual application analysis and grant decision will be outside of ICANN.
Although in theory there might be future auction proceeds, one of the premises of our entire work is that this is a one-time bonanza that will not be rrepeated and we should expect the funds to be used up in some (finite) time.
Alan
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My comments in response are in CAPs below/in blue. First, thanks, Sam L [so that I am distinguishing from Sam/ICANN] your comments are very welcomed/ thank you for taking the time to share your perspective. ________________________________ From: Sam Lanfranco <sam@lanfranco.net> Sent: Monday, July 29, 2019 7:09 PM To: Vanda Scartezini <vanda@scartezini.org>; Becky Burr <BBurr@hwglaw.com>; Alan Greenberg <alan.greenberg@mcgill.ca>; Aikman-Scalese, Anne <AAikman@lrrc.com>; Marilyn Cade <marilynscade@hotmail.com>; Elliot Noss <enoss@tucows.com> Cc: ccwg-auctionproceeds@icann.org <ccwg-auctionproceeds@icann.org> Subject: Re: [Ccwg-auctionproceeds] Judith Hellerstein's comments on the Auction Proceeds Draft I would like to pick up on what Anne E. Aikman-Scalese wrote: To wit: “If the CCWG has already examined the Trust mechanism in the context of Option A, I apologize for bring this up. It’s just completely unrealistic to think that you can establish the required independence by setting up a department within ICANN where employees responsible for grant-making are hired and fired by ICANN staff and/or Board.” The future for new auction revenues is highly uncertain. From an economist’s perspective, I would not be surprised to find that ICANN has reached seriously diminishing marginal returns from additional auctions, whenever the applicants elect not to hold private auctions. In addition to the auctions balance being unlikely to grow, ICANN’s own evolving financial situation means that the existing balance is not immune to appropriation for other ICANN needs, no matter what the intentions are today. MSC: IN RESPONSE TO ANNE, NO, WE DIDN'T DO NEARLY ENOUGH WORK ON FOR INSTANCE EXAMINING A TRUST MECHANISM, JUST AS WE DIDN'T FULLY EXAMINE THE TRUE COSTS OF ANY OF THE MECHANISMS, INCLUDING EXIT COSTS. THESE WERE RAISED BUT NOT DEVELOPED, SO WE HAVE ONLY HALF THE WORK THAT SHOULD BE DONE, STILL. YES, I AGREE THAT A SPECIALLY ESTABLISHED TRUST MECHANISM, WITH A TRULY INDEPENDENT BOARD -- FULLY SEPARATE FROM THE ICANN Board -- WHICH HAS FIDUCIARY ACCOUNTABILITY TO ICANN MIGHT BE A WAY TO MAKE MECHANISM A MORE INDEPENDENT -- BUT THAT THEN SOUNDS MORE LIKE MECHANISM C.
From the beginning of this discussion the implicit understanding was that the funds would be released in tranches (slices). Various “tranche models” were bandied about. For the moment the endowment preserving strategy of only allocating interest earned is essentially a dead option, given near zero and negative interest rates, the funding flow would be minimal. Other portfolio approaches may combine potentially higher yields, but also quite likely with higher risks.
MSC: NOT SURE WHY THIS HAS HIGHER RISKS, SAM.JUST ASKING. ALLOCATING PERHAPS 15-20 % OF FUNDS IN YEAR ONE WITH ASSESSMENT AT END OF YEAR; AND THEN ALLOCATING A % EACH YEAR UNTIL THE FUNDS ARE EXPENDED... I THINK YOUR ANALYSIS OF WHETHER AUCTION FUNDS ARE AN EXTRAORDINARY REVENUE OPPORTUNITY FOR ICANN IS INTERESTING. MY OWN VIEW IS THAT ICANN SHOULD LIVE WITHIN WHATEVER THE FEES FROM REGISTRARS AND REGISTRIES PROVIDE, COLLECTED FROM THE REGISTRANTS, AND PASSED THROUGH TO ICANN. OTHERWISE, WE RUN THE STRONG RISK THAT ICANN Board AND ICANN Org ARE MOTIVATED TO INFLUENCE RELEASE OF NEW GTLDS, OR CREATE OTHER MECHANISMS TO INCREASE ICANN BUDGET. These considerations lead me to believe that the auction revenues are essentially a one-time windfall, to be husbanded wisely by ICANN, with direction from the ICANN stakeholder community, and possibly used to exhaustion over some agreed upon finite time horizon. Should I be wrong, and we find that there are significant additional auction proceeds, we should consider placing them in reserve, with our decisions here to be revisited in terms of lesson learned from the handling of the first auctions balance. These are issues to be discussed among the stakeholder community. Lastly, in addition to the issue of required independence and Option A, there is the challenge of amassing the appropriate expertise to properly and efficiently administer the granting process within a unit of ICANN itself. One has to weigh those costs against Option C, where for a management fee the administrative process is transferred to a competent entity. IT IS MY VIEW [AND I THINK THAT OF THE CSG PARTICIPANTS] THAT EXPERTISE CAN BE HIRED, BUT THAT TO PLACE IT WITHIN ICANN Org CREATES UNDUE CHALLENGES, INCLUDING PAYING MUCH HIGHER SALARIES, EXIT COSTS, ETC, AS WELL AS ICANN OVERHEAD, AND ALSO CREATES INCREASED INFLUENCE FROM WITHIN ICANN Org, ICANN Board, AND FRANKLY, ALSO ICANN COMMUNITY. WE ALSO UNDERSTAND THAT EXIT COSTS FOR AN INTERNAL HOUSED MECHANISM A WILL BE MUCH MORE CHALLENGING, INCLUDING SUBJECT TO INTERNAL LOBBYING BY STAFF AND BOARD INTERACTIONS RE THEIR PREFERENCES EVEN THOUGH INDEPENDENCE IS SUPPOSED TO BE THE NAME OF THE GAME AND EVEN BY THE COMMUNITY ITSELF, AS WELL, HUMAN NATURE IS HUMAN NATURE. SO FAR, THE CSG COMMENTS HAVE SUPPORTED AN INDEPENDENT MECHANISM, WITH EXPERTISE FROM THE RELEVANT GRANTING COMMUNITY, WITH A SEPARATE BOARD, AND A LIGHT ADVISORY COMMITTEE FROM THE COMMUNITY TO ADVISE, NOT REVIEW GRANTS, NOT OVERSEE GRANTS, BUT ADVISE LIGHTLY. PERHAPS UP TO TWO BOARD MEMBERS OF ICANN Board CAN BE EXOFFICIO. INDEPENDENT LEGAL COUNSEL SHOULD BE ASSUMED, AND INDEPENDENT COMMUNICATIONS AND GRANT MAKING STAFF. I SAW A COMMENT THAT INDEPENDENT LEGAL REVIEW WOULD BE INFORMATIVE, AND I SUGGEST THAT AS WELL FOR A CONSULTATION WITH THE US IRS OR US JUSTICE DEPARTMENT REGARDING ENSURING FULL INDEPENDENCE OF ANY GRANT MAKING MECHANISM. WE WOULD NOT WANT TO PUT ICANN'S UNIQUE STATUS AT RISK IN ANY WAY. The terms of reference for grant eligibility would be set through an ICANN policy development process. [MSC: NOT SURE THAT THIS IS IN ANY WAY PRACTICAL. NOR DOES THE COMMUNITY, LARGELY, HAVE SUCH EXPERTISE. AND WE HAVE TO ACCEPT THAT THE COMMUNITY LARGELY HAS PERSONAL INTEREST IN WHAT IS FUNDED BASED ON THEIR OWN UNDERSTANDING OF ICANN. THAT IS NOT A CRITICISM. ONLY A COMMENT. THAT IS WHY THE CCWG CREATED SOME EXAMPLES, BUT ONLY AS EXAMPLES. That would hold for both Option A and Option B. Assuming that it is the same for Options A and B, the core questions here are (a) the relevant costs of the administrative process as between A and B, and (b) the reality (and optics)of process independence with in-house ICANN management versus contracted outside process management. My personal views are that an in-house process will be more expensive, and more fraught with problems, than a process being run by a outside foundation or similar group. ICANN has no expertise in these areas and this is not an area where ICANN should learn while doing. MSC: TO DATE, THE CSG COMMENTS HAVE BEEN LARGELY SIMILAR/SUPPORTIVE OF YOUR STATEMENT, SAM L. WE HAVE SUGGESTED OUR PREFERENCE FOR MECHANISM C, BUT ACCEPT THAT BOTH MECHANISM A AND C MUST BE FURTHER DEVELOPED. WE PREFER FOR THE BOARD NOT TO PREEMPT THE COMMUNITY PROCESS, HOWEVER, LONG IT TAKES US TO ACHIEVE MORE DEVELOPED RECOMMENDATIONS. Sam Lanfranco, NPOC
Thank You Marilyn for your comments. /I will not copy my posting and your comments, but cut to the chase and focus on three direct issues./ First, to get it out of the way, you ask why I see a (any) portfolio strategy managing the proceeds as risky. Most economists generally agree that the flood of cheap money, through Quantitative Easing (QE) by central banks has fueled the unprecedented rise in asset values since the 2008 financial disaster, /and -I might add- the unprecedented concentration of income and wealth/. With essentially negative interest rates this is an unsustainable situation. When it unravels, quickly or slowly, there will be a major downward adjustment in asset values, putting any portfolio strategy at risk, including those containing ICANN funds. Such is life. Second, when I look into my economist’s crystal ball, there is a high probability that the existing auction proceeds were a product of the times, and unlikely to be followed by substantial new auction revenues. Third, be that as it may, I would suggest that whatever strategy ICANN selects, it not place any new auction revenues into the existing pot, but segregate them for the time being. We should consider setting a timeline, say after three rounds of grants from the current revenues, for a review of lessons learned from the process to date, and possibly initiate a new policy development process so that the auction revenue policies can be revised in light of lessons learned. This is new territory for the ICANN community, and that is even more true for the ICANN staff. Sam
participants (6)
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Alan Greenberg -
Becky Burr -
Marilyn Cade -
Maureen Hilyard -
Sam Lanfranco -
Vanda Scartezini