[nc-budget] RE: [council] Re: [announce] NCtelecon 9 May 2001, minutes

["Cochetti, Roger" <RCochetti@verisign.com>]

Karl-

Thanks for your input.  At the risk of opening a discussion over whether a
glass is half empty or half full, I want to comment on your concerns.  	

First, we are not in this case discussing regularly collected ICANN funds
(e.g. payments from registrars or registries).  In this case, we are
discussing funds donated for a specific purpose:  to provide professional
support for the DNSO as directed by the Names Council.  Those are the
conditions under which donations are solicited and, presumably, granted.
Donors fully understand that the funds are being placed under the qualified
control of the Names Council and administered by ICANN management.

Second, as you may recall, the Names Council considered using an independent
legal entity to serve as the custodian for these earmarked donations, and
after considering several alternative custodial arrangements, concluded that
reliance on ICANN management offered the best custodial structure.
Obviously, ICANN management could agree to serve as custodian for these
funds, however, only if the directions for the use of the funds were lawful
and consistent with ICANN obligations under the various U.S. tax
regulations.

Third, clearly, ICANN management is accountable to the ICANN Board and, in
that sense, it is the Board that is ultimately responsible for such
decisions as whether a Names Council decision on a disbursement is unlawful
or in violation of some tax regulation.  But beyond those two
determinations, no role is contemplated in deciding on how these funds are
used by either the ICANN Board or ICANN management.

Fourth,  this arrangement is intended to distinguish between funds that are
part of the regular ICANN budget and funds that are donated to the DNSO.
While it is quite correct to say that the DNSO, the Names Council, and the
various sub-elements of the DNSO are parts of the Corporation (ICANN), that
need not mean that every expenditure made by every element in the DNSO is
under the direction of ICANN management or directors.  Take, for example,
the operating expenses associated with the PSO.  As I understand that
Organization, various members of the PSO assume the responsibility to cover
various operating expenses of the PSO at various times.  While these
expenditures are essential to the operation of that Supporting Organization,
I understand from ICANN management that ICANN management and directors
assert no claim to control these expenditures of the PSO.  The expenditures
are evidently considered to be independent of ICANN.

Finally, the proper way, in my opinion, to view these voluntary donations
would be to compare them to the dues that employees make to an employee
activity of and by employees of a tax exempt corporation.  Management (and
ultimately the Directors) of this Corporation may serve as custodians of the
employees' funds and make clear that they will not disburse them for
unlawful purposes; but they would almost certainly not assert discretion
over the use of these funds, this that would be inconsistent with the
purposes for which the funds were donated.

Roger Cochetti


          



 

 -----Original Message-----
From: 	Karl Auerbach [mailto:karl@CaveBear.com] 
Sent:	Tuesday, May 29, 2001 3:42 AM
To:	council@dnso.org
Subject:	[council] Re: [announce] NCtelecon 9 May 2001, minutes


> Agenda item 5: Budget Committee recommendation
>
>      Decision D2: R. Cochetti moved the following resolution, seconded by
P.
>      de Blanc:
>
>           The Council authorizes the Budget Committee to:
>
>           (1) conclude a memorandum of understanding with ICANN management
>           on behalf of the DNSO, under which ICANN management will serve
as
>           a custodian for the funds raised by voluntary donations to the
>           DNSO; In such a custodial role, ICANN management will deposit
and
>           disburse funds as directed by the Council or its Budget
Committee,
>           unless ICANN management reports to both that doing so would in
>           ICANN management's view either be illegal or jeopardize ICANN's
>           own tax status; and

As a member of the Board of Directors I find this to be somewhat
inadequate.  We can not forget that the board retains the ultimate
discretion over these funds.  Thus any suggestion as to disbursement is
just that, merely a suggestion, it can have no mandatory effect.  Of
course, it is likely that such requests will be accepted as a matter of
course.  But it is important to not lose sight of the fact that the DNSO
is part of legal entity known as ICANN, the ultimate direction of which,
financial and otherwise, including all of its sub-elements, including the
DNSO, is vested in the Board of Directors.

I understand that efforts are underway to investigate creating a distinct
entity for these funds.  I encourage and support that effort.  But as long
as the DNSO is legally part of ICANN everything that it does and
everything that it has are ultimately the responsibility of the Board of
Directors of ICANN.

In the meantime, I see no reason to disrupt or change the way the DNSO's
funds are handled or any reason to not give the DNSO the lead in making
recommendations (ones that will, without doubt, carry significant
persuasive force and which will probably be disregarded only in the most
compelling of circumstances) over those funds.  We, of course, ought to
make sure that the DNSO funds are properly and clearly identified on
ICANN's ledgers and financial reports.  There is no "us vs them" here;
rather we are all part of one single corporate entity.

		--karl--