USG IANA Stewardship Transition – Additional FY16 Expenses and Funding

The USG IANA Stewardship Transition is a major initiative to which the ICANN Community as a whole is dedicating a significant amount of time and resources. ICANN's support for the community's work towards a successful completion of the Project (including both the USG IANA Stewardship transition proposal development and the CCWG's work) is critical for ICANN.

Considering its exceptional nature and the significant amount of costs anticipated to be incurred, the funding of this Project could not be provided through the Operating Fund. Accordingly, when the Board approved the FY15 and FY16 Operating Plans and Budgets, it included the anticipated funding of the transition initiative costs through a corresponding withdrawal from the Reserve Fund.

ICANN is not able to unilaterally decide to fund these expenses through the New gTLD auction proceeds, or potential excess from New gTLD application fees, as the Board has committed in the past to organize community consultation on the future use of these funds.

The costs on the USG Stewardship Transition Initiative incurred through the first five months of FY16 totaled US$7 million, an amount equal to the total envelope budgeted for the entire of FY16. Furthermore, the expenses projected for the remaining seven months of FY16 are estimated at US$8 to US$9 million, including US$3.5 million in external legal advice expenses.

Considering the strategic importance for this initiative to be successfully completed, the Board needs to approve additional expense envelopes for FY16 and identify the funding source.

Based on the extracts from Section 4 of the Charters of the CCWG and CWG, the Board acknowledges that the CCWG and CWG, through their co-chairs, are responsible for defining and requesting staff support, meeting support, experts and facilitators. The CCWG and CWG co-chairs are also responsible for defining and requesting additional advisors or experts and, doing so by providing ICANN with rationale and expected costs.

The CCWG Charter states:

The ICANN Staff assigned to the CCWG­Accountability will fully support the work of the CCWG­Accountability as requested by the co-chairs, including meeting support, document drafting, editing and distribution and other substantive contributions when deemed appropriate by the CCWG­Accountability. ICANN will provide access to relevant experts and professional facilitators as requested by the CCWG­Accountability Chairs.

The CWG charter contains the same statement as above.

The CCWG Charter continues

[…] the CCWG-­Accountability may also identify additional advisors or experts to contribute to its deliberations […]. Should additional costs be involved in obtaining input from additional advisors or experts, prior approval must be obtained from ICANN. Such a request for approval should at a minimum include the rationale for selecting additional advisors or experts as well as expected costs.

The CWG Charter reads:

The chairs of this charter's drafting team, Jonathan Robinson and Byron Holland, will write to ICANN seeking reasonable travel resources for CWG members to participate in face-to-face CWG meetings, but on the understanding that the CWG will make every effort to hold any face-to-face meetings concurrent, or in conjunction with regularly scheduled ICANN meetings.

As a result, the BFC recommended to the CCWG and CWG co-chairs the following three actions: (a) the CFO to work with the CCWG and CWG co-chairs to review and confirm the estimates for the remainder of FY16; (b) ICANN to facilitate a discussion on how to establish proper budgetary estimates and cost control mechanisms for the next phase of Cross Community Work in FY16 (Implementation including Bylaws drafting), to take place between the CCWG and CWG co-chairs and the SO/AC Chairs/Chartering Organizations; (c) the ICANN Board should initiate a community discussion on how to replenish the Reserve Fund.

The above requests are consistent with previous communication issued by ICANN's CFO:

to the CCWG co-chairs on 14 October 2015 through a letter on the ICANN website (see https://community.icann.org/display/acctcrosscomm/Costs+of+independent+l...) requesting the co-chairs to provide estimates for external legal advice.
to the CWG and CCWG co-chairs, an email dated 30 November 2015, providing actual costs incurred by the four-month period ending 31 October 2015 and requesting to provide the ICANN CFO with cost estimates for the external legal advice expected to be incurred from 31 October 2015 until 30 June 2016.

In addition, as the amount of expenses incurred for this initiative totals an estimated US$24.7 million for FY15 and FY16, it is expected that the Reserve Fund balance will be approximately reduced to US$60 million, corresponding to approximately 6 to 7 months of Operating Expenses, well below its current target level of 12 months of Operating Expenses or approximately US$113 million. As a result, the Board will initiate a process to identify a solution to replenish the Reserve Fund by the estimated amount of US$24.7 million (or its actual amount once known). The ICANN Board plans to initiate a community discussion on how to replenish the Reserve Fund.

The Board expects that as the community groups continue to incur costs for the initiative, they will perform cost management exercises. Guidelines will be developed on cost management practices.

This action will not have a direct impact on the security, stability and resiliency of the domain name system.

This is an Organizational Administrative Function that does not require public comment.