Minutes | Meeting of the Finance Committee of the Board (BFC) | 5 December 2023

BFC Attendees: Harald Alvestrand, Edmon Chung, Danko Jevtović (Chair), Patricio Poblete, and León Sánchez

BFC Member Apologies: Maarten Botterman

Other Board Member Attendees: Sally Costerton, Sajid Rahman, Katrina Sataki, and Tripti Sinha

ICANN org Attendees:  Xavier Calvez (SVP, Planning and Chief Financial Officer), Franco Carrasco (Board Operations Manager), Elizabeth Le (Associate General Counsel), Becky Nash (VP, Planning), Shani Quidwai (Sr. Director, Finance), Vivek Sengupta (Senior Director, Procurement), and Amy Stathos (Deputy General Counsel)

The following is a summary of discussions, actions taken and actions identified:

1. Draft FY25 Planning Assumptions and Highlights of Activities – ICANN org provided the Committee with an overview and the assumptions for the planning process for FY25 Operating Planning and Budget and the FY25-FY29 Operating and Financial Plan. The org noted that, key planning assumptions include: (i) the strategic plan for FY21-25 will remain unchanged; (ii) affordability and a balanced budget; (iii) face to face meetings and engagement will occur based on the public meeting schedule; (iv) planning for Board approved activities; and (v) implementation of recommendations from the FY25 Community Planning Prioritization process.

2. FY25-29 Funding Projections and ICANN's Affordability Plan – ICANN org presented the Committee with an overview of the historical and projected funding for FY25-29. The org reported that the analysis revealed a gap between ICANN's funding growth and U.S. Consumer Price Index growth, which is indicative of inflation. ICANN org also reported that costs from FY17 to FY19 were stable, followed by a drop during the pandemic, following which costs increased due to resumed travel and increased higher staffing to align with work on initiatives such as the New gTLD Program: Next Round, the ICANN Grant Program, the Registration Data Request Service, and review implementation. The Committee discussed the financial projections for FY25-29. The funding projections are estimated to grow on average of one percent. These projections are based on a number of key assumptions, including the volume of domain name registrations, the volume of contracted parties, and fees. The Committee discussed ICANN's affordability plan and noted that it includes steps taken by the org to develop efficiencies and minimize costs, which has enabled the org to execute on an increased workload and absorb inflationary increases despite lack of funding growth. ICANN org reported that it will continue to develop efficiencies and process improvements to lower costs as funding is projected to continue to remain flat while costs and the workload of ICANN increases. The Committee also noted that since FY17 the Reserve Fund has increased by approximately USD100 million, a large portion of which was due to contributions from the organization. The Committee further noted that funding has been added to the Supplemental Fund for Implementation of Community Recommendations (SFICR) over time. The Committee discussed the impact of the New gTLD Program on staffing and costs, recognizing the need for flexibility in resourcing. The Committee also discussed the need for ongoing collaboration and communications to address potential staffing concerns and ensure alignment with the Board's strategic goals.

   • Action: The Committee to continue its discussion at a future meeting.

3. Draft ICANN FY25 Budget - The Committee was provided an overview of the Draft FY25 Budget with ICANN Operations funding of USD148 million and ICANN Operations expenses of USD148 million. In addition, the Committee was presented an overview of the expected FY25 expenses for the New gTLD Program Next Round (USD25.9 million), the FY25 SFICR expenses for the implementation of the prioritized specific review recommendations (USD2.2 million) and the ICANN Grant program (USD1.7 million).

4. Overview Key Timeline for Community and Board Involvement re Draft FY25 Operating Planning and Budget  (OP&B) and Draft FY25-FY29 Operating and Financial Plan (O&FP) - ICANN org reviewed the key timeline for community and Board involvement for the Draft ICANN FY25 OP&B, FY25-29 O&FP, and Draft IANA FY25 Operating Plan and Budget will be published for public comment from 12 December 2023 through 12 February 2024. The org reported that the 2025-2029 Funding Forecast Assumptions Report will be published as a supporting document to the public comment proceeding. ICANN org further reported that there will be two webinars on 13 December 2023 to present the draft plans to the community and a community engagement seminar during ICANN79. It is anticipated that the Summary Reports on Public Comments will be published in March 2024 and that the proposed plans for adoption will be presented to the BFC and Board in April 2024.

   • Actions:

     • ICANN org to publish the Draft ICANN FY25 Operating Plan and Budget and the Draft IANA FY25 Operating Plan and Budget for public comment from 12 December 2023 through 12 February 2024.

     • ICANN org to conduct two community webinars regarding the Draft FY25 Operating Plan and Budget and the Draft IANA FY25 Operating Plan and Budget on 13 December 2023.