W3C Legal Structure

• W3C is not legally incorporated
• W3C operates as a partnership of four Hosts
• For most purposes it is a pure peer relationship
  • MIT maintains some items that are better centralized (trademark, appointment of successor director, current location of HQ)
  • Other Hosts are Beihang University, ERCIM, Keio University
  • Irregular meetings of the Host Steering Committee
• Day to day management by W3M; typically on behalf of the Director
• Work of the consortium guided by W3C Process Document with advice from the Membership

History

• Structure has served W3C well for over 20 years
• Recently renewed through YE 2020 with an option until YE 2021.
• Anchoring in Hosts provided global reach, branding, stability, and security for a new organization
• Hosts get revenue from regional memberships and provide resources and technical strength
• But as early as 2009, a W3C task force anticipated that W3C needs to evolve to some form of independent legal entity

Time for a change

• From W3C’s point of view, many of the reasons that it needed the Host structure for are no longer relevant
• From the hosts' point of view, W3C carries risks and burdens (e.g., financial risk, space)

• Most importantly, W3C needs to have greater flexibility and agility in meeting the needs of the Web. Coordinating across different organizations that have different budgets, constraints, HR policies, etc. slows progress
• Yet the hosts provide value → remove the dependence on hosts gradually

Legal Entity Task Force

• While the W3C process has evolved continuously under the leadership of the Advisory Board, the Hosting agreement has not evolved significantly since 2010
• In 2009, a task force of Hosts, Members and Team representatives recommended a headquarter-based structure. As a first step, MIT became a ‘lightweight’ headquarters
• In 2015, a Legal Entity Task Force was organized by the W3C Team
• Initially, there was difficulty getting consensus among the Hosts
• In the last year there has been substantial support from the W3C Membership and Advisory Board to accelerate the transition.

Drivers of change: Need for agility

• W3C needs to rapidly diversify its skill base for changing web technologies
  • Huge increase in the diversity of technologies
  • Demands of vertical industries
  • Attracting highly skilled and specialized staff: security, accessibility
  • Global focus

• W3C needs to have agility to deal with threats to the Web ecosystem
  • Walled gardens
  • Security and Privacy
  • Growing challenges in internationalization and accessibility

Drivers of change: Operational efficiency

• Requires tighter coordination of operational decision making
• Requires more uniform and flexible HR policies
  • Compensation
  • Staff management including hiring
    

• A well connected Board of Directors can help
• Global footprint
  • Greater flexibility to work with global community

Drivers of change: Finance

• Reduce overheads
• Financial reserve for strategic initiatives
  • Current budget suffices for day-to-day needs; increasing need to focus on strategic initiatives
• Less bureaucracy in introducing new services
• Fee structure on a fair, global basis

Host synergies to be continued as Partners

• Some global reach provided by the Hosts
• Technical & Marketing synergies with the Hosts
  • Status of Hosts in their countries
    

• Services available from the Hosts
  • Industry relations, legal department, …
  • Member association with Hosts
    

• Government funding
• Should be phased out over time

Proposal

• Carefully plan a new structure effective at the close of the current HA (1/1/21)
• Create a W3C legal entity with sufficient authority/budget to be an independent actor (referred to as ‘W3C’ in the balance of these slides)
• Retain the Hosts as Partners, reframing W3C as a partnership between the W3C legal entity and the four Hosts
• Use the next two years to
  • create a $10M Reserve/Strategic Initiatives Fund
  • gain wide stakeholder buy-in and support
  • assess the feasibility of getting the $10M fund – and come back to the Steering Committee if infeasible

How the proposal fixes agility

• Redefined relationship between W3C and Hosts/Partners
• Most revenue typically goes to W3C
  • Government contracts may still go to Host
  • Clearer control to assign staff where needed without Host constraints
    • Decisions can be made ‘for the good of the web’; not constrained by local budget issues or ‘not having the right staff’
    • Decisions can be made globally
• Staff is split between W3C and Host Partners
  • Annual contract to the Partners to support those staff that choose to remain with the Hosts (for personal, research, or geographical reasons)

$10M Reserve/Initiative Fund

Need for reserve

• Breadth of ‘mission’ requires that all funds raised are spent on mission of organization
• Yet the sources of funds are not reliable
• As a non-profit there is (typically) no flexibility to raise capital
• Without Hosts to backstop a sudden reduction in funding, inability to pay bills

$10M Reserve/Strategic Initiative Fund

Need for strategic initiative fund

• Current budget addresses operational needs and occasional strategic needs
• 2009 Legal entity task force anticipated a broad vision for organization
  • Only partly addressed through small diversions of operational budget
• W3C should have a tightly controlled fund available for strategic initiatives – ‘unfinished business’ from 2009 report
  • Not available to management → tightly controlled by Board of Directors
  • Typically a small portion of $10M allocated for a limited time with an expectation of replenishment

$10M Reserve/Initiative Fund

• Timing
  • A unique opportunity at ‘start-up’ with two years to raise a reserve
    • Approach Hosts, foundations, IntGov organizations, individuals

• Size: approximately 100% of budget

• Board might want to divide fund; allocating a certain amount for absolute reserve, and being more willing to allocate a certain amount for strategic initiatives.

Reserve/Initiative fund management

• In general it is not touched.
• The reserve is there for a budget crisis.
• Management might propose (to the Board of Directors) to allocate some amount for a strategic initiative:
  • The Board would approach such proposals with skepticism
  • The Board would need to be convinced that the strategic initiative is worth the additional risk
  • The strategic initiative plan should also describe the time frame for replenishment of the fund

Candidate strategic initiatives

• Embrace of ‘developers’
• Sudden need to add new skills (e.g., security)
• More agility (e.g., a new process to address ‘living standards’)
• Broader globalization: different countries, better tools, multilingual
• Modularization
• Integration of web architecture into a more cohesive architecture
• Documentation that can be understood by non-experts
• Maintenance
• ‘Fix’ security and privacy
• A structure for industry engagement
• Liaison with governments

Proposal development

• 2015: W3C Staff brainstorming
• 2016-2017: Early Host discussions. No consensus.
• 2018: Strong push from Membership
• 2018: W3C Advisory Board creates Governance proposal
• 7 February 2019: W3C Steering Committee meeting to approve legal entity proposal
• 2019: Detailed planning. Contracts. Space. Fundraising. Negotiations between W3C and Hosts
• 2019/2020: Additional Steering Committee meetings to assess progress; give guidance.
• 1 April 2020: Nearly complete proposal for staff transitions.
• 1 December 2020: Complete all negotiations including staff transitions.
• 1 January 2021: Start of legal entity

Board of Directors and W3C Process

• W3C Standardization activity continues with evolution involving the Membership, under the guidance of the W3C Director (Tim Berners-Lee)
  • Parallel exploration of the possibility of that role evolving
• Board of Directors has legal, fiduciary, and governance functions
• W3C Advisory Board and W3M collaboration on a governance proposal
• Responsibilities
  • Strategic vision of the organization
  • Approve budget
  • Approve global staffing plan
  • Reserve management
  • Succession planning

Hosts / Partners and W3C

While W3C becomes the legal entity, and contracts with the Membership, it maintains a strong relationship with Hosts as Partners

• Every year, with plenty of notice, W3C and Partners would negotiate how much W3C effort takes place with staff employed by the Partners
• Proposal may be implemented gradually if we discover that Members have a strong affinity to Hosts and do not want to contract with new legal entity.
• Many more details in partner document

More proposal details

• See legal entity document
• New legal agreements required (Hosts, Members)
• Location – US / Boston
• HR policies W3C
  • Staff movement between Hosts and W3C

Issues/risks

• Buy-in from stakeholders
• Attracting a reserve
  • Being able to back down if there is insufficient reserve
• Agreement from Hosts
• Member retention
• Continued to be viewed as Global and vendor neutral