As many people know, W3C is not incorporated. It exists as a series of contracts between four Host organizations —MIT, ERCIM, Keio University, and Beihang University— as well as a series of contracts between those entities and the W3C Membership.
The Hosting model has served W3C well for over 20 years. However, due to the complexity of this approach and the new organizational demands driven by the evolution of the Web itself, there is now consensus among the Hosts, the W3C Advisory Board, and the W3C Advisory Committee that it is time for W3C to incorporate.
This proposal captures some of the opportunities, risks, and unique challenges the W3C community will consider as it makes the transition to a legal entity.
This proposal does not include detailed legal documentation for a future incorporated W3C.
Superseded See the version edited by the Advisory Board.
This document has been prepared by the Editor for discussion within the Steering Committee in early 2019.
The aggregator Editor endeavored to group material into three major areas:
The aggregator Editor synthesized the work of the Legal Entity Task Force, and drew from a number of sources: the Draft Legal Entity Proposal, Continued Host (Partner) Relationship, and Starting Point proposal.
W3C plans to incorporate on 1 January 2021 as a 501(c)(3) in the Boston (Massachusetts) area. As a corporation, it will have a new Board of Directors (in this document occasionally referred to as the "BoD" to distinguish it from the Advisory Board, which will continue to function essentially in its current form).
W3C will continue its primary activity of developing open standards to ensure the long-term growth of the Web, following familiar processes. While W3C does not conduct basic Web research, at times it engages in applied research for the benefit of the Web.
The Host organizations will no longer "house" the W3C, but the Hosts and new W3C entity expect to continue close relationships through new Partner Agreements. W3C staff in some cases will be employed by W3C and in some cases (at least for a transitional period) by the Hosts.
Member dues will continue to constitute W3C's primary source of revenue, as well as some grants (typically in Europe and in the US). However, this transition to a legal entity offers an opportunity for W3C to create a financial reserve through fundraising.
The existing Host model has served W3C well for over twenty years. So if we are to change it, it is important to evaluate the purported benefits of a different structure.
At a high level, when W3C began in 1994 it desperately needed Host support. W3C was unknown on the global stage and the Hosts provided instant credibility. Moreover, as a young organization, it was useful for W3C to have access to the infrastructure of a larger host (for human resources services, legal, finance, systems infrastructure, etc.).
By 2021, W3C will be 27 years old with an established reputation. Indeed, W3C was noted in 2011 to be one of the most significant contributions that MIT has ever made. W3C now has the capacity to create an independent legal entity and to own its own trademarks. Still, if the current system is working well, why change it?
In the summer of 2015 the W3C management team reviewed this question and identified a number of advantages in creating a new legal entity. Many of these were broad advantages relevant to any type of independent entity, including:
Creating a new legal entity does not preclude mutually beneficial ongoing partnerships with the current Hosts. Some benefits include:
Moreover, there is a viewpoint, incorporated in this proposal, that the event of creating an independent legal entity should attract seed funding to recapitalize the organization and place it on a more firm financial basis.
See below for more information on the origins of this proposal.
Note: This proposal is about restructuring the organization, not redesigning the W3C mission or changing the goals listed below.
The mission of the organization remains To Lead the Web to its Full Potential.
Many of these are longstanding W3C goals. The expectation is that incorporation will make it easier for W3C to fulfill them in pursuit of its mission. See below for details about objectives associated with each of these goals, both met and unfinished.
W3C does not pursue its goals in a vacuum. To ensure end-to-end interoperability W3C works with other global organizations, including the Internet organizations ISOC, ICANN, IAB, and IETF —collectively referred to in this proposal as "I*".
A number of documents will describe the governance model of W3C. Many of the current governance documents will remain the same except for changes necessary to account for the new legal structure. These include the Member Agreement, Process Document, and Patent Policy.
Note: This proposal does not address how a future Incorporation Document will reference other governance documents. Also, Today's Hosting Agreement and Appendix contain a description of the purpose, leadership, and membership of the consortium. Much of this description needs to be modernized and moved to the Incorporation Document.
The following are key topics that will be covered in detail in a future Incorporation Document.
Note: In this proposal we refer to a single Incorporation Document, but multiple documents may be created as needed.
W3C will incorporate as a 501(c)(3) in the Boston (Massachusetts) area. Reasons include:
The primary change in governance structure in this proposal is the creation of a Board of Directors, which in essence replaces the W3C Steering Committee and has additional responsibilities.
The Board of Directors has the ultimate authority on the strategic direction of the organization and the members of the BoD have a legal obligation to ensure that W3C implements its mission. The Board of Directors has to meet to perform its functions (such as ensuring audits occur). W3C will be an incorporated non-profit. The role of the officers and the Board of Directors then is, to a certain extent, determined by the laws of the relevant jurisdiction and unchangeable.
The Board of Directors has the following roles and responsibilities.
Although final governance authority rests with the Board of Directors, the authors of this proposal intend for the Board of Directors to play little to no role in:
The Board of Directors should not change these expectations without extensive interactions with the W3C Membership and community.
To help ensure that the individuals on the Board of Directors can fulfill these roles, W3M and the Advisory Board have described expectations for members of the Board of Directors.
W3M and the Advisory Board propose an initial composition for the Board of Directors consisting of 14-16 seats:
Additional notes on the composition of the founding Board of Directors:
In addition, although the Board of Directors may evolve in structure over time, the Incorporation Document will set the following expectations:
This proposal does not change the roles of the Director described in the W3C Process, nor their implementation.
Note: This section describes ongoing Advisory Board discussion.
The (Founding) Director of W3C is awarded significant authority through the W3C Process.
Increasingly, the Director has been implementing his authority via delegation. For that to be acceptable to the Web Community, it is essential that the Director be someone who (objectively) deserves that level of trust and (subjectively) who has earned the trust of the key constituencies of W3C. It can be argued that there will never be a successor with the gravitas of the Founding Director since there is only one inventor of the world wide web.
Therefore, the Advisory Board has been contemplating the level of authority of a "successor" if the Founding Director were to step down. Some ideas have emerged, though there is no current consensus:
A "strong" successor Director should have a seat on the Board of Directors; in other models there would not be a "Director seat" on the Board of Directors.
Because there is not yet consensus, the W3C community needs to continue the discussion about the role of the Director, but that can happen independent of this proposal.
While the Founding Director has no limit on his term and no method of evaluation, successor Directors are evaluated and must be renewed.
Note: If a consensus emerges between the Advisory Board and the W3C Board of Directors that the Role of the Director should change significantly, then this section is not applicable.
In this proposal, if the Founding Director steps down, the Board of Directors is responsible for his replacement. Finding a suitable successor to the Founding Director requires both good fortune and a vetting process with sufficient input from stakeholders to foster the necessary trust within the W3C community.
First, it is highly desirable that the Director give at least one year notice of any decision to step down. In cases that the Director steps down without notice, the BoD is encouraged to appoint an Acting Director for the length of the search.
When the BoD is informed that it needs to appoint a Director it forms a Search Committee. This task force should be Chaired by someone appointed by the BoD. To ensure broad representation, it should consist of:
The Search Committee posts a job description that includes the personal qualities of the desired successor, including technical ability, leadership ability, and commitment to W3C values. Armed with this, the Search should actively look for appropriate candidates. Although the nature of the search should be open, for confidentiality reasons, the search itself needs to be closed.
The Search Committee may come up with one or several candidates that they feel are appropriate. It is up to them whether to recommend one candidate or several.
Once they have completed identifying one or several candidates, these finalists are reviewed by the Advisory Board. The ensures that there is strong Member buy-in to the final candidate. The Advisory Board provides the Board of Directors their views on these finalists.
The final decision is made by the Board of Directors. If they are not satisfied with any of the candidates, then a new Search Committee is developed.
This proposal does not change the existing roles of the CEO described in the W3C Process, nor their implementation. However, the CEO will report to the Board of Directors under this proposal.
The CEO of W3C does not have the same level of authority as the Director so it is less critical that there is such an elaborate Search for a successor. However, when a search for a new CEO is required, it would make sense to model it on the Director Selection Process.
The current roles of the Advisory Board, defined in the W3C Process Document, do not change under this proposal. In this proposal, the Advisory Board is also expected to provide guidance to the Board of Directors for some of its activities, including Director or CEO searches.
The Advisory Board's specific roles are thus:
The composition of the Advisory Board does not change:
The W3C Member Agreements need to change as most of the Member agreements will be signed directly by the W3C legal entity. All of the rights (e.g., intellectual property rights) will typically be shared between W3C and the Member in this new structure, without rights going to the Partners. (In some cases, where Partners employee W3C staff, we may need to figure out the proper representation of those rights).
Note: We expect to take this opportunity to modernize the more than 20 year old Member Agreement. New agreements will also be required for Business Group Participants, Introductory Industry Members, etc.
The primary governance document covering how W3C produces standards is the W3C Process Document. The W3C Advisory Board has responsibility to evolve this, working with the Membership (Advisory Committee) and the general public. Despite the creation of the new Board of Directors, the W3C Process Document continues to be the major means of standards development within the W3C, and the Membership (through the AC and its elected AB) continue to play a central role in its evolution. That said, as in all matters, final governance authority rests with the Board of Directors, and is exercised at that Board’s discretion.
The Incorporation Document for W3C should include provisions that support the Membership role in evolving the W3C Process and, in that sense, limits the responsibilities of the new Board of Directors. The central players in the governance of W3C are the existing players: the Director, W3M, and the Membership. The Board of Directors has the significant fiduciary responsibilities mentioned above —but not the W3C Process. In that regard, the Board of Directors is analogous to the current W3C Steering Committee —the Committee of Hosts that has overall oversight to W3C.
The general operation of W3C will continue to evolve as it currently does, guided by continued proposals from the AB, AC, community, and staff.
The W3C legal entity must be well capitalized from its inception.
On many dimensions (technology, society, industry needs, the social web, globalization, security needs) at various times we have seen striking new requirements for which W3C has needed to rapidly build staff support.
To fulfill the organizational vision we must still considerably expand our activity. There should be a strategic plan to address these opportunities: sometimes through re-prioritization; sometimes through investment.
The best way to get the necessary capital is to receive it in the form of grant in accompaniment of the creation of a legal entity. It will be much harder to attract large grant funding once it is in operation. Capitalization is required:
Starting in January 2021, W3C uses the calendar year as its Fiscal Year. In October of the previous year, the CFO and CEO create a balanced budget and secure the approval of the Board of Directors. Upon approval, that forms the budget for the next year.
While in operation each year has budget variability, the management team is tasked to achieve its balanced budget throughout the year. If there are an excess of Membership resignations, or unexpected expenses, W3C might need to temporarily dip into its reserve. In that case, subsequent annual budgets should be proposed to be in the black for several years, until the $10M reserve is restored.
W3C learned in the 2008-2010 period that the combination of global economic factors, M&A activity, and the normal ebbs and flows of interest in web technology can cause rapid decline in revenue and jeopardize the financial health of the organization. During that period, W3C was able to navigate through the financial distress based on the financial strength of the Host institutions and the provision of a grant from the Internet Society. However, it is not consistent with W3C achieving its vision if it needs to struggle so mightily to pay its bills.
Before creating a new legal entity, W3C should raise $10M in funds for its reserve fund, net of start-up costs. These funds are available as a reserve, to achieve flexibility, and to achieve the vision. We have identified the need for a reserve of that size in light of W3C's annual operating budget. This is slightly more than is needed for a strict reserve, so it may be leveraged flexibly in pursuit of the W3C vision.
It is desirable that the source of the capitalization of W3C should be from public interest foundations, Internet related organizations (e.g., ICANN, ISOC), or the existing four Hosts (e.g., from existing surpluses or other generosity). It would not be desirable for the source of the funds to be from a small set of commercial organizations or private donors who are closely associated with commercial interests.
To achieve a Reserve of $10M will require fundraising of more than $10M since the capitalization plan must also fund start-up costs.
Note: In most cases, W3C expects to address priorities through activities within the context of a balanced budget. However, from time to time, the management team might wish to use some of the reserve as a limited time investment. For example, there might be a need for an emergency hire in a new area. Or some new program to ensure acceptance of W3C on a global level. When this type of situation arises, the management team might bring an extraordinary request to the Board of Directors, to allocate some of the reserve for this investment. Generally, the Board of Directors should be conservative about dipping into the reserve, doing so only for an extraordinary opportunity —and together with a plan to repatriate the reserve over time.
Some investment will be needed to create a new legal entity, including:
For W3C to be an independent legal entity, it must control its agenda, which it can only do if its funding is available to it in an unencumbered fashion. As a result, the revenue that is credited to W3C at each of the four Hosts should transition to the W3C legal entity as soon as practical.
After the launch of the legal entity, new Members would sign up with W3C rather than Partners. With few (itemized) exceptions the revenue that arrives from Member fees (and business group fees, sponsorships, and donations) in Calendar Year 2021 and beyond goes directly to W3C irrespective of the country where the Member is based.
See below for more information about business development and managing Member Agreements as part of the transition plan.
Today, W3C collects Membership fees in local currencies of dollars, euros, yen, and yuan. This leads to stability, because W3C pays local staff in the same currency as the Membership revenue. This is also sensible for the majority of W3C members who are headquartered in countries that use these four currencies.
This approach also has some disadvantages. As exchange rates fluctuate, some Members end up paying more than others, causing dissatisfaction. For Members in countries that use none of these currencies (e.g., Korea, UK, Russia) - this approach is a nuisance. And companies that appear to be headquartered in multiple locations try to find the lowest cost method to join W3C.
The creation of a legal entity will not change these fundamental trade-offs, but with a different organization, there is an opportunity to revisit these issues. This is an operational set of decisions for which we do not have a specific proposal at this stage.
Many of the current external grants that help support W3C activities (e.g., government research contracts) involve agreements between funding agencies and Hosts. In most cases those contracts would stay with the Partners after creation of the legal entity. Some considerations:
After creation of the legal entity, there may be contracts for which W3C is not well-positioned. For example, some ERCIM contracts are with the EU which may require that the contractor be based in the EU. Some MIT contracts come to W3C through MIT. Other contracts might be for more fundamental research and are better situated in a university. In all of those cases, the contract would remain with the Partner. W3C may or may not provide partial staffing based on the requirements of the contract, as above.
Where W3C can effectively compete, it could acquire such grants, potentially working with Partners as subcontractors.
A key element of this proposal is continued partnership with the current W3C Hosts. Since this is an important request that W3C is making of the Hosts, it is important to delineate the reasons for this request. There is a feeling among W3M that without this continued relationship that the W3C legal entity proposal is considerably weaker.
In this proposal, "Host" refers to the current relationship with MIT, ERCIM, Keio University, and Beihang University, while "Partners" refers to the new relationship.
Under this proposal, the W3C legal entity has full authority, responsibility, and liability for the successful continuation of W3C. Partners play a supporting role, possibly employing some staff, participating in research projects, and supporting a global footprint.
The Partners support the mission of the W3C and support Members in their geography to the extent established in their Partnership Agreement. Partnership Agreements are recommended by W3C with oversight and approval from the Board of Directors and are confirmed or entered into on behalf of the W3C annually.
Partners are entitled to a seat on the founding Board of Directors. The selection of their appointee to their seat is at their discretion.
Note: Over time, it is expected that the relationship with Partners will, perhaps stopping entirely at some point as staff, Member Agreements, research, systems, and so forth move fully to W3C.
To the extent that the Partners employ W3C staff, run contracted (‘research’) projects, and recruit prospective Members, the W3C will enter into Partner Agreements to support those activities.
Although details must be worked out, key characteristics expected of a Partner Agreement include:
The following sections discuss other potential components of an individual Partner Agreement.
W3C’s Member agreements auto-renew every year. One objective of this proposal is to change the Membership contracts from Member/Host to Member/W3C, with dues paid directly to the W3C. A goal is for each Member to transition to the new contractual relationship upon annual renewal.
However, there may be some limited reasons for a member to continue paying the Partner. Among the reasons could be tax implications in member countries, unwillingness to pay in US dollars, and inertia. For all of these reasons, W3C would like to have the Partners continue to be allowed to collect Member dues through Member agreements, subject to the agreement of both the Member and the W3C management. The transition period requires careful management.
W3C receives significant funding from the EU and the US Government. This funding is important financially; but also is significant to advancing web technology in areas such as accessibility and privacy.
W3C expects it to be challenging for a US organization to qualify for EU funding. The legal entity task force believes that it is important to maintain a relationship with ERCIM for these contracts. This is especially the case for current contracts held by ERCIM.
For US Government funding, W3C would continue to qualify as a grantee. However, lacking the name recognition and infrastructure of MIT, W3C might be disadvantaged in continuing its success in garnering funding. So a continued relationship is important at MIT as well. Again, especially for existing contracts.
The W3C and its Partners may enter into agreements with external funding bodies for the support of W3C work, with the work to be done at a Partner, and the monies supplied directly to the Partner for that work. This privilege (taking on W3C contracts) is reserved to Partners (and W3C itself).
For a transitional period, W3C may enter into agreements with the Partners for space or services.
In some geographies there may be a desire for W3C staff to remain in their existing space.
There are various system services: telecommunications infrastructure, WebEx, cloud services, which benefit W3C. While we have not developed a system services strategy to this level of detail, there might be some advantage in keeping these services for a period of time.
At the moment, staff are employed by the Hosts. A goal of this proposal is that, in the long run, staff are directly employed by W3C, by a contract agency, or by a Partner.
Today, W3C works with both employees of Hosts and independent contractors, who may be working for multiple employers, or part-time, or for short duration. It is anticipated that this will persist. This means that in the future there could be both employees of W3C or Hosts, as well as contractors of W3C or Hosts. In the case of contractors, there appears less reason for them to stay at Hosts (rather than transitioning to W3C) so they should transition relatively quickly.
W3C expects the staff continuity issue to attenuate with time. First, it is anticipated that new W3C staff should be hired by W3C – not by the Partners. So the employment grandfathering applies only to current staff. Additionally, W3C is exploring registering as an employer in France, Japan, and China – so it might be possible to provide local benefits even to existing staff. This is still under exploration.
W3C’s goal is to provide equivalent benefits and to encourage its staff to leave the Hosts and join the legal entity. At this stage, as long as the details have not yet been worked out, it is unclear how this will turn out.
W3C plans to continue to have a global footprint; indeed to improve it by hiring more globally than today. However, in the immediate move to a US-based legal entity, there is a concern that there will be a perception that W3C is moving away from a global commitment. Certain governance characteristics: a global board; a commitment that the BoD track global staffing; diversity targets will help with this.
Continuing the relationship with the Partners is another key aspect of maintaining a global footprint. Today, W3C's global staff profile is enforced by a revenue module that distributes the revenue to four Hosts, and an underlying assumption that the Hosts will hire locally in their country. This has fared reasonably well in that the W3C staff is distributed across the world, but we are under-represented in some strategically important countries because we lack Hosts there. This problem could become worse in the future as the revenues centrally flow to W3C and W3C might not feel obligated to honor current hiring patterns by country.
But while operationally W3C management might not want to be obligated to hire globally, it is in fact essential to W3C being perceived as a global community.
Initially this should not be a problem since most staff in 2021 will be the prior staff of 2020. So it is a longer-term concern.
This will be addressed through oversight by the Board of Directors. Specifically, together with its annual budget, W3C will bring a global staffing plan to the BoD for their approval as part of the budget plan for the next year.
Today, W3C administers several different sets of HR policies and compensation policies based on the policies of the individual Hosts. While W3M tries to align practices as much as possible, in reality it is difficult to do in many cases. Hosts differ in their policies relative to hiring and firing, pension plans, vacation plans, merit compensation policies, etc. While most global organizations have regional variation to align with local compensation practices and local law, the degree of variation with W3C Hosts is not ideal.
Moreover, it is not clear that any of the Hosts have an appropriate plan for W3C. Hosts are large academic institutions. Their heritage in academia pushes against merit pay and favors long-term, tenure-oriented relationships. Their size encourages complex bureaucracy rather than the agility of a small organization. Performance reviews are very basic and could be improved.
Performance reviews are only one piece of the HR puzzle. A W3C legal entity requires a full set of employee benefits: medical plans, vacation and holidays, pensions, position levels, leave policies, staff development plans, etc.
Today, we have insufficient experience to recommend a detailed set of HR policies and Compensation policies. We have started to create a task force that looks at similar organizations or perhaps engages with HR consultants to recommend a set of HR policies and Compensation policies.
Some have raised a concern that the existing Hosts, in some cases, have provided compensation which is less than market rates to certain staff. This might be because the W3C staff is part of a larger university that may have compensation policies that do not keep up with the marketplace for hot web development skills. It is the objective of the new W3C entity to benchmark its compensation against comparable organizations and to ensure compensation is competitive in the marketplace. If in some cases an individual is below a competitive compensation, that would be adjusted over a period of several years.
Below is the transition plan for the W3C legal entity.
Note: After creation of the legal entity, there could be further organizational evolution. There could be subsidiaries of the legal entity in other geographies or the staff could exit the Hosts entirely. Design of these further phases is beyond the scope of this document.
Throughout the development of the legal entity proposal, the proposal is being modified (compensation, benefits, business development model, Systems costs, AC input) and we get a better sense of the availability of a reserve. In late 2019 there needs to be a final "go" / "no-go" decision based on whether a sufficient reserve has been built. Without sufficient funding, there is then sufficient time to either delay for one year leveraging the one year delay option in the current Hosting agreement, or entirely shelve these plans. In the latter case, we could keep the existing Hosting structure, and begin negotiating any changes in a three year Hosting agreement that is in effect from 1 January 2022 until 31 December 2024.
Once we have cleared the funding hurdle, the next step is to move beyond conceptual design and policy design, on to the mechanics of actually starting up the new organization, identifying the key people who move to the organization on 1 January 2021, and providing incentives to move. The Director, in conjunction with the then-serving CEO would make the determinations about the subset of Group 1 that is identified first. By late 2019, there is a core team (shadow new W3C) who have been identified to move, and have indicated that they want to move on 1 January 2021.
This core team determines the W3C budget for the first year. A key part of that is detailed split between W3C and the Hosts for the first year, commencing 1 January 2021. They identify their preferences for what fraction of the budget is spent on W3C, and what fraction for each of the Hosts. They identify which individuals they want to move to W3C (assuming there is agreement from the Hosts and individuals, as indicated above). They prepare incentives and determine who should be employees and who better fits as consultants. The core team may also involve other W3M people who are not transitioning to W3C in the first year.
Once this position is determined, approximately 1 January 2020, negotiations commence with the Hosts. It is anticipated that the negotiations complete by 1 April 2020. In general, the expectation is that W3C controls the budget in order to have the primary say in what work is done in W3C and what work is contracted to the Hosts. The Hosts might have preferences (e.g., some Hosts might want more budget to support more staff; other might want less budget if their priorities are moving away from W3C). But while the Host preferences are important input, we will not have succeeded in making W3C independent if the Host priorities dominate the W3C priorities in this negotiation.
Still, if there are major changes, the Hosts (and staff) need time to plan. That is the reason for making decisions nine months earlier, to allow everyone adequate time for planning.
While agreement in principle is achieved on 1 April, there are always unanticipated events that occur through the year. For example, W3C and the Hosts might have counted on some key staff person (employed by either of the two organizations) that chooses to leave midyear. So the final contract is not signed until December.
Once we are past 1 April 2020 there are no more complexities in launching the legal entity, but a fair bit of minutiae that is required to have a seamless operation.
We anticipate that we sign three year Partner Agreements (1 January 2020 to 31 December 2023). After the first three years, the text of the Partner Agreements might change.
As W3C staff will be distributed among W3C and the Hosts in the initial period, W3M in the initial state will have some staff that are employed by W3C and other staff that are employed by the Hosts. As part of the new agreements, each Partner will have an appointee to W3M who will fully participate in the consensus management of W3C.
Note, however, that while most decisions are made by the full W3M, and a small number (budget, reserve management) are handled by the BoD, there is also one set of decisions that is made by the W3M team minus the Partner representatives to W3M. W3C needs to negotiate with the Partner every year about the size of the budget that is allocated to the Partner to fund staff employed by the Partner. For W3C to be in control of their own agenda, this determination must be made without voting rights for the partner representatives.
W3C operationally wants to get to the new structure as quickly as possible and wants to move the Membership to the new Agreements as quickly as possible.
Members who have been paying annually to Hosts need to be notified sufficiently early that the 2021 invoice and payment is associated with the new legal entity.
Note: We still need to work out detailed timing. Typically, Membership revenue that is due on 1 January is billed the year before, and sometimes comes in the year before. We need a clean solution to deal with this boundary condition. Most likely, the solution will be to have existing Hosts take care of the 1 January billing cycle and credit the revenue to W3C as part of the overall rationalization of the multiple funding sources.
We recognize that some Members will be reluctant to sign on to a new structure or new IPR agreements. In most cases, if there is a choice between forcing the issue and possibly losing a Member, or finding an accommodation, we would not want to lose a Member.
Accordingly, in the implementation of the legal entity and in the construction of the contracts, there should be a temporary accommodation which allows us to snap back and have Members continue to renew the existing contract with the Hosts. We need to put the right incentives in place to get Members to move; not publicize this accommodation, yet have it available as a stop-gap to ensure we do not lose Members.
In no case, however, would new Members sign up with existing Hosts.
Some temporary accommodation considerations:
During the 2015 task force, when W3M imagined a 2019 starting date for the legal entity, it was envisioned that discretionary funds would gradually be reduced. However, with the various delays, and a projected starting date of 2021-2022 there is now a desire among the W3C membership to move more rapidly to the new structure.
As a result, the discretionary funds appear to be anachronistic. Currently, a Host can retain 9% of the dues paid to it. With W3C leaving the Hosts, there seems to be little reason to continue the 9% fee. This proposal therefore eliminates these fees so W3C can invest its resources on the web.
All W3C-related copyrights and trademarks will move to W3C on 1 January 2021.
It would be highly desirable if W3C can continue to be located at CSAIL; at least for some number of years. If CSAIL does not permit this, then W3C will find space elsewhere.
We anticipate that W3C would need to hire the Director as a consultant to cover his service to W3C.
During the initial period, some fraction of the W3C staff will still be employed by the Partners and not by W3C, and certain projects that are being executed on behalf of W3C will be totally within the responsibility of the Partners. The Partners will continue to be a key factor in the realization of W3C as a global community.
We do not believe that it is fair for the staff that continue in W3C to force them to leave their employers.
Long-term staff at W3C, who have been employed by the Partners for years or decades, and have accrued significant tenure and pension benefits at the Partner might have a preference to remain at the Partner if possible. Moreover, non-US staff might have a preference working for a Partner in-country, rather than the US-based W3C.
W3C and the Hosts have a mutual interest in ensuring smooth operation and smooth movement of staff from the Hosts to W3C. As mentioned above, there are numerous reasons that staff will want to remain at the Hosts or the Hosts will require the staff to remain - yet a portion of the staff will move to W3C. This should be done in a way that preserves W3C's ability to operate, is fair to staff, and works well for the Hosts. This will involve providing sufficient notice of intent.
Therefore, every year, on or about 1 January, the Hosts and W3C commence negotiations about which staff will transition to W3C the following year, and what funding is available for the Hosts. It is intended that this negotiation can complete by 1 April. This provides nine months of transition to allow staff to move and to work out the finer details of a transfer (incentives, pension arrangements, government contract requirements). It also provides the Host and staff ample time to make new plans if there is insufficient funding. It also gives time to plan for personal preferences.
The 1 April data is preliminary as changes may occur during a year. On 1 December the Hosts and W3C finalize the plans for the final year and contracts are signed. On 1 January, actual moves can take place.
For example, on 1 January 2020, the negotiations between the "shadow W3C" and the Hosts begin for 1 January 2021. By 1 April there is preliminary agreement, and by 1 December there is final agreement. On 1 January 2021, the negotiations begin between W3C and the Hosts for 1 January 2022.
We do not know where new staff added after 1 January 2021 will be employed. In some cases, where a large fraction of the staff's responsibility relate to contracts held by the Partners, it is possible that Partner personnel would be added to W3C through a contract with the Partner. At other times, the staff member, W3C, or the Partners might prefer that the staff member contract with W3C. For example, we do not know whether Partners will want to accept continued responsibility for long-term career planning, so many staff might prefer working for W3C. There appears to be ways to set up a staffing registration authority in some geographies who are able to hire locally, provide benefits, but who are not full subsidiaries.
The W3C legal entity will negotiate with Partners in good faith, and offer funding for those productive staff that choose to remain employed by the respective Hosts. While no guarantees are made, and there is no expectation of funding when inadequate budget exists, priorities change, or staff is non-productive, this does not change the general expectation of good faith. The fact that the global staffing plan requires approval by the Board of Directors and that each of the Partners are represented on the BoD provides effective oversight to this imperative.
When W3C, Partner, and the staff member all agree on an employment relationship (i.e., employee or contractor; contracted with W3C or with a Partner) we fulfill that mutual preference.
If either W3C and the staff member agree that the staff member should contract through W3C; or a Partner and staff member agree that the staff member should contract through the Partner, we would generally endeavor to satisfy the staff member even if the Partner (respectively, W3C) would prefer otherwise.
There may be situations where the Partner and W3C might want a placement for the staff member which is opposed by the staff member. For example, a staff member might have an interest in staying at the Partner where it will be easier to be a Principal Investigator for some research. Or a staff member might want to stay at the Partner for reasons related to pension. Or a staff member might feel a principal allegiance to W3C, but both W3C and the Partner feel that the staff member should stay at the Partner to complete commitments to an externally funded program
In all cases of conflict there needs to be dialog among the staff member, W3C, and Partner to arrive at as good a solution as possible. In some cases the organizations might provide incentives to the staff member to have them move to an employer that they do not prefer.
The exact timing of when staff moves from Partners to W3C; whether they ever move (or remain Partner staff); whether they move as employees or consultants is a very individual set of decisions. As mentioned above, individual considerations include: pensions, involvement in research, job function, and personal preference among other things. Nonetheless, from the perspective of W3C, there is a sequence which is a preferred sequence. Some functions (e.g., CEO, business development) are more essential to be moved into W3C earlier, whereas other functions which have more synergy with the Partners could remain longer at the Partners. So the following sequence is the preferred sequence of W3C; to be modulated by the individual interests of the people involved.
Most of the systems that W3C uses to support its work on standards will be the same in the new legal entity. And if there is natural evolution of the tool set required for the W3C Process, that will continue irrespective of this proposal and is not included in this proposal. There will be some work, especially if the systems will be physically moved from the Partners, but that is not considered a major investment.
However, there are considerable new systems support expenses for W3C's new organizational needs. We currently have task forces to assess the needs and estimate costs. As W3C looks for start-up funding, it will look not only for a reserve, but also for funding for one-time expenses associated with new support systems. Some considerations:
At all points of the process we need a clear communications plan. Throughout the next several years there needs to be regular communications and updates with our internal stakeholders (Membership, AB, Steering Committee, Team). There also needs to be occasional updates to the broader world. W3M, the CEO, and the Communications Team are responsible for timely updates to all.The communication plan should organize on behalf of all of our stakeholders:
While the development of this full plan is outside the scope of the current task force, as an example, we list some of the key messaging points:
This will be developed further after the Steering Committee approval of the legal entity direction.
For early discussion of some the motivation for a separate legal entity, as well as some useful criteria for this entity, see the 2009 legal entity task force intermediate report.
In 2015, a W3M/multi-host task force described a detailed proposal and plan to move W3C from its current Hosting agreement to a legal entity, commencing on 1 January 2019. Although the task force socialized a proposal with the W3C Hosts in the 2015-2017 time frame, it did not reach consensus soon enough to be operational by its intended date. That task force consisted of Jeff Jaffe (chair), Jean-Francois Abramatic, Daniel Dardailler, Mike Smith, Jun Murai, Osamu Nakamura, Naomi Yoshizawa, Angel Li, Ralph Swick, Veronica Thom, and Wendy Seltzer.
While there was a consensus in 2015 that it was time to create an independent legal entity, there was considerable caution about moving too quickly. The caution emanated from two sources:
If W3C becomes a legal entity it will need to incorporate somewhere. Either it incorporates in one place (in which case it loses some status as a global organization), or it incorporates in multiple places (which adds its own level of complexity and overhead).
In 2018, further discussion in the W3C community —involving Hosts, the W3C Advisory Board, and the W3C Advisory Committee— established there was rough consensus that the time had come to move forward with this proposal, even if there is not unanimous support.
This current document is essentially the same proposal as the 2015 W3M task force: W3C incorporates as a legal entity and maintains a formal contractual relationship with the four Hosts. Each Host thereby continues to provide a visible presence of W3C across the globe.
It has been updated to refer to new target dates, and to incorporate targeted modifications proposed by various stakeholders in the W3M community. There is one additional year available in the Hosting agreement should we need more time.
To summarize the schedule leading up to the proposed timeline:
The largest risks in moving to an independent legal entity emanate from losing the strong relationship with the Hosts. However, since this proposal assumes a continued partnership with the Hosts, the major risk mitigation is precisely that we will rely on such a continued partnership. Below we somewhat overstate the risks (almost assuming reduced relationship to the Hosts); but the mitigation is to make sure that the partnership with the Hosts remains strong. Throughout the document, then, we have carefully designed the new structure to maximize the autonomy of W3C, but at the same time maximize the partnership between W3C and the Hosts.
W3C should foster application and support of core Web standards to problems in key business sectors, when there is no more appropriate venue in which to do this. By including communities such as industry verticals W3C will broaden and deepen its Membership base.
In today's Host-based consortium, there is a global business development team. Revenue goes to W3C at a particular Host, the discretionary funds go to Host itself, and the staff is employed by the Host. This tends to skew the incentives towards having a high degree of focus on the local needs of a Host rather than the global needs of W3C. Some of business development is inherently local —so this is not all bad— but there are other ways to organize a business development function. There could be separate assignments by geography, by industry, by size (large or small members), by type of revenue (memberships, sponsorships, events), or various other criteria.
W3C has begun to create a business evangelist program, where independent business experts globally advocate for W3C membership and are paid on an incentive model.
W3C Offices play a vital role for W3C, in terms of connecting W3C to local web developers, translations, recruiting, and running local W3C events. Additionally, a fraction of new revenue that results from Members in country go to the Offices. In reality, some Offices are more effective than others. While most excel on translations and local outreach, there is wide variation in success for recruiting. We are already revisiting the Office model and how it relates to the new business evangelists.