GDPR is not the only hot topic at the ICANN 61 meeting in Puerto Rico. Discussion of ICANN’s financial condition has taken up a significant fraction of the meeting time as well. It is no secret that ICANN is in a bit of a financial slump. The organization spent a ton of money on getting out from underneath U.S. government oversight (only to walk squarely into apparent EU government oversight in the form of GDPR and its effects on WHOIS). ICANN spent millions and millions of dollars on that effort. That politically driven spend, combined with lower than expected new gTLD revenues and rising travel and staff cost, ICANN no longer has a reserve fund appropriate for an organization of it’s size. Let me repeat that for effect: The organization responsible for the security and stability of the Internet’s infrastructure has an insufficient reserve fund.

ICANN’s plan is twofold—cut expenses and find other money. Cutting expenses is hard and it will take time to build up the amount of money needed. The other idea is to find other money and specifically to find money in the pot of auction proceeds. What are auction proceeds? These are the amounts that applicants had to pay ICANN when they applied for a domain name, which ICANN considered similar to another application. The party with the most money won (or lost, depending on whether the applicant had to pay the auction price when it believed that a third party applicant was squatting on its trademark rights by applying). There was a silver lining in that the Applicant Guidebook made it pretty clear that the auction proceeds were to go to a good cause and not to ICANN’s pocket book:

“Possible uses of auction funds include formation of a foundation with a clear mission and a transparent way to allocate funds to projects that are of interest to the greater Internet community, such as grants to support new gTLD applications or registry operators from communities in subsequent gTLD rounds, the creation of an ICANN-administered/community-based fund for specific projects for the benefit of the Internet community, the creation of a registry continuity fund for the protection of registrants (ensuring that funds would be in place to support the operation of a gTLD registry until a successor could be found), or establishment of a security fund to expand use of secure protocols, conduct research, and support standards development organizations in accordance with ICANN's security and stability mission.”

In fact, the ICANN community set up a cross community working group to look into the best way to spend those funds, but now ICANN has put forth a proposal to take those funds and stuff them into the reserve fund. A public comment period has been opened on the topic. In various public sessions here at ICANN 61 in San Juan, ICANN’s finance staff have made it clear that the amount of money involved will be tens of millions of dollars (in fact it could easily be a majority of the auction funds that are not currently subject to litigation). It will be interesting to see if ICANN sticks by its initial public interest principals when it segregated these funds outside of operations, or if the enormous cost of getting away from U.S. government oversight will weaken the ICANN Board’s resolve.