[arin-discuss] SPAM-WARN:Re: ARIN Fee discussion

[Andrew Dul]

>  -------Original Message-------
>  From: Bill Woodcock <woody at pch.net>
>  Subject: Re: [arin-discuss] SPAM-WARN:Re:  ARIN Fee discussion
>  Sent: 09 Oct '07 10:17
>  
>  
>  On Oct 9, 2007, at 10:54 AM, Owen DeLong wrote:
>  > Lee, is it possible to get some idea of what percentage of ARIN's
>  > annual costs are fixed and what percentage are incremental per
>  > allocation.
>  
>  This is something I've chatted with Lee and others about, and the  
>  consensus has been that that's a pretty gray area.  Not because the  
>  numbers aren't available; they are, in spades...  But because it's  
>  almost completely subjective as to which would be amortized per  
>  allocation, and which would be counted as overhead.
>  
>  The reason I've been asking the same question you are, Owen, is  
>  because I'd like to see ARIN move toward a fee model wherein all  
>  overhead costs, like the cost of maintaining whois, maintaining the  
>  in-addr, holding meetings, keeping the office doors open, et cetera,  
>  would be paid for from an endowment, while all transactional costs,  
>  like the cost of an IP analyst responding to a request for an AS  
>  number, would be billed to the recipient of the service, at cost.
>  
>  That would get completely away from the misimpression that there's a  
>  per-IP-address cost, and make the cost of ARIN's services, regardless  
>  of whether they're provided to a small member, a large member, an end-
>  user, or a legacy-holder, completely fair and transparent.
>  
>  Or at least, that's my take on what would be fair.
>  
>  Anybody have any thoughts on that?
>  

An endowment financing method certainly would be a large change from our current funding model, and it is one that should have some serious thought and consideration.  One can see how the use of an endowment to fund the overhead costs would be desirable from a long-term perspective.  However, funding of endowments can be tricky and a number of non-profits I have had exposure to have suffered from good intent with an initial endowment strategy, but over time the expenses increased such that the endowment was unable to support the expenses that it was originally intended to be used for or other changes in the environment changed the financial model of the organization.   One way that one maybe could help prevent endowment decay would be for the ongoing transactional costs to contain a portion which was earmarked for the endowment during the initial years of endowment funding.

As you noted above separating the overhead from the transactional costs can be complex and I think it would be hard to separate the overhead vs. transactional costs.  I believe it could be done though.

One other concern about this funding model would be the perception if someday ARIN had a "huge" endowment that was constantly growing such that the annual return from the endowment greatly exceeded ARIN's overhead expenses.  If that happened how would/could the excess income be used?   This maybe similar to the current (incorrect in my opinion) perception that ARIN currently may have a "huge & excessive" operating reserve.

Andrew