Bruce Fenton of the Bitcoin Foundation published on the reddit bitcoin sub an open letter detailing the much maligned Bitcoin’s foundation expenses. Sadly an organization that was created to help promote and sustain bitcoin instead stands as another black mark on the bitcoin PR list.
His reasons for the current financial collapse of the foundation:
1) a large drop in Bitcoin value costing millions of dollars – the peak foundation assets were calculated based on a Bitcoin price in the $800 range — so, had they simply held those coins it would have seen the $6-7 million fall to $2 million or so
2) ridiculously wasteful and reckless spending
3) reasonable and legitimate expenses such as Gavin and dev salaries
Lets be real, the reason the foundation is in the position it is in, is #2
When you look at the Salaries being paid out in 2014, during the start of Bitcoin bear market.
Gavin Andresen: $147k. Chief Scientist. Salary down from $209k (salary was higher in 2013 as it was pegged to BTCUSD)
Jodie Brady: $141k. COO of the Foundation, who also served as CFO at CoinLab (Peter Vessenes’ affiliate company).
Jon Matonis: $137.5k through “THE HOLE OF ROY LLC”. Salary up from $31k. Jon Matonis acted as Executive Director up to October 2014.
Patrick Murck: $115k. Executive Director of the Foundation (as of November 2014). Salary up from $57k.
I’ve seen less executives at an all hands meeting in a Fortune 500. The fact is the foundation with a 7 million trust during Bitcoin’s all time high was a tiny organization, smaller than your local dry cleaner chain. Yet everyone had six figure salaries.
Then wasteful spending on conferences and PR, which at a minimum should actually be opportunities to fund raise.
“LOCAL PRODUCER” was paid $790k to host Bitcoin 2014 in Amsterdam.
Apple Fundraising Consultants were also paid $123k for activities related to the aforementioned conference.
THEPOLICYCOUNCILCOM INC as the Foundation’s ‘Global Policy Counsel’, paid $114k for about 9 months of work in 2014.
And the breakdown of the functional expenses, oh, so many expenses: Office Expenses: $39k up from $8k in 2013.
Information Technology: $158k up from $67k
Travel: $159k up from $69k
Occupancy: $18k up from $7k.
Accounting: $50.5k up from $9.1k.
Legal fees: $220k up from $161k.
Other: $653k, consisting of:
Professional services: $307k
Public relations: $93k
Executive Directory Compensation: $137.5k
Professional event expenses: $115k
Other salaries and wages: $471k up from $72k
Sure hindsight is 20/20 but there were plenty of voices calling for audits, and tighter control of bitcoin foundation spending for several years. It’s also clear that those placed in charge of the foundation had no experience in managing a charitable organization who needs to rely on its donors. Rather than build trust with the community bridges where burned at every opportunity.
The foundation took in revenue of less than a $1 million dollars.
Revenues : Membership dues: $335k down from $358k Conference revenue: $584k up from $337k At the end of 2014 not much was left: $366k.
It spent over 50% of its revenue on the salaries of 4 people? Is that even in compliance with 501c3? One of the criteria the IRS uses is to outline compensation for executives is the Budget of the charity
Sorry but I can’t imagine that consuming that much on Executive Compensation is justified.
The Bitcoin Foundation was a giant pass through to a select group of people