Are non-profits in the US allowed to hoard cash long-term?
In the UK, spending on furthering their charitable purpose is expected to roughly match income over the medium term. There are carve-outs for specific types of "permanent endowment" (and even there, spending is meant to match the investment income) but it wouldn't cover anything like Mozilla's commercial agreement with Google.
Having worked for a non-profit many years ago as an office monkey who, among other things, took notes on finance committee meetings, it's typical to have some operating reserves that you can measure in terms of how many months or years of your operating expenses they could cover. This is a common financial stress test used to assess the financial health of organizations. Given Mozilla's singular dependence on Google search and pressure to diversify income streams, it's their firewall in case of emergency. And frankly the simple return on investment from their endowment year to year is one of the strongest non-Google revenue streams at their disposal right now.
If armageddon came and they no longer had their search revenue, they could cover 2 years of their operational costs. Many organizations have endowments that cover them for anywhere from 5 to 20 years. What I understand off the top of my head is that their major spending categories are software development, "operations" which is largely infrastructure to support that development, legal, and marketing.
I could see the case for not spending so much on marketing, but it would be organizational suicide to deficit spend away their endowment, their one firewall against existential threats, on "engineering" without a credible road map to long-term sustainable income that's better than what they're already doing. In fact if you catch the HN comment section on the right say, such behavior would probably be pointed to as yet another example of wasting money on unfocused side bets, because at the end of the day the mob truly can't decide what it wants.
And who knows maybe this "spend it all down on engineering + ??? + profit" plan could work, but that would be extremely risky and would hinge on the details of a plan. But I don't feel like I'm hearing a plan so much as vibes. I would actually turn the tables on this whole entire interpretation and say what they spend relative to their market share, they're actually punching above their weight compared to Google, and that this criticism of "hoarding" is not grounded in financial literacy.
The whole argument is that Mozilla is using their money incredibly inefficiently, and a good chunk of that is putting money into the pockets of the people managing it.
They claim to be putting $220 M/year into software development, but can't sponsor Servo even at $1 M/year? I call bullshit.
Well I did just give you four paragraphs extensively elaborating on the strategic value of having an endowment, and how strategically fundamental it is to the long-term health, health of any organization and how it's consistent with financial management you see at typical Western non-profit institutions.
I actually think you're right that they should have kept Servo, but that doesn't sustain the charge that is smart to not have an endowment or spend down their endowment for no reason. Most of your questions are financial literacy issues in response to standard non-profit disclosures rather than legitimate critique of strategy.
They're maintaining 32 million lines of code, same as Chrome, on dramatically less resources. So if the question is how they manage to be so much more efficient in terms of ratio of resources invested to production capability (or insert preferred metric, LoC, market share, code line commits, security updates etc), I think it likely comes down to the breakthrough efficiencies of Rust, which they developed.
Rust was the backbone of Quantum, their monumental overhaul and modernization of the Gecko engine. Mozilla is way ahead of competitors in shipping production Rust code. Google is in C++, but taking baby steps toward also implementing Rust in bits and parts but with lots of security containering and interfacing with C++.
This is not correct. Servo predated Quantum. Quantum was never abandoned, it was completed and integrated into Firefox. Quoting from their page on Quantum:
>Firefox Quantum was a revolution in Firefox development. In 2017, we created a new, lightning fast browser that constantly improves. Firefox Quantum is the Firefox Browser.
Quantum took modernizations that were started as part of Servo but integrated them into Gecko, where they continue to live today. They include Stylo as you noted, but also WebRender, Quantum DOM, Quantum Compositor, Quantum Flow, as well as a host of rust libraries and tooling.
Firefox’s responsiveness, GPU acceleration, and memory-safety improvements are directly attributable to Servo's research being folded in.
So it is in fact getting the benefits I stated. In fact it demonstrates that Servo succeeded after all: the fruits of it were harvested, brought into Firefox and are a key demonstration of Mozilla punching above its weight with smart investments allowing them to be more efficient than Google.
Edit: The reply below is largely unresponsive, not acknowledging factual inaccuracies, and repeating points that have already been addressed. As I already explained, Firefox benefits from Servo to this day. The end of its support is regrettable but not a scandal nor even a demonstration of inefficient use of resources. Its benefits were rolled into the core browser which is maintained at a fraction of the cost of its competition.
There was a time when Mozilla worked on what is being now pushed forward under the Servo umbrella. 2017 was 8 years ago. Then in 2020 Mozilla laid off 250 employees, including pretty much all of the developers of Servo/Quantum and their security team.
And now Mozilla is sitting on that cool $1.3 B, burning $220-500 M/year on "software development" without telling anyone what it actually is doing with that money, and putting $0 into Servo.
But the Mozilla Foundation's purpose is "protect and improve the Internet as a public resource, open and accessible to all".
It's not clear to me why that requires a sizeable team of developers - surely they'd be better off working for MoCo (the commercial subsidiary who make the browser and who provide a large portion of the MoFo's income)?
MoFo's activities are centred on philanthropy and advocacy. You'd expect most of their staff to be experts in things like community engagement, policy research and development, grant-making, campaign strategy, volunteer welfare, reporting & transparency, and management of investments.
Sure, there'll be some engineering needed to support that, but it shouldn't be their core focus.
Why is it that the Mozilla Foundation was set up in such a way that it cannot fund the core browser development activity? Other foundations do fund software development for their respective projects, e.g. the FreeBSD Foundation [1] and the Python Software Foundation [2].
The MoCo/MoFo split happened for a reason: a non-profit couldn't do the big commercial deals that became available to MoCo.
If you went back to the pre-2005 situation, in which MoFo was all there was, it would have at most low single-digit millions in the bank rather than a billion. The AOL dowry was only intended to last a couple of years, and there's simply no way it could have sustained development of the browser beyond that. The Phoenix would have been consumed by the flames, and we'd be left with a stagnant IE/Chrome duopoly.
On the linked report above I'm seeing software development as about 52% of their expenses. And many of the other expenses, eg "General and administrative", I understand to be support infrastructure for software development. This would seem to fit the meaning of "most" on my read.
Saying "Mozilla doesn’t itemize expenses" is like saying a university's annual financial report is hiding cafeteria costs because it doesn’t list fruit cups separately.
Large nonprofits publish consolidated, high-level statements that group expenses by broad function, not by department or line item because that's the correct level of financial reporting for external audiences.
If they misrepresented their spending that would be flagged by the independent auditor. It's deeply responsible to accuse them of hiding something when you have no baseline concept of standard disclosures.
>we'd actually benefit more from refocusing it into software (like it used to be).
Firefox was spending $40MM on software and development in 2009. Adjusted for inflation that would be ~ $60MM today. They're spending upwards of $262MM today. So they're spending more than quadruple what they used, to directly on software + development.
Worth noting that Mozilla Corporation (which I believe is the entity that has the contract with Google) is a for-profit organisation wholely owned by Mozilla Foundation which is the non-profit.
In theory, it feels like that ought not to change anything regarding the legal situation, but I bet it does.
In the UK, spending on furthering their charitable purpose is expected to roughly match income over the medium term. There are carve-outs for specific types of "permanent endowment" (and even there, spending is meant to match the investment income) but it wouldn't cover anything like Mozilla's commercial agreement with Google.