[Editor’s note: The following is a guest editorial by Nat Cohen, offering critical insights into the establishment of Public Interest Registry and its intricate relationship with the Internet Society. While I may not endorse every conclusion drawn, I believe this contribution is vital for the ongoing dialogue surrounding the proposed acquisition of Public Interest Registry by Ethos Capital.]
The .org domain, a digital home for countless non-profit organizations, charities, and community initiatives, is at the heart of a significant controversy. Annually, the Internet Society (ISOC) generates substantial revenue, often tens of millions of dollars, through its stewardship of the .org registry, managed by the Public Interest Registry (PIR). This revenue stems directly from the registration and renewal fees of .org domain names. The financial allure of running the .org registry has grown so immensely that PIR has become an attractive acquisition target for private equity firms, most notably Ethos Capital. A critical aspect of this financial model is that a significant portion of ISOC’s revenue originates from non-profit organizations[1] that predominantly utilize .org domain names.[2] This arrangement raises profound questions about whether ISOC’s control over .org genuinely serves the public interest, as funds that could support vital non-profit missions are instead funneled into ISOC’s coffers. The system, intended to benefit a global community, appears to have transformed into a self-sustaining revenue engine for a select few.
Typically, a non-profit organization earns its funding through voluntary contributions, demonstrating its commitment to a worthwhile mission and prudent financial stewardship. For instance, organizations like Doctors Without Borders must consistently prove their effectiveness and responsible use of donated funds to attract and retain donor support. This transparent and voluntary funding model ensures accountability and aligns the organization’s financial health directly with its public service achievements. However, the funding mechanism supporting ISOC through .org diverges sharply from this established norm, creating a contentious financial ecosystem.
ISOC, in stark contrast, leverages its comparatively modest financial support of the Internet Engineering Task Force (IETF)—an entity where the vast majority of work is carried out by “thousands of volunteers from around the world”[3]—to justify extravagant compensation packages for its own executives. Simultaneously, it imposes an estimated $70 million surcharge on its base of .org registrants, while enjoying oversight of a public resource valued at over a billion dollars. The funds ISOC extracts are not voluntary contributions but rather compulsory payments from those who wish to utilize .org domain names.[4] This structure allows ISOC to spend considerable sums without needing to rigorously justify the efficiency or worthiness of these expenditures, operating with a concerning lack of accountability regarding its financial discipline. The inherent conflict between generating revenue from non-profits and then using a significant portion of that revenue for internal operational costs, rather than directly supporting the broader internet community or the IETF’s core mission, is a central point of contention.
ISOC’s Mission and its Financial Profligacy
ISOC’s stated primary mission revolves around supporting the modest funding requirements of the IETF.[5] The IETF functions as a critical Internet standards body, comprising thousands of dedicated volunteers[6] who generously contribute their time and expertise to achieve the IETF’s overarching goal of “making the Internet work better.”[7] Its activities typically include organizing three annual meetings, managing extensive mailing lists, and publishing essential Internet standards documents. In 2018, ISOC reported a $3 million contribution to the IETF.[8] However, a closer examination reveals that much of this contribution merely involved passing along external funds specifically earmarked[9] for the IETF.[10] This raises questions about the true extent of ISOC’s direct financial commitment to the IETF’s operational needs versus its role as a conduit for other donors.
In the same year, ISOC successfully generated over $70 million from its dominant control over the .org registry. Out of this substantial revenue, $18 million was disbursed to Afilias[11] for the technical operation of the registry, and an additional $2.65 million was paid in fees to ICANN. Despite these operational expenses, ISOC still levied approximately $93 million from .org registrants for the right to register or renew their domain names. This leaves a significant financial gap, prompting the crucial question: where did the bulk of the $70 million in surplus revenue actually go?
A detailed breakdown of ISOC’s expenditure reveals several key areas where these funds were directed, sparking debate over their alignment with the non-profit ethos of the .org domain:
- PIR Staff and Executive Compensation: Nearly $7 million was allocated to remunerate PIR staff and executives. While PIR contracts Afilias for the technical heavy lifting of running the .org registry, PIR itself handles critical functions such as marketing, registrar relations, and crucial lobbying efforts with ICANN to safeguard ISOC’s interests. PIR maintains a lean team of ten key employees, including top executives, each earning in excess of $200,000 annually. The combined compensation for the CEO position[12] alone surpassed $770,000 in 2018.[13] This stands in stark contrast to organizations like Doctors Without Borders, whose global scale and operational complexity far exceed PIR’s, yet its executive director received less than $300,000 in 2018.[14] This disparity highlights a contentious allocation of funds derived from the non-profit community.
- Vaguely Defined Initiatives: ISOC embarks on several broadly outlined initiatives, often described as “a bit of a hammer looking around for nails.”[15] These include efforts like promoting global internet growth in developing countries ($9 million), external communications ($4 million), policy briefings ($4 million),[17] outreach to new stakeholders ($2 million), and initiatives focused on internet security and “identity” as a core issue ($3 million).[18][16] While these initiatives may hold merit, their broad scope and significant funding raise questions about direct impact and accountability, especially given the source of the funds.
- General Staff Compensation: A substantial $17 million was expended on compensation for a staff exceeding 100 individuals in 2018.[19][20] This is a considerable payroll for an organization whose core technical operations are outsourced.
- Travel and Conferences: Approximately $7 million was dedicated to travel expenses and attendance at various conferences.[21][22] This level of expenditure on travel has also drawn scrutiny, questioning its necessity in achieving ISOC’s stated mission compared to direct support for the IETF or the wider non-profit community.
The Controversial Award of .org to ISOC: An “Insider Deal”
To understand the current predicament, it’s crucial to revisit how ISOC gained control of the .org registry. In the early 2000s, ISOC faced a severe “looming financial crisis,”[23] desperately needing funds for its own survival. Concurrently, ICANN was seeking a new manager for the .org domain and opened a bidding process in 2002.[24] ISOC was one of eleven bidders, but its initial performance in the evaluation process was notably weak. Bid evaluators assigned ISOC poor marks on the “good works” criterion, with its support for the IETF being its sole redeeming factor:
“The Committee notes that although it has made no commitment to support ‘good works,’ profits from the registry will go to ISOC. On the arguable proposition that support for IAB/IETF standards processes constitutes ‘good works’ we awarded ISOC a ‘Low’ ranking in this category rather than a ‘None.’”[25]
Furthermore, evaluators observed that ISOC’s perceived public support largely originated from within its own ranks:
“The Internet Society demonstrated support for its proposal by mobilizing its own membership and chapters. With one late exception, the British Computer Society, it does not seem to have sought or received organizational endorsements from outside of ISOC.”[26]
Another bidder, Unity, received significantly higher rankings from the non-profit constituency and garnered much broader support from the wider non-profit community than ISOC’s bid.[27] Despite this, ISOC possessed significant influence within ICANN. Many of ICANN’s founders and early leaders maintained close ties to ISOC. At the time of the .org bid process, the ICANN Board included Vint Cerf, a former head of ISOC, serving as Chair, and another ISOC member as Vice Chair.[28] Additionally, eight more ISOC members held positions on the Board.[29] Ultimately, the ICANN Board controversially awarded the .org domain to ISOC.[30][31]
Observers at the time widely condemned the outcome as an “insider deal.”[32] They astutely recognized that ISOC was proposing what amounted to a parasitic arrangement, where ISOC would extract revenue from .org registrants to fund its own operations: the “ISOC proposal nakedly says it will take money from .org registrants to support ISOC.”[33] This relationship was essentially perceived as rent extraction. As Bret Fausett pointed out in his ICANNWatch blog, “the idea that funds from .org registrants will be skimmed to support ISOC programs is not only bad policy but contrary to what the Board has previously expressed.”[34] This early criticism laid the groundwork for the ongoing debate about the ethical implications of ISOC’s control over .org.
The Evolution of a Flawed Funding Model: From Lull to Storm
In its initial years of managing the .org registry, ISOC imposed a relatively modest financial burden on registrants. The price of .org domain names was fixed at $6.00 for the duration of the 2003 agreement, essentially maintaining existing pricing levels.[35] In 2004, ISOC generated approximately $5 million in disposable funds,[36] contributing $1.25 million of this to the IETF. This meant that a respectable 25% of the funds at ISOC’s disposal directly supported the IETF’s mission. This period represented a comparatively stable phase, with ISOC’s revenue generation seemingly more aligned with its stated objective of funding the IETF.
However, as is frequently observed when ICANN renews registry agreements,[37] the terms negotiated between ICANN and ISOC during the 2006 renewal of the .org agreement fundamentally altered this dynamic. The renewed agreement led to increased revenue streams for ICANN itself and the registry operator, but critically, it imposed a significantly increased financial burden on registrants. This was done without their meaningful participation in the decision-making process and without any discernible increase in benefits for them. The 2006 .org agreement renewal introduced a new fee surcharge for ICANN and, more controversially, granted ISOC the power to aggressively increase .org prices by up to 10% annually.[38] Disturbingly, no safeguards were incorporated into the agreement to ensure that the amount of money extracted from .org registrants corresponded to the actual funding needs of the IETF. Nor did it link prices to operational expenses, meaning ISOC was not required to provide any justification for raising .org prices. The first such 10% price hike took effect on November 9, 2008, pushing the price of .org domain names to $6.75 (which included a $0.15 ICANN fee). Prices remained at this level for about two and a half years, until April 1, 2011, when ISOC again raised .org prices to $7.21.[39]
A significant shift occurred after 2011. ISOC developed a discernible appetite for extracting substantially more revenue from its control of .org. Consequently, .org prices were increased in 2012, 2013, 2015, and 2016, eventually reaching the current level of $9.93 per year. This continuous escalation, coupled with a growing number of .org registrations and sharply negotiated lower fees with Afilias for registry operations, resulted in an ever-expanding river of funds flowing into ISOC. By 2018, ISOC’s effective surcharge had skyrocketed to $75 million, a staggering fifteen-fold increase from the $5 million level observed in 2004. In stark contrast, ISOC’s contribution to the IETF had only slightly more than doubled, reaching $3 million. This meant ISOC was pocketing 25 times the amount it seemingly needed to fund the IETF, passing along a mere 4% to the IETF of the total funds it collected from .org registrants. This widening disparity starkly illustrates how the funding model had drifted far from its original intent, prioritizing ISOC’s financial growth over its foundational mission.
A Broken Funding Model: Exploitation and Mismanagement
The initial decision to award ISOC control of the .org registry as a mechanism to raise funds for the IETF, while potentially made with good intentions, has, after 18 years, unequivocally proven to be a funding model run amok. What began as a structure designed to provide a few million dollars annually to the IETF is now funneling more than $70 million per year in excess funds. The financial flow to PIR is projected to grow rapidly, even if annual price increases are limited to 10% per year, demonstrating an unchecked growth potential.[40] The colossal scale of these future cash flows is underscored by Ethos Capital’s valuation of PIR at a staggering $1.135 billion (even considered a “low end” estimate by some[41]).[42] This valuation is not merely a financial figure; it serves as a stark measure of the profound harm that ICANN’s current policies and the ISOC/PIR funding structure are inflicting upon .org registrants. The modest good accomplished by ensuring a volunteer-run organization covers a small budget shortfall[43] is completely overshadowed by the tens of millions of dollars of financial burden imposed annually on .org registrants to achieve this relatively minor objective.
ISOC’s capacity to overcharge .org registrants, facilitated by its control over PIR, has become dangerously unrestrained. This is a direct consequence of its perpetual control of the registry and the recent, highly controversial lifting of price caps. It is precisely this unchecked power to exploit .org registrants that has attracted the predatory interest of Ethos Capital. The very fact that a private equity firm views operating a namespace explicitly intended for non-profits as a compelling investment opportunity unequivocally demonstrates that this vital public resource is being grossly mismanaged. This situation represents a profound betrayal of the public trust and the foundational principles upon which the .org domain was established. While ISOC’s stated mission is to promote the Internet “for the benefit of all people throughout the world,”[44] a significant portion of the $70 million extracted by ISOC is being skimmed from charitable contributions. These contributions are intended for non-profits actively working to address some of the most pressing global social needs—including hunger, disease, climate change, homelessness, intolerance, and refugee crises, among countless other invaluable missions—as well as from the tithes and other donations made to religious institutions and local houses of worship. This diversion of funds from their intended benevolent purposes represents a moral failing within the current management structure.
A Call to Action: ICANN Must Restructure .org for the Public Good
ICANN must urgently recall its own mission[45] and purpose, and fundamentally restructure how the .org registry is managed.
ICANN bears an undeniable duty to act in the public interest. While blocking the sale of PIR to Ethos Capital is a necessary immediate step,[46] it is by no means sufficient. Ethos Capital’s interest in PIR is a symptom, not the root cause; it stems directly from the underlying defects[47] embedded within the .org registry agreement negotiated by ICANN. ICANN took a stable, vital, and growing namespace and dangerously destabilized it by removing crucial protections for registrants, thereby rendering them vulnerable to financial exploitation by the registry operator. Merely rejecting Ethos Capital’s purchase offer, without implementing further substantive reforms, would only perpetuate the current broken system. In this system, ISOC continues to extract enormous sums from .org registrants, dissipating these funds to enrich its own executives without providing a commensurate public benefit that justifies the immense resources consumed. The long-term stability and trustworthiness of the .org domain, a cornerstone of the non-profit world, are at stake.
It is imperative that the financial exploitation of .org registrants comes to an immediate end. The PIR/ISOC funding model, which has long since outlived its usefulness and become a conduit for excessive revenue extraction, must be dismantled. Now is the critical moment for ICANN to thoroughly rethink the entire operation of the .org domain. The objective must be clear: to ensure that .org genuinely represents and actively supports the non-profit community it was created to serve, rather than operating as a parasitic entity that drains resources from it. This requires a bold and decisive intervention to restore integrity, transparency, and public benefit to one of the internet’s most trusted domains. The future credibility of the global non-profit community’s online presence depends on it.
I extend my sincere gratitude to those who generously reviewed this article and provided invaluable feedback.
[1] For further details on this economic dynamic, refer to the analysis available on CircleID.
[2] In the United States, a significant majority of 501(c)(3) organizations host their websites on .org domain names, underscoring its importance to the non-profit sector. See also a detailed discussion on Domain Name Wire.
[3] As reported in ISOC’s 2018 Form 990, the IETF’s operations rely heavily on volunteers.
[4] This compulsory payment model is discussed in detail by Domain Name Wire.
[5] The historical context of ISOC’s formation highlights its initial purpose: “In contemplation of the need for a mechanism for aggregating funding from many sources, it was proposed to form an Internet Society and to use its resources, in part, to provide funds in support of IETF.”
[6] ISOC’s 2018 990 form reports the involvement of 4,096 volunteers, illustrating the IETF’s reliance on community contributions.
[7] The IETF’s mission statement clearly outlines its goal: “making the Internet work better.”
[8] The IETF’s 2018 budget document details ISOC’s contribution.
[9] For example, discussions at RIPE meetings indicate that RIRs contribute membership money to ISOC specifically earmarked for IETF support, suggesting a pass-through function.
[10] ISOC’s 2018 Form 990 (Part VIII, 1f) shows that $2.6 million in outside contributions and grants nearly offset ISOC’s $3 million grant to the IETF, implying that most IETF funding comes from dedicated external sources.
[11] Domain Name Wire reported on PIR’s significant reduction in registry fees paid to Afilias.
[12] PIR underwent a CEO transition in 2018, with an interim CEO serving for several months. The $770k figure represents the total salary and benefits provided to both the former CEO and the interim CEO in that year.
[13] ProPublica’s Nonprofits Explorer provides detailed compensation data for PIR.
[14] Doctors Without Borders’ 2018 Form 990 reveals its executive director’s compensation.
[15] The observation that “ISOC has a reputation for being a bit of a hammer looking around for nails” reflects a perceived lack of focused purpose.
[16] Figures reported here represent net expenses after accounting for grants given to other organizations, providing a clearer picture of ISOC’s direct expenditures.
[17] ISOC’s 2018 Form 990 outlines expenditures on policy briefings and other initiatives.
[18] The 2017 Form 990 provides a more detailed breakdown of “stakeholder” and “identity” initiatives, which were consolidated in the 2018 report.
[19] Compensation figures for 2018 are available in ISOC’s 990 report.
[20] ISOC’s website provides information on its staff numbers.
[21] Details on travel and conference expenses are included in ISOC’s 2018 Form 990.
[22] Ayden Féderline’s detailed Twitter thread offers an independent review of ISOC’s spending habits.
[23] ICANNWatch previously documented ISOC’s “looming financial crisis” in the early 2000s.
[24] The Request for Proposals for .org management in 2002 is archived on ICANN’s website.
[25] The NCDNHC evaluation report from August 2002 details ISOC’s low ranking on “good works.”
[26] The same evaluation report notes that ISOC’s support was primarily internal.
[27] The evaluation report also indicates Unity’s superior ranking and broader community support.
[28] Reports from ICANNWatch highlight the presence of former ISOC leadership on the ICANN Board.
[29] ICANN’s General Counsel’s report in 2002 acknowledged that “Ten of the ICANN Directors are members of the Internet Society.”
[30] Contemporary reports accused ICANN staff of manipulating evaluation results to favor ISOC’s bid, suggesting “lying with statistics.”
[31] ICANN’s General Counsel’s report addressed conflict of interest allegations, concluding no impropriety as Directors would not financially benefit directly from ISOC’s selection.
[32] The outcome was widely described as an “insider deal” at the time, as reported by ICANNWatch.
[33] Critics observed that the “ISOC proposal nakedly says it will take money from .org registrants to support ISOC.”
[34] Bret Fausett’s commentary, cited via Aaron Swartz’s weblog, criticized the policy of skimming funds from .org registrants.
[35] The 2003 registry agreement maintained fixed pricing for .org domain names.
[36] In 2004, ISOC generated approximately $5 million in disposable funds, defined as revenues exceeding payments to Afilias and ICANN fees, from a base of 2-3 million .org domain names.
[37] Domain Name Wire has also noted similar patterns of increased costs for registrants during other registry agreement renewals, such as for .com.
[38] The 2006 .org agreement renewal (effective 2008) introduced an ICANN surcharge and allowed for 10% annual price increases.
[39] An ICANN document from September 2010 provides details on the .org price changes.
[40] An analysis on Domain Name Wire estimates the potential cost of .org with 10% annual price increases.
[41] Lance Wiggs’ commentary suggests ISOC’s valuation might be on the “low end.”
[42] Domain Name Wire reported Ethos Capital’s $1.135 billion offer for PIR.
[43] As highlighted in footnote 9 and ISOC’s 2018 Form 990, much of the IETF’s funding comes from external, earmarked contributions, reducing ISOC’s direct contribution to a potential $400,000 shortfall.
[44] ISOC’s mission statement, as found in its 2018 Form 990, emphasizes benefiting “all people throughout the world.”
[45] The ASAE’s comment on the proposed .org registry agreement renewal clearly states: “ICANN’s mission is in part to preserve the operational stability of the Internet. Eliminating price caps and endangering the online credibility of the global nonprofit community is not consistent with ICANN’s mission.”
[46] The Register reported on the widespread opposition and “shambles” surrounding the .org registry sale.
[47] The ASAE’s comment articulated the “misguided rationale that registry operators of legacy gTLDs should effectively be treated as owners entitled to whatever fees they deem appropriate.” Additional comments from the Internet Commerce Association (ICA) and others further detail these underlying defects.