Transparency, Openness, and Our 2020 Financials

Every year, as required by U.S. federal law for 501(c)(3) nonprofits, the Tor Project completes a Form 990, and as required by contractual obligations and state regulations, an independent audit of our financial statements. After completing standard audits for 2019-2020,* our federal tax filings and audit are both now available. We upload all of our tax documents and publish a blog post about these documents in order to be transparent.

Transparency for a privacy project is not a contradiction: privacy is about choice, and we choose to be transparent in order to build trust and a stronger community. In this post, we aim to be very clear about where the Tor Project’s money comes from and what we do with it. This is how we operate in all aspects of our work: we show you all of our projects, in source code, and in periodic project and team reports, and in collaborations with researchers who help assess and improve Tor. Transparency also means being clear about our values, promises, and priorities as laid out in our social contract.

This year’s version of the financial transparency post is a bit different than past iterations: we hope that by expanding each subsection of this post and adding more detail, you will have an even better understanding of the Tor Project’s funding, and that you will be able to read the audit and Form 990 documents on your own should you have more questions.

*Reminder: We no longer tie our tax filings and our audits to the calendar year; instead our fiscal years run from July through June. We made this change in 2017 because following the calendar year meant that our fiscal years were ending right in the middle of fundraising season (December), making it harder to plan budgets.

Fiscal Year 2019-2020 Summary

The last few years have been bumpy financially for the Tor Project, but at the end of 2019 and beginning of 2020, we began stabilizing. You helped make this possible by contributing to an incredibly successful 2019 year-end campaign, raising more funds than we ever had before during a year-end campaign up to that point. We were looking towards rebuilding our reserves after having to use them to cover expenses in 2017 and 2018. 

Then, of course, the COVID-19 pandemic changed the world. Individual donations took a drastic downturn, events (where we raise donations at booths) were canceled for the rest of the year, and foundations shifted their funding strategies to stabilize their current grantees. Some foundations even completely halted their giving for the year. 

Despite all of these challenges, we ended the financial year (June 2020) in a stable place.

Revenue & Support

Tor’s total revenue and support in fiscal year 2019-2020 was a bit under $4.9 million. Take a look at page two of the audit:

Screenshot showing the Tor Project Revenue and Support for fiscal year 2019-2020

You can see that “Revenue and Support” is broken into five different categories in the audit documents: most categories are more or less self-explanatory, but let’s talk about in-kind contributions. In-kind contributions are donated services or goods--like translation completed by volunteers, website hosting, donated hardware, and contributed patches. This year, we counted $450,705 in donated services: that’s 2,490 hours of software development, 1,203,719 words translated, and roughly $96K in cloud hosting services. Clearly, Tor would not be possible without you. Thank you!

Because in-kind contributions don’t equal actual money in the bank--but instead equate to value assigned to donated services and goods--think of the $450,705 in-kind contributions as the “Support” portion of the Revenue and Support category. Consider the remaining $4,400,782 in this category as the “Revenue.”

In the 2019-2020 fiscal year, our “Revenue and Support” was less than the previous fiscal year by about $700,000. On the surface this might seem scary, but this reduction in revenue and support also comes with a reduction in expenses and a reversal of unsustainable spending of our reserves. Here’s a comparison, where you can see that in FY 2018-2019, we had to spend a significant amount of our reserves. In FY 2019-2020, we actually increased our assets slightly, despite all of the challenges related to COVID-19.

Financial Year

Income

Expenses

Change in Net Assets

July 2018 - June 2019

$5,606,013

$6,188,913

($582,900)

July 2019 - June 2020

$4,851,487

$4,811,399

$40,088

Government Support

We get a lot of questions (and see a lot of FUD) about how the U.S. government funds the Tor Project, so we want to make this as clear as possible, and show you where to find this information in the future (or for previous years) in these publicly-available documents.

Let’s talk specifically about which parts of the U.S. government support Tor, and what kind of projects they fund. Below, you can see a screenshot from the Tor Project’s FY 2019-2020 Form 990 on page 42, where we’ve listed all of our U.S. government funders. You will find text like this in all of our Form 990s.

Screenshot of government support sources for the Tor Project in our 990

Now, we’ll break down which projects are funded by each entity and link you to places in GitLab where we organize the work associated with this funding.

U.S. State Department Bureau of Democracy, Human Rights, and Labor ($752,154)

  • Project: Empowering Communities in the Global South to Bypass Censorship
    • Description: This ongoing project’s goal is to empower human rights defenders in the Global South by improving censorship event detection and reporting, ensuring users have the best options for their needs to bypass censorship, and informing human rights defenders when censorship is happening and how to bypass it.

National Science Foundation + Georgetown University ($98,727)

Open Technology Fund ($908,744)

Institute of Museum and Library Science + New York University ($101,549)

  • Project: This funding passed through the Tor Project to Library Freedom Project to deliver the Library Freedom Institute. 

Defense Advanced Research Projects Agency + Georgetown University

For even more about how government funding works for the Tor Project, consider reading our previous financial transparency posts, as well as Roger’s thorough comments on these posts.

Other Grants & Contracts

Of the remaining 47% of our revenue, about 26% comes from non-U.S. governments, foundations, other nonprofits, and corporations.

Many of these contributions are in the form of restricted grants, which means we propose a project that is on our roadmap to a funder, they agree that this project is important, and we are funded to complete these projects. Some examples in this category include DIAL Open Source Center’s support of Tor Browser ESR migration work, Zcash Foundation’s support of our project to write the specs for Walking Onions, and RIPE NCC’s support of our work to improve IPv6 support on the Tor network.

Also in this category are unrestricted funds, like support from Media Democracy Fund, Craig Newmark Fund, and FOSS Responders. These unrestricted funds are not tied to a specific project, which means we can use this funding to respond and develop our tools in a more agile way.

Unrestricted funds also include contributions from corporations, and is where you will find membership dues from our members. In the 2019-2020 fiscal year, you’ll see contributions from our first two members, Avast and Mullvad! We haven’t listed every single entity you will see in our Form 990 in this blog post, but we hope you have a better understanding of what you might find in the Form 990. Please explore these documents to learn even more!

Individual Contributions

Individual contributions come in many forms: some people donate $5 to the Tor Project one time, some donate $100 every month, and some make large gifts annually. The common thread is that individual donations are unrestricted funds, and are the most important kind of support we receive. Unrestricted funds allow us to respond to censorship events, develop our tools in a more agile way, and ensure we have reserves to keep Tor strong in case of emergencies (like what happened in 2020, with COVID-19.)

In the 2019-2020 fiscal year, you contributed $890,353 to the Tor Project in the form of one-time gifts and monthly donations. These gifts came in all different forms (including ten different cryptocurrencies, which are then converted to USD), and come together to equal our greatest individual fundraising year in our history. Thank you!

Expenses

OK, we’ve told you how we get funding (and which documents to look at to learn more). Now what do we do with that money? You can find that information on page four of this year’s audit.

Screenshot showing the Tor Project's expenses

We break our expenses into three main categories: 

  • Administration: costs associated with organizational administration, like salary for our Executive Director, office supplies, business insurance costs;
  • Fundraising: costs associated with the fundraising program, like salary for fundraising staff, tools we use for fundraising, bank fees, postal mail supplies, swag; and 
  • Program services: costs associated with making Tor and supporting the people who use it, including application, network, UX, metrics, and community staff salaries; contractor salaries; and IT costs.

In the 2019-2020 fiscal year, 90.4% of our expenses were associated with program services. That means that a very significant portion of our budget goes directly into building Tor and making it better. Next comes fundraising at 6.4% and administration at 3.2%. 

Chart showing the percentage of expenses are associated with program services

According to Charity Navigator, technology nonprofits for which program services make up more than 82.5% of their expenses receive the highest “financial health” score in their ranking system. This means that we’re meeting and significantly exceeding the “industry best” for tech nonprofits. We’re proud to show that our work is both efficient and effective.

Ultimately, like Roger has written in many past versions of this blog post, it’s very important to remember the big picture: Tor's budget is modest considering our small staff and global impact. And it’s also critical to remember that our annual revenue is utterly dwarfed by what our adversaries spend to make the world a more dangerous and less free place.

In closing, we are extremely grateful for all of our donors and supporters. You make this work possible, and we hope this expanded version of our financial transparency post sheds more light on how the Tor Project raises money and how we spend it. Remember, that beyond making a donation, there are other ways to get involved, including volunteering and running a Tor relay!

I've tried reading financial statements from the Tor Project before just for the lols. But because of how hard to read they are the lols quickly diminish, so this blog post is appreciated.
I like the section that goes into detail about US government funding, partly for my own curiosity but mainly because it's a good place to point people to when they ask the question about the US government's involvement with Tor that you've been getting asked for 15 years.

Bernd

July 10, 2021

Permalink

Please post the news from a staff member of DUCKDUCKGO that v3 is now available and should be switched to especially within Tor Browser:

While the following is given:

https://duckduckgogg42xjoc72x3sjasowoarfbgcmvfimaftt6twagswzczad.onion/

For some reason I couldn't get it to work until I added "html" at the end:

https://duckduckgogg42xjoc72x3sjasowoarfbgcmvfimaftt6twagswzczad.onion/…

From the news post here:

https://old.reddit.com/r/duckduckgo/comments/oc07wj/news_duckduckgo_sea…

posted by DDG staff member https://old.reddit.com/user/tagawa

Please approve this message, it's important!

Bernd

July 10, 2021

Permalink

Cool! But one small objection:

> Tor's budget is modest considering our small staff and global impact.

The sentence itself is fine.
But when you talk about Tor's global impact and compare it with the spent money then actually you need to add to the calculation all the money relay operators spend because they are the ones that back a lot of this global impact.
(Let's forget about users in this calculation because their global impact is even more uncertain and impossible to guess into money).

So we have about 8000 relays and bridges.
The average relay probably costs between 5 - 15 € a month.
That's about 40.000 - 120.000 € a month for the whole network so about 500.000 - 1.5 million € a year.

So about 10 - 30 % of the torprojects budget is what relay operators all over the world are spending for providing the services you guys are producing.

Bernd

July 12, 2021

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I find it interesting that the bulk of government-related grants are from the Open Technology Fund and the Bureau of Democracy, Human Rights and Labor. Critics of Tor usually claim government direction is coming from attack organizations like military, police, surveillance and spy agencies, crypto backdoor advocates, etc. But these financials show a nearly 3 to 1 ratio of government funding from soft-power diplomatic, anti-censorship, and apparently constructive organizations.

The financials list government organizations only in the United States. Are governments besides the United States funding Tor Project?? It is a worldwide project after all. The amount of relays in Germany rivals the amount in the United States, and the amounts of relay users and bridge users whose autonomous system (AS) appears to be in Russia, Germany, and Iran rival the amount in the United States.

Bernd

July 12, 2021

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Sorry. I asked if governments besides the US are funding TP. Further down, the report says, "Of the remaining 47% of our revenue, about 26% comes from non-U.S. governments, foundations, other nonprofits, and corporations." Thank you! I wish the funding was more even between countries, though, to balance potential influence.

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