The second is more severe. WMF is a non-profit charity. It is entirely dependent on donations. These donations have been sent in the expectation that they shall be used to pay computer centre costs, connectivity costs and similar for Wikipedia and other WMF projects. Secondary to that, there is an expectation that they can be used to pay reasonable other costs (for, say, a small amount of travel, copying expenses, accountancy costs for annual tax reports and the like). If, as is alleged, Jimbo has tried to get WMF to pay for massage parlour visits, expensive dinners, maybe household equipment for the Wales household and other non-reasonable costs (either because they're outside the remit of what WMF deals with or that they, while related, are unreasonably high), this is a severe breach of trust.
As has been mentioned, Jimbo is the figurehead of Wikipedia. Wikipedia is heavily based on trust (readers must trust that any single Wikipedia article is factual; editors must trust that people have done a best-effort to verify edits to articles; there is also a whole lot of trust that the more central editors (whatever we call them) will apply procedures and policies in a neutral matter). If the head of Wikipedia is breaching the trust invested in him, how will this effect Wikipedia, WMF and (to some extent) Wikia, Inc?
In the short term, it will probably not make a large difference. There might be people (like me) who will consider and re-consider possible donations to WMF, as there is allegations of inappropriate use of funds. The fund-raising FAQ states that the primary uses for donated money are:
First, we need money to keep our projects online: to pay for servers, bandwidth, office space and other necessities. Second, we want to focus more attention on program development, particularly in communities underrepresented in the projects, some of which have little or no access to educational resources. For example, in early November we will hold several Wikipedia Academies in South Africa, with the hope of increasing the number of Wikipedians contributing in African languages. We hope to do more of this kind of outreach work. Our operating budget for 2007-08 is USD 4.6m. You can see how it will be spent on our budget overview page.To my mind, none of the out-of-line things Jimbo is alleged to have asked to be reimbursed for fall within this limit. They also do not fall within what I'd consider reasonable amounts, where they do fall within the category of reasoably reimbursable activities.
That would be one example of "reasonable reimbursment of activities outside the core", since there was a lot of boring work that needed doing, a limited pool of volunteers to do the work and rather severe problems arising if the work was not done. Typical activities would be envelope stuffing for recruitment campaigns, putting up new wallpaper (including a wall that needed reconstruction in parts), re-wiring the office (under the supervision of a certified electrician, of course) and other things that needed doing, but wasn't necessarily that fun.
To repair the trust that has been broken would require that it is either comprehensibly shown that there were no inappropriate use of WMF funds and (if there were) adequate measures are taken to ensure that there will be no further (and to the extent possible, legal measures to deal with any that have happened). To my mind, the first would require a thorough audit, by an independent auditor, with the auditor's report being available to (at minimum) all donors within the audited period or (ideally) available to anyone.
Of course, a proper audit, by an independent auditor, is not necessarily cheap, but I think it is money well spent, if it does, in fact, rebuild broken trust and stops it from being broken in the future. While there have been public statements to the fact that there have been no financial misuse, I honestly do not find it very compelling to trust WMF saying "we are squeaky-clean" (thus the need for an independent auditor).
As far as future controls go, I would, personally, want two people to sign off on any reimbursment. When I was active in non-profits, anything paid out needed two signatures, one from the treasurer and one from a controller. Both of these have a veto and in the case of a dead-lock (one wants the payment to be processed, the other thinks it shouldn't) the question is either taken up at a board meeting or the payment is simply stopped. It is, nonetheless, placed on hold until such a time a firm decision to pay or not has been reached.
Having been in the position to actually having had to say "no" to a reimbursment to another board member, I know it is not an easy decision, but it is one that sometimes has to be made (of course, you need a third person to vet any reimbursment to either the treasurer or controller).
This is the first released version, so there are no previous versions. The author can be contacted at ingvar@hexapodia.net
This is one of Ingvar's essays