Foundations are used for purposes where democracy is not an issue
Yesterday, I read this email from Lars, a long time wikipedian. He gives a good description of the creation of the Wikimedia Foundation, back in 2002-2003, which I believe, completes pretty well the historical time I gave at Wikimania, with a focus on the membership issue.
I think it is worth copying below for historical purpose and to comment upon later.
There was a decision point back in 2002 or so, where Wikipedia was still more or less Jimbo's private property, and the question was where to put it. Many Germans and other Europeans wanted a membership association, but Jimbo went for a foundation. Later (in 2004) the German national chapter was structured exactly like the membership association (Verein) that they had wanted also for the international body. There is a fundamental difference between the two kinds of organization, but I think this was more clear to the Germans than it was to Jimbo or most Americans.
However, one fundamental requirement for a membership association was also missing. The word "Verein" means union, a get-together of equals. The corresponding verb "sich vereinen" means "to unite", to team up. And there simply was nobody who equalled Jimbo. The German Wikipedians could get together as equals to form their national chapter. Their elected board was only slightly more into Wikipedia than the rest. There was nobody there with the God-like status of Jimbo.
I think the only way Wikipedia could have been turned into a real membership association is if a global "chapter" of wikipedians had been formed in 2002, without Jimbo, and then started to negotiate with Jimbo about the future rights to domain names and servers. As we all know, this didn't happen.
This leaves Jimbo with the decision, and it is a fact that his position is more like that of Bill Gates, Andrew Carnegie, or Alfred Nobel. One day he finds himself in possession of something that should live on after him, and there really is little point in his family to inherit it. What do you do in such a situation? You start a foundation. Its bylaws is your last will. If a board member needs to leave, the rest of the board must find a new board member. Many newspapers are owned by foundations, so it makes sense for a web media venture as well.
The fact that two out of five board members should be elected by the community is merely a curious detail of the Wikimedia Foundation. This is not expected from a foundation. Foundations are used for purposes where democracy is not an issue. And in fact the Wikimedia Foundation works perfectly alright without democracy, as does the Nobel Foundation. The former only needs to keep the servers running. The latter only needs to find the best scientists. Both tasks can be accomplished with a handful of administrators and a network of experts. These small tasks are independent of the whole body of article-editing or science that they serve.