Four months ago we launched Liberapay, a recurrent donations platform whose primary goal is to help fund the development of free software. In this post we explore why that’s difficult, and the solutions we’re proposing for the two steps of the process: getting the money, and distributing it.
Many projects have trouble with the fundraising itself.
A big reason is that there are psychological barriers on both sides (the open source projects on one hand, and their users on the other).
In the eyes of many people donations are not a valid business model. To some of them it even feels like begging. Our answer to that is simple: seeking donations isn’t asking for charity, it’s more like allowing the customer to choose the price of the service. It’s pay what you want, and there’s nothing wrong with it, in some ways it’s even better than other pricing schemes.
On top of that, a few questions often go through someone’s mind when they’re asked to donate. Why pay for something I already have for free? Why should I fund this when others don’t? Is my money going to be wasted? How much should I give? These are all valid questions that need to be addressed.
Liberapay can help overcome some of the obstacles that stop people from donating. For example, we have “standard” donation amounts to help users who don’t know how much to give. We also provide visibility into how much everyone receives (except users who opt-out), and we’re planning to help creators tell donors about the work their money funded, because we believe that transparency and accountability are two key ingredients.
Corporate sponsors are another important piece of the puzzle, as they can make bigger contributions than individuals. Like the creator of Open Collective recently noted, a good way to convince businesses (and nonprofits) to give back to the projects they rely on is to offer them visibility in return, by publicly thanking them, on the project’s website and in its README. Unfortunately the anonymity of donations on Liberapay is currently preventing our users from thanking their donors, we’re going to fix that.
We’ve also identified another hurdle: information circulates badly in the open source community, especially when it comes to money. There’s no social network you can use that will keep you updated on which projects need funding. To address this issue we’re trying to build communities, to bring people together and keep them informed through newsletters (those aren’t operational yet).
Distributing the funds
So you’ve found people to support your work, great, now what? Any sizeable project has multiple contributors, and determining who should get how much is a big challenge.
To solve it we’ve come up with an innovative way to distribute donations to contributors: a team system that allows members of a project to share income, without having to set up a legal entity, and without creating resentment.
The basic principle is very simple: each member decides every week how much of the team’s income they take! We call that “take-what-you-want” remuneration. There is no hierarchy, not even an owner with special powers. The amounts are public, so everyone can see how much each team member is taking.
This might sound crazy, but it actually works, and since every member “votes” on how to share the money, the repartition is reasonably fair and resentment is minimal.
To bypass the need for a legal entity, the money goes directly from the donors to the team’s members. As team accounts never actually hold any money, not even for a split second, they don’t need to have a legal existence.
We’re not saying that this system is perfect, it might have legal issues that we haven’t anticipated, and it may prove to be impractical in many cases, but the only way to know for sure is to try, so that’s what we’re doing.