The Funding DilemmaBy
Snowdrift.coop aims to solve some of the problems facing free software funding by linking the amount of an individual pledge to the number of donors willing to share the financial commitment.
For the last two years, Aaron Wolf has been studying crowdfunding for free software – specifically, sustained funding rather than one-time donations. His conclusion is that a new model of funding is needed, which he plans to implement with Snowdrift.coop, a new project that should launch in early 2015.
A music teacher by trade, Wolf became interested in free software because of his growing disillusion with Apple. “I remember feeling outraged when I learned that Apple’s iOS terms effectively censor GNU General Public License software,” he says. “Volunteers worked to provide valuable free resources to the world, and then Apple could just block users’ access in order to compel people to get only proprietary apps and see ads or pay.” By 2012, he had discovered GNU/Linux, “and the welcoming community far surpassed my limitations.” Feeling a need to repay the benefits he received from free software, he was soon writing documentation for the KXStudio music system and providing non-technical help for the task manager Task Coach.
At the same time, Wolf started to focus on the economics of free software. He proposed some of his developing ideas to Task Coach, but “the developers weren’t sure how to implement them.” Instead, they urged him to spend his time developing his ideas. His friend David Thomas also encouraged him, offering to help build the necessary infrastructure. Although initially reluctant, Wolf allowed himself to be convinced. He now devotes much of his time to the project.
“When I decided to do it, I went all-in, working to get every detail right and thoroughly research all the relevant issues,” Wolf says. “I’m even studying Haskell so I can understand and help a little with the code here and there.”
Free Software and the Prisoner’s Dilemma
The Snowdrift dilemma compares the funding of free software to clearing a road of snow by volunteer effort. The blocked road is analogous to the problems that free software often faces, such as less polished interfaces or a developer-centric approach.
Clearing the road can be done three ways: If no one helps, the road remains blocked, and nobody wins – the problems remain. If you get others to do the work without you, you get a clear road at no cost to you and they get a clear road at heavy cost that may disincline them to contribute again. By contrast, if everyone helps everyone gets a clear road at modest cost; the problem is solved, and everyone is reasonably likely to contribute another time.
The problem, however, goes beyond this basic knowledge. As Wolf explains, if one person starts to shovel first, others have less incentive to join in. “Nobody wants to go first, and whoever has to get through sooner ends up doing it alone.”
Wolf continues, “This dilemma explains why plain donation buttons are not that effective. For each new user asked to donate, the existing donors are a given. The project may be doing OK or may be struggling, but, either way, a new user’s small donation makes basically no difference. If they bother at all, they’ll donate just to the extent it makes them feel good.”
Snowdrift.coop is designed as a way around this dilemma. Instead of making a one-time donation, donors become patrons on the site. Each donor makes the pledge: “I’ll chip in a sustaining share based on how many others are with me in supporting this project – I’ll do more if more people will help.” In this way, Wolf theorizes, individual contributions make a difference, and ongoing contributions remain relevant.
Patrons can donate at any level they want, but Wolf proposes that the minimum share to be a patron of a project be one-tenth of a cent per month times the number of patrons. When they sign up, each patron sets how much they want to make available for donations; when they run out of funds, their pledges are no longer counted. In this way, Wolf explains, “the share value can never reach absurdly high levels unless everyone involved truly wants to keep funding and actually puts up enough funds.”
Similar, higher-level shares will also be available for institutions to match donations with each other. Additionally, Snowdrift.coop is also implementing feedback and volunteer mechanisms, because contributions to free software are not always monetary. “We might even offer a similar pledge for volunteer time as for financial donations,” Wolf adds, “but quantifying time and work is not as simple.”
“Overall,” Wolf says, “our system combines the mutual-assurance of threshold goals and matching pledges with the accountability and reliability of sustaining memberships. Because funding is spread out over time, patrons can increase or reduce support of a project to favor the ones that do the best work.”
The project is organized as a cooperative, with three types of members: those who work on the site, the teams for projects asking for funding, and the general community of patrons. Each category of member will be represented on the board, and decisions will be by consensus.
This model is based on an extensive study of other funding models, including a review of more than 700 crowdfunding and donation sites. According to Wolf, the problem with most crowdfunding sites is that they are good for one-off campaigns but can be costly and do not provide a sustainable solution. Moreover, they are mostly proprietary in their governance.
Snowdrift.coop did find some crowdfunding sites to recommend, such as Goteo.org and Open.Tilt.com, which Wolf describes as providing “the most public benefit,” and Gratipay, which he calls a “decent site for ongoing donations, although their model doesn’t address the snowdrift dilemma.” He concludes that, “after all our research, it’s clear that Snowdrift.coop truly represents a departure from any existing models.”
Still To Be Done
Asked about the current state of the project, Wolf replies: “Two years after initializing, we have a functioning test site; a first full draft of bylaws, many wiki pages of writings covering background research, explanations, and project plans, and a community of volunteers and supporters enthusiastic about making this happen.” In addition, the site is available for users to test with imaginary money.
Moreover, the project is still in the process of ensuring that its proposed handling of funds and its co-op structure are legally valid. Attracting members, finalizing user account settings, translations and other site tweaks remain to be done, and a launch fundraiser is also scheduled for the near future.
“Our progress has been somewhat slow because we’re a bootstrapped non-profit co-operative,” Wolf says. “In essence, we’re facing the same issues that many projects face: we work with the limited time and resources we have. As we get the system running, we will use it ourselves to accelerate our progress and hopefully become sustainable long-term.”
Most of all, the Snowdrift dilemma remains to be proved relevant to funding – to say nothing of the project’s solutions to it. However, with its patron pledge and cooperative structure, Snowdrift.coop might just be different enough to succeed. For anyone looking to fund or donate to free software, it’s definitely a site to keep an eye on.
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