Rodrigo Davies

Thoughts on Neighborly, civic crowdfunding and the future of community development

Crowdfunding as a salary, or crowdfunding from your salary

17 Oct 2013

Sustainability is one of the biggest questions marks around crowdfunding and its long-term viability. Campaigns are framed intentionally as time-limited, one time opportunities - a form of gamification that creates urgency and momentum. But once the fanfare of the campaign is over, who will pay for the ongoing running costs of the project? It's a major, as yet unanswered question for civic crowdfunding.

It's also a major question for people who are hoping to make a living out of the types of creative projects the commercial market isn't funding, and for which crowdfunding is one of the least worst options - like open-source software. We know that running a conventional crowdfunding campaign is usually a sub-minimum wage job.

In four years, Kickstarter has funded 131 open source projects, raising a total of $3.5 million dollars. A third of that total was raised by two UK-based campaigns this year - Next Generation LiveCode ($795,000) and the blogging platform Ghost (approx. $316,000). For most developers, Kickstarter is a hobbyist's game: the median amount raised is $6,955; the most common amount is $3,000. There's little evidence of support for ongoing projects.

Gittip thinks it can do a better job of supporting open source developers, by asking funders to commit to giving a specific amount per week. As a member you're both a potential giver and receiver (unless you specifically opt to be a patron only). If you receive gifts from other users, you generate an account balance that can be given to others, and Gittip will debit your bank account for the difference if needed. Payment processing fees of around 4.6% are charged. There's no campaign process and you need not set a funding target (although you can try both if you'd like). The barrier to participation is very low - if you use Twitter, GitHub, BitBucket or Bountysource, it's simply a matter of authorizing your account to be linked to Gittip, and you can start collecting money.

Gittip is a taxable gift economy, and total donation amounts (how much you've given and received) are all public. Recipients are responsible for managing their own income tax obligations. Eighteen months in, it's still at a small scale: Gittip currently has 1,900 users exchanging $6,600 per week. However, the site's biggest recipient, Drupal 8 developer Alex Pott, may soon become a poster-boy for the 'quit your day job and crowdfund your salary' movement. Potts receives $444.32 per week via Gittip, close to his goal of $475. The next highest recipient is Gittip founder Chad Whitacre ($423.50 per week), followed by Ashe Dryden, an independent developer and conference organizer ($266.75 per week). Its rate of growth is impressive (it's even better that Whitacre is documenting so much of the process openly).

It will be interesting to see how or whether the 'tail' formation of recipients changes - currently it's a 'long tail' formation in which a small number of users are receiving the majority of the money, but that distribution is already looking more favorable and equitable than many other crowdfunding sites. For crowdfunding as a salary to be truly desirable and scalable, it will need to offer a broad base of individuals the chance to benefit from it, rather than a few stars.

There's another strategy emerging around Gittip that I think is just as interesting as its model of recurring donations, or crowdfunding your salary. That's the idea of crowdfunding from your salary. John Resig, the creator of JQuery who is now based at Khan Academy, is a long-time fan of Gittip and describes how Khan employees (including interns!) are being given $5 each per week to gift to Gittip users whose work they value. There's an obvious synergy: Khan developers benefit directly from the work of the open source community (and many of them are very well-known participants in it). Khan employees are giving $107.50 per per week, and they're lobbying developers who aren't even yet on Gittip to join so they can receive funds. The only thing better than a salary cheque is, surely, a surprise salary cheque.

Payroll giving is of course not new. But it's often regarded as uninspiring, passive and a pseudo-obligation that few employees derive enjoyment from. Using that infrastructure for active, participatory giving to crowdfunding campaigns could be a great way to encourage companies to support ecosystems from which they benefit. The often invisible workers of the open source software movement are an obvious example, but giving employees agency in deciding how their company (large or small) organizes its social impact giving across a range of sectors seems like a natural next step for crowdfunding. I'm surprised we haven't seen more of it already.

The addition of payroll giving also a potential shot in the arm for crowdfunding: it would bring in more institutionally-linked money and help to develop a culture of engaged giving in places where it's less common. It's not just a matter of making giving more attractive to individuals, either. It's also a way to make corporate or company-based giving more transparent. In the corporate sector, it's being termed 'corporate competitive crowdfunding', and proprietary platforms to manage it are springing up. It would be good to see this giving being done in the open, as it is on Gittip. Khan Academy's initiative shows how groups of all sizes, for-profit and non-profit, can self-organize around the issue.

Democratizing access to capital doesn't always mean asking people to dig deeper into their own pockets: it can also mean democratizing access the capital that is being, or can potentially be, used on our behalf.

(Cross-posted at