Pledge Incentives and Deadlines

For a more informal description and the rationale behind this project, see my page on funding free software.

The proposed fundraising system would be similar to (and possibly based on) microPledge, but with support for donor-specified deadlines and pledge incentives.

When making a pledge, a donor would specify the amount pledged and when the project needed to be completed in order for the developer to receive the pledge.

In addition, developers would need to pay for pledges. By default, the system must use the following formula for the cost of a pledge. The default formula is:

V*(1-exp(0.5*(T-t)/(t-t0)))

where V is the amount of the pledge, t0 is the time that a pledge was first made, T is the donor-specified deadline for the pledge, and t is the time that the pledge is being purchased.

The system may (but it is not required to) allow a user to specify a different cost or cost formula, as long as the above formula is the default.

A developer’s bid would specify the amount he needs to raise and the amount he is willing to spend to raise that amount. When there is a developer that is willing to pay enough to raise the funds he needs, the system tells the donors and the developer to make good on their commitments. Specifically, the system collects the pledges (less the amount paid for them) from the donors, and collects the amount paid for the pledges from the developer. Those amounts are held by a pre-specified party. If the project is completed successfully, that amount (less fees) is paid to the developer. Otherwise, it is paid to the donors in proportion to their pledge. This means that the amount that the developer paid for the pledges is paid to the donors as a non-performance penalty.

The system must also provide a web interface for specifying projects, submitting bids, and making pledges. MicroPledge already has such an interface.

Donors must not be required to pay a pledged amount until the pledge is bought by a developer, except that the system may require that each donor back the pledge(s) to the project to which he has pledged the most money.

This project will be considered complete when the system described above has been in operation and publicly usable for 1 year, and the developer has committed to release (under an OSI approved license) all software needed to operate the system if it becomes unusable for 1 month.