Mechanism Proposal: Creator and Project Budgets

Clear and concise summary:

  • Allow creators to make a budget of expenses they have.
  • Use as an intermediary that can pay bills directly. (Verified Expenses).
  • Allow patrons to pledge payment towards these specific expenses.
Optional detail

Use something like Preshold for funding these items.

The nitty gritty details:
I believe that FLO projects, or any sort of community funded project, should include the values of Transparency, Democracy, and meaningfulness. These values and concepts that I think all projects should have, and we have all discussed at one point or another in this forum. This proposal includes aspects of all of them.

A creator having a public budget clearly increases transparency and builds trust. For example we at already does this. (Although it is out of date). I think this is a good start but the process should be more formalized.

From an implementation and technical perspective, there are payment processors that consolidate bills and are connectable via api. More research would need to be done, but two companies I found with a quick search were BillGo and Plastiq.
These companies both have API’s that allow banks and fintech companies to route payments towards various bill payments such as electric, water, and waste utilities, internet providers, cell phone providers, insurance, and more. Plastiq even supports sending cheques in the mail so creators who have landlord that only accept checks could be paid via this process as well.

Allowing patrons to cover the bills of creators directly would dramatically increase transparency and trust in my opinion. I think it would also increase meaningfulness. Donating $10 to some faceless project doesn’t feel as good as contributing towards the internet bill of a specific person who creates programs that I enjoy. Or the server rental fee. Or their weekly meal box. Etc.

1 Appreciation

Now this is also were I think that preshold could shine. One thing that preshold is really good at is funding a specific goal. As @sandra.snan has said elsewhere:

I agree with this statement, and budget items are the perfect place for preshold funding. For example, lets say someone has an electrical and water bill of $90. Nine people all pledge to pay up to $10 to cover the bill. But then an additional 2 other people join in who also pledge up to $10. Now that we have 12 people contributing to the electric and water bill, each person is only billed $7.50, etc, etc. The bigger the crowd, the less each individual has to pay.

This also builds in flexibility for bill payments. Because everyone has pledged up to $10. If for some reason the bill is higher or lower from month to month, this allows for that flexibility. Now it’s winter, and it’s the electricity and water bill goes up to $100 in December. Through the connected billing API, that verified bill gets posted on the project’s snowdrift website, and the 12 people who pledged up to $10 end up paying $8.34 that month instead of the $7.50 during the summer. This increase will be noticed, but pledgers shouldn’t mind as the transparency of the bill payments and budget have made it clear that there will be some ups and downs.

This also deals with the question about how to allow people who can and want to give more to do so. Someone with a lot of money can pledge to each item in the budget if they want to. However, I wouldn’t suggest just letting anyone pledge to budget items. I would suggest limiting this ability to people who have already pledged to the general crowd matching mechanism for the project. In this regard, crowd matching would act as a gatekeeping mechanism, restricting more detailed giving to those who crowd match first.

One final point of clarity. This budget mechanism would be in addition to, not instead of, the original crowd matching mechanism.

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We are already building toward goal-explicit mechanism, so that fits easily.

The idea of multiple goals for a single project where patrons fund one or another is not crazy but it’s troublesome. It limits the project team who really are the ones who know the complex trade-offs. It’s similar to the many serious issues with bounty systems. It can go well, but in many/most cases it does not.

I lean toward the lighter approach of giving patrons to the project some way to give suggestions/votes/feedback that identifies them as patrons. The project can simply recognize the importance of being responsive to patron concerns.

But the idea of an entity holding funds and then distributing them to reimburse specific expenses… it makes a lot of sense. That’s what Open Collective already emphasizes. But it’s a scope that is related to legal incorporation questions and not to the mechanism of fundraising.

We’re calling this “share-the-burden” and we are openly considering it as an option for what would happen once a goal is reached. There are definitely situations where it makes sense.

Yes, it does limit the team, and that is the entire intent of the mechanism Similar to how Restricted Donations work within the charity sector, Allowing supporters to pay for specific costs (using Snowdrift as the the third-party authenticating intermediary would be significantly more transparent than how things are usually done.

It is also orders of magnitude more democratic than complete centralized control and centralized planning of a project.

The “lighter” approach of giving patrons “suggestions/votes/feedback” is no different than customer feedback forms that big corporations use in my experience. Even after you’ve given your feedback ultimately it’s the project manager that maintains complete control of the project, much like a CEO of a tech company does today or Kings did historically.

Also, in case you misunderstood…I am NOT suggesting this “instead of” Crowd matching. I personally really like and support the idea of Crowd matching. I’m suggesting this as “in addition to” crowd matching. In fact, with my suggestion in the other thread that crowd matching be used as a gate before you’re allowed to commit to specific goals, this mechanism would not detract from the main money source, which is crowd matching.

Also, unlike Budget line items, the money raised through crowd matching would be entirely controlled by the project or creator to spend as they see fit, where they see fit, as needed.

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Yes, I think this sort of option is worth considering in the long-term as addition to crowdmatching.

Although I see that connection, corporations have a different power here. If people want to get the product, they have to pay for it, and that remains true even if the corporation doesn’t listen to feedback. But with FLO public goods, patrons who are frustrated that their requests get ignored have a lot more options. They could switch to freeriding, continuing to access the product without paying. They could fork it or hire someone else to fork it. So, this puts a lot more real pressure on projects to actually listen to feedback, and specifically feedback from patrons who are donating.