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Crowdfunding Open-Source in times of crisis

Since crowdfunding is a very successful way for products or projects to raise many small amounts of money from a larger community, we want to show in this article that it could even be a way to help overcome the current crisis.

Estimated time to read: 5 minutes

Seeing the crisis as an opportunity

Many a little makes a mickle

Three years ago we published our first article about the pros and cons of crowdfunding Open-Source software. One of the cons we mentioned there was the lack of sustainability. But although crowdfunding cannot guarantee anyone a regular income in the long term, it could still help companies, developers and especially freelancers or other people with temporary contracts to survive the current crisis.

When written in Chinese, the word 'crisis' is composed of two characters. One represents danger and the other represents opportunity.

John F. Kennedy

The Gridelements 2.0 refactoring was one of the first officially crowdfunded extension projects in the TYPO3 universe, raising an amount of 32,000.- € for paid development within a 90 day campaign on the platform Startnext. In 2017 we started our Coders.Care crowdfunding campaigns offering developers who joined our team the opportunity to fund upgrades of their own extensions to upcoming TYPO3 versions within predefined milestones.

Now that we are facing a crisis caused by a global pandemic, those crowdfunding campaigns offer an additional way out of that difficult situation. Together developers and users of TYPO3 extensions can overcome the financial losses this crisis causes due to lock down of wide areas of public life.

Crisis (Chinese: "Wéijī")
Crisis (Chinese: "Wéijī")

Although the crowd as a financing model has certain disadvantages in terms of sustainability, it can still help to bridge financial bottlenecks in the short term. Interestingly enough, this applies to both sides. On the one hand, the financial burden is spread over many shoulders. On the other hand, however, sufficiently high sums are generated to secure additional income for developers besides usual project work. 

We should therefore take a closer look at the specific advantages crowdfunding offers to both parties involved, the financiers in the crowd and those financed by the crowd, during the current crisis.

Never let a crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before.

Rahm Emanuel

The Crowd

Reduced per capita costs

A good thing about crowdfunding is the implementation of the saying "many a little makes a mickle". This means that people and companies who only want to make small contributions or who are unable to spend larger amounts due to the current crisis situation will still be considered as investors.

For many of our previous supporters, it was a completely new experience that they did not have to develop an extension on their own and pay for the working time involved. Often there was the desire for exclusivity for fear of sharing know-how with potential competitors. According to the motto "enabling people to share" we still were able to convince most of them of the actual Open-Source idea.

Especially in times of crisis, however, the willingness to cooperate and share burdens is greater anyway. Despite social distancing, people at least literally move closer together and recall long forgotten social values. When due to nationwide lock-down budgets are cut or customer projects are completely cancelled, the shared financial burden of crowdfunding can help the crowd to spare costs.

The Maintainers

Compensation for crisis-related losses

For many developers who maintain TYPO3 extensions, the crisis doubles financial problems they often already had before the crisis. This is due to the fact that a large part of the relevant TYPO3 extensions with a significant number of downloads is maintained by small teams or single persons in their spare time.

Now those developers are losing contracts because their customers have to close parts of their companies or apply for short-time work. The first sufferers are often freelancers, who usually don't have the reserves to compensate the losses. Nevertheless, this could give them more time to take care of extension development, since those are not necessarily connected to their project work.

But of course this can only work out, if they will be able to generate the absolutely necessary income somehow or other. Crowdfunding can help them by providing projectable milestones with a calculable value. Those milestones will be paid by a larger number of small clients instead of just one contractor. So even if one of them has to shut down their business, it will reduce the risk of a total loss.

The Mutual Benefit

Sharing is caring - and sharing is sparing

One of the basic principles of the Open Source movement is to share code and work together on the big picture. The well-known motto "Sharing is Caring" is supplemented with another aspect by Crowdfunding. For all supporters who cannot contribute code themselves, but provide different amounts of money, "Sharing is Sparing" also applies.

By spreading the financial burden over several shoulders, the risk for individuals is minimized and at the same time more justice for all participants is achieved, because in the end the supporters decide how much money they can and want to contribute in the current difficult situation.

If we as a community realize that together we can act much stronger than as individuals, we can actually use the chances this crisis has to offer. Ultimately, it will provide us as an Open-Source community with improved, state-of-the-art software products to get back on track once we have overcome the crisis together.

TL;DR - Conclusion

Crowdfunding can help us to make the best out of a difficult situation.

Although crowdfunding cannot guarantee anyone a regular income in the long term, it could help companies, developers and especially freelancers or other people with temporary contracts to survive the current crisis.

On the one hand, it reduces the per capita costs for the participating crowd, and on the other hand, it generates additional income for the developers of Open-Source extensions to compensate for their crisis-related losses.

Ultimately, it will provide us as an Open-Source community with improved, state-of-the-art software products to get back on track once we have overcome the crisis together.

Jo Hasenau