No Donations Please
There is the beginning of a rather icky problem in open source software to do with Donations. You’ve seen those shiny Donate buttons on many software projects’ websites, maybe you’ve even clicked on one to support a software project you like. Well, Paypal and Amazon are becoming renowned for NOT HANDING OVER THE MONEY to the developers. Why not? Well, according to the fine print, the Donate button is supposed to be for registered non-profits only.
Unfortunately, this fine print has been so small that many people haven’t noticed it (I think they’ve made it larger recently), and Paypal and Amazon don’t get around to checking until you try to withdraw the donations generously provided by the community. (As far as I know the donations eventually get returned to the people who made them if the recipient is found to be ineligible.)
This is clearly upsetting and worrying for the developers in question, especially if they are counting on these donations to help support themselves while they work on projects that benefit the wider community. I have heard some people make technical arguments that Paypal and Amazon should not be in the business of checking the credentials of whoever is using the Donate button. I don’t know about that, but I’m going to make an entirely different sort of argument here.
Paypal and Amazon have a policy that you should not use the Donate button unless you are a registered charity. I can understand where they are coming from in that the word “Donate” carries with it a specific meaning that will trigger people to assume that they are, in fact, making a bona fide charitable donation. It’s certainly possible to imagine that some people would take advantage of this and add a “Donate” page to an existing business, tricking people into making donations for a fictional charity.
However, that’s their logic. My logic is this: you should not use a Donate button because it’s a bad idea financially, for you and for the people donating to you. Let’s start with the donors. Let’s say there’s a great little open source project that has saved me a huge amount of time and money, and I want to support this project by way of “thank you” and also to help the developer make more awesome stuff. I go to the project website, click on Donate, and send off my $100. A few months later, I’m doing my taxes and I see a charge for $100 on my company credit card. Now I’m stuck. I donated to a project which isn’t a registered charity, so I can’t get a tax write-off for this $100. I’ve also messed up by putting this on my company credit card since I treated it as a business expense and didn’t really think it through all the way. So, I have a minor admin headache to deal with. Maybe I’ll think twice next time about donating money.
Now let’s take you, the developer, and your software project. Unless you are a very large organization like the Apache Foundation with 501(c)3 status (or your country’s equivalent), if you are taking “donations” for an open source software project then you are running a business. You are making money off your code. You need to take this seriously and figure out the implications, and run it like a business. Maybe it’s a micro-business that will only ever make a few hundred dollars in pizza and hosting money, but if you start out treating it like a business then you will save yourself a lot of trouble.
People don’t donate to a business, they buy from a business. So, if you want people to support your open source project then CREATE PRODUCTS and SELL THEM. These can be real products, like books you write, or fake products which are just proxies for the donations people are going to send you. But, you act as though they are products and you sell them to people who want to support your software.
Now as your supporter, I have a receipt for the $100 “set your own price e-book” I bought. This is a valid business expense and you gave me a receipt. I have no more admin problem. You as the developer have THOUGHT THROUGH THE IMPLICATIONS of receiving money for your open source software, you have recognized that you want to run it as a business, you have made enquiries for the tax implications and you are keeping good records of your income and expenses. This makes more sense for everybody, and it also avoids the headaches of the evil, shiny, Donate button.