- archives/communications/formula (10 matching lines) [show matches]
<span class="alert-warning">**We will not implement this formula at this time. We favor of a simpler pledge mechanism with no matching of extra "shares".** The simplified approach (see the [mechanism page](mechanism)) is straightforward enough that no formula page or explanation is needed. More about this decision on our [mailing list archives](https://www.mail-archive.com/discuss@lists.snowdrift.coop/msg00003.html).</span>
<span class="alert-warning">We still believe that the formula with matching of extra shares makes sense in most regards and is superior in principle. But it is just too difficult to explain clearly and present clearly in the interface.</span>
# The Snowdrift.coop share-value formula
The formula basically says, "each month, I will donate a tenth of a cent for every patron who pledges to this project with me, and I'll add an extra tenth of a cent each time a patron doubles their shares".^[Technically, the increase for extra shares is on a smooth curve. If a patron increases their pledge by less than double, then share value goes up by an amount that is a fraction of 0.1¢.]
Another way to describe multiple shares: Saying "I pledge 4 shares" is like as saying "I will donate four tenths of a cent for every patron…" (except that these larger pledges count in the formula themselves as though there are more total patrons).
## Understanding the formula
With 0.1¢ pledges, 100 patrons put in 10¢ each, and the total monthly funding equals $10. Obviously, *without* any matching of larger pledges, 100 patrons pledging 4 shares each (effectively pledging 0.4¢ per patron) *would* total $40. But with our formula, a pledge of 4 shares counts toward share value like 3 base-level patrons; so the total funding from 100 patrons @ 4 shares each totals $120.
Without the <span class="math">lg</span> part of the formula, shares beyond the minimum would not get matched at all. That would encourage users to open duplicate accounts instead of pledging extra shares, because they would otherwise get no more matching after their first share.^[Of course, if we only permitted base-level pledges at all, that would definitely encourage redundant accounts and also reduce overall funding.] However, if we matched *all* extra shares completely, then the system would be susceptible to manipulation and excessive volatility.
Once we are operational, people we will see how our formula works in the real world. We can then adapt and adjust things as necessary. We can adjust the minimum base pledge, the base of the logarithm, or the frequency of payouts to projects to find the optimal way to support projects and engage the maximum number of patrons.
- market-research/other-crowdfunding (2 matching lines) [show matches]
**Liberapay** emphasizes FLO software and culture but does no curation or enforcement. They accept donations from anyone for anyone but insist that all donations be pure gifts with no special rewards or strings attached. Although recipients are individuals, they have an optional "teams" function where donations to a group get routed alternately to different team members so that, over time, the group donations are distributed to team members by some formula.
Our summary of what these platforms are doing: There's some deadline time at which point 100% of the funds donated to a collective pool are donated to a set of included projects. The portion of funds given to each project is decided by a formula whereby smaller donors have substantially more influence than larger donors. Though presented as "matching funds", there's no matching of donations that increases the total donated. All the "matched funds" are funds that are moved to some projects at the expense of others. In practice, the bulk of funding comes from some large grants, but the small donors get relatively democratic say about where the funds go. FundOSS is itself legally sponsored by Open Source Collective at Open Collective. At the time of this review, such Democratic Funding isn't set up to be sustaining and ongoing except by running multiple events which each work as one-off cases and require independent donations and grants each time.
- community/projects/strategy (1 matching lines) [show matches]
* **Metrics:** As we build the site and get test stats, we can construct tests with variations in the formula, the presentation, and elsewhere.
- archives/communications/shares (1 matching lines) [show matches]
**As a guideline, consider a single share as the normal pledge for one person, like the normal price of a good in the market.** Additional shares show an intent to give extra. We *do* encourage some extra generosity by providing extra partial matching of multiple shares from the same patron, but that extra matching tapers off for greater share numbers (see the [pledge formula](formula) for details).
- about/mechanism (1 matching lines) [show matches]
We originally proposed a "share" method where instead of changing the base match, each patron could choose to double, triple (or more) their pledge to any particular project. We wanted to encourage that generosity with some additional matching. To do that without letting one generous patron manipulate the donations of everyone else, we proposed a partial match that tapered off for these increased pledges. While our original model had merit, it presented serious trade-offs, most significantly in how difficult it was to explain. But if you're curious, see our [old share-value formula](/archives/communications/formula).
- about/markets-and-prices (1 matching lines) [show matches]
Our system provides a framework for coordinating patrons and projects to provide effective support for creative work. Our pledge formula helps the community to collectively determine fair and effective share values that meet the needs of the projects we support. Of course, we may adapt our precise formula as things go, and any decisions after initial launch will be made through our democratic cooperative system. To avoid overly favoring either supply-side or demand-side, our [multistakeholder co-op structure](co-op) balances the interests of both projects and patrons.
- about/history (1 matching lines) [show matches]
After initial discussion of the fundamental issues, concerns about how private or public to be at the early stage, and confusion about the details of the proposals, clarity of the vision developed by spring 2013. By that time, the concepts of project-in-project (meaning that we are a project in the system and every tool we find useful will be made available to all projects), the basic formula, the terminology, and the initial drafts of mission statements were worked out.