How Are Open Source Projects Funded

A lot of people wonder how open source software is funded. The list is probably longer than you might imagine. In fact, many different models exist, depending on the project and its specific needs. Some developers do it all on their own, using it as a hobbyist endeavor in their spare time. Others rely on sponsorships, while there are even some who ask for donations or offer advertisements in exchange for the open source software they provide. Basically, it just depends on the individual.

This is a very important topic. I have been in the web development industry for over 10 years now, and this subject of how these open source projects are funded is one that no one ever seems to talk about. Maybe because few people really understand the answers. Maybe because it doesn’t apply to commercial organizations. Or maybe because there aren’t any clear-cut answers. Anyway, let’s find out together.

Open Collective

Open Collective is another popular funding initiative where a person who is willing to receive the donation for the work he is doing in Open Source world can create a page. He can submit the expense reports for the project he is working on. A contributor can add money to his account and pay him for his expenses.

The complete process is transparent and everyone can track whoever is associated with Open Collective. The contributions are visible along with the unpaid expenses. There is also the option to contribute on a recurring basis.

Open Collective currently has thousands of collectives being backed up by thousands of users.

The fact that it is transparent, and you know what you are contributing to, drives more accountability. Some common example of collective include hosting costs, community maintenance, travel expenses etc.

Though Open Collective keeps 10% of all the transactions, it is still a nice way to get your expenses covered in the process of contributing towards an open-source project.

Business models aligned with something people are willing to pay for

Raising money for any project whether open source or not is not easy and it requires people involved in the project to get creative. For open source projects it may be an even bigger challenge to make money as the software they produce may by definition be used or licensed free of charge.

In general, it is useful for many projects to be aligned with something people or businesses believe in so much or find value in that they are willing to pay for. In the majority of cases that is the best and most effective business model and the best way to reach sustainability.

The fact that people are willing to pay for the software that you are working on means that they are finding value in the software, that they use it to do stuff and so are happy to pay to fund continuous development and ensure sustainability in the long run.

So building a community and making that community care about your use case just enough that they are willing to pay for it is the first step.

I hear you saying that you’re not a business person, you don’t want to change your role, you don’t want to need to communicate to the outside world, to not even talk about doing marketing! Perhaps there’s a way to get other passionate people involved that could help you with some of the aspects that you don’t want to deal with?

In the case of Plausible Analytics, Uku is more focused on development while I’m more focused on the communication side of things. We discuss the different things together but our main responsibilities are split along those lines.

Here’s Webpack’s Sean Larkin on what cultural change they needed to make to grow the project’s funding which included publishing content, doing outreach and building relationships:

“Think about long-term strategy for your project. Sustainability is really important. I think open source sustainability is broken in this day and age. It’s not charity, it’s value in return. Every feature we work on has to be beneficial to the web ecosystem and to users. Communication is equally important to the code itself. Webpack used to be just a project, maintained by one person. So this was a change in not only development activity and support, but how we reached out to people, how we published meeting notes, how we communicated on Twitter, and how we recruited people to get involved with the project.”

Here are some ways you can ensure that you can pay your rent and your bills with your open source project while still retaining creative freedom and enjoying the process.

Tidelift

Tidelift is an impressive enterprise-focused solution that helps maintainers monetize their open-source projects.

You might have read about the $25m series B funding raised by Tidelift. So, it is indeed something that we’re keeping an eye out for.

Tidelift basically helps enterprises by providing a managed open-source subscription for a range of open-source tools that companies rely on. Normally, if you’re an enterprise, you would have to appoint a separate team to maintain/manage the open-source technologies you use. But, with Tidelift, you hire the developers/maintainers of the open-source projects indirectly to get involved to manage it for you.

This way, the developers get paid for improving their own tools and you get the necessary support as well. So, it’s a win-win.

xs:code

xs:code is fairly new to the scene. However, it plans to monetize your source code in general.

Open source is all about the source code, right? So, with xs: code you can limit access to your source code to premium subscribers. If someone wants access to your source repository, they have to opt-in for a subscription plan in order to access it.

This might sound bad, as in – “locking up the source code behind a paywall”. However, it is still something through which you can help fund the projects.

Bountysource

Bountysource is a funding platform for open source software that has a unique way of paying a developer for his time and work int he name of Bounties.

There are basically two campaigns, bounties and salt campaign.

Under the Bounties, users declare bounties aka cash prizes on open issues that they believe should be fixed or any new features which they want to see in the software they are using. A developer can then go and fix it to receive the cash prize.

Salt Campaign is like any other funding, anyone can pay a recurring amount to a project or an individual working for an open source project for as long as they want.

Conclusion

There are several ways that people or companies can fund open source projects. The best way to fund an open source project depends on the situation.

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