Threshold pledge

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Threshold pledge is a system developed to address one of the problems of distributed funding: that before putting up their own money, contributors need to be assured that others are also contributing.

In a threshold pledge system, a would be creator of a new work estimates the amount of money required to produce the work—this is the "threshold." An intermediary organization collects the pledges from the public, in any amounts. When the amount pledged reaches a threshold (or exceeds it by a standard percentage, assessed to compensate for bookkeeping and assumption of risk), the intermediary signs a contract with the creator. The pledges are then called in. At this stage, with enough money collected to achieve the desired result, the participants are asked to pay up. The money is held in escrow by the intermediary. The creator is then paid according to the pre-agreed schedule established. The last payment occurs on completion of the work, which is publicly available, not just to the contributors. If the creator fails to produce, the intermediary returns the money to the donors.

[edit] References

The Promise of a Post-Copyright World - The source for article above

[edit] External links

• Fundable - A service based on threshold pledge ideas
• PledgeBank - An honor system threshold pledge website
• The Digital Art Auction - A proposal for a threshold pledge system where pledges represent valuations, and the eventual price paid is the minimum necessary to reach the threshold.