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I Just Hit $100k/year On GitHub Sponsors (calebporzio.com)
1469 points by calebporzio 10 months ago | hide | past | favorite | 493 comments



Reading these makes me sad about the law in my country, Finland. The lowest tier of OP ($7 for no reward) would be illegal here.

We have a law called "Money Collection act", which states that to gather donations (i.e. payments with nothing in return), you have to get a permit. This permit costs money, is not given to individuals, and is given only for non-profit activities.

So this means that if you see a donation/sponsorship button on a software project where the money goes to a Finnish person, it is illegal (unless they have obtained a permit, which is highly unlikely). If you see a patreon/sponsorship with rewards, it's a grey area. The only clearly legal way is by selling actual things, and of course then you quickly need to set up a business.

I host a free project myself and I've had to set up a business (sole proprietorship) and sell things in order to get money for server costs. Even though people have been interested in donating, I can't do that legally.


> Even though people have been interested in donating, I can't do that legally.

What you can do is to "sell" something in lieu of donations:

E.g. - To support me please buy this wallpaper image file of my project logo. Or one-day email support etc.

You can always add a note that Finland laws prevent you from accepting donation, and this is the only way you can accept money from patrons, and even provide a link to the law in question.

(Note that depending on the laws in your country you may have to register as a freelancer / small business and pay taxes. In most countries this will be free or near free, and you probably won't get enough money to reach the threshold aftwer which you have to pay taxes).


Sure and this is kind of what I do. I have a sole proprietorship and sell stickers and in the future some minor features on the site. Of course it has the overhead of setting up the business and all the accounting/tax stuff (unless you use a service for that which takes ~5 % of your revenue).


But can't you sell your digital artwork without setting up business? Seems better than stickers (also, no shipping!).

[*] Digital artwork = project logo in png format, free to use however they please. You can license the publicly-available logo with any minimally-restrictive license (e.g. CC-BY); this should still count that "you gave them additional rights, in exchange for payment".


tax reporting most likely


I mean, yes you need to report revenues, but... do you need a company for that? Do e.g. all Finnish photographers on Shutterstock have a company, in order to receive payments?


Yes, if you sell things (or electronic things), in any meaningful amount (no one will care for 200$ per year though), you have to set up a company or a sole proprietorship. It is like this in most western countries. The activity that you are doing in that case is called business, and of course you need to have a company or a similar business structure (like sole proprietorship) to do business.

Whether all people do it or not is another question, but that is what is required by the law.


I think the confusion in this thread is that (in most of Western Europe) you automatically become a business (or even company) by the sole act of doing "business" (enterprise with the purpose of earning money), and once you cross some (small) threshold you have to register in some capacity. That can be a ~$20 bureaucratic act, compared to the ~$500 act of setting up a proper company. But of course at that point it varies wildly by country.


IANAL, but I have done this a few times. I'm pretty sure you do not need a company to make money as a self-employed person in the USA. Not in terms of federal taxes anyway.

What you might need a company for is to pay sales taxes you charge for physical goods, or get insurance appropriate for your line of work. That's likely to be state-by-state. You just get the convenience of an EIN by registering and some additional legal protections by being a distinct entity (i.e. I could sell the company or assign IP to it or hire employees).

I have certainly gotten contractor income to me personally that I just had to account for. In the USA for small businesses you'd have to send the same documentation, so it doesn't even save paperwork. As a sole proprietorship I get the same tax documents from my clients as I would if I were operating directly under my name.

Edit: Also, if this were true in the USA, it implies that all those Uber drivers each have a sole-proprietorship set up. I'm pretty sure that companies can hire contractors as individuals without them becoming businesses.


You also need a company so you don't lose your house and life's savings if you're sued, too. That's what freelancers primarily create companies for. IRS doesn't really let you take advantage of any tax loopholes unless you employ a bunch of other people.


I don't understand characterizing compliance with tax law as using "loopholes." What are you referring to?


The topic is obviously enormous and more complicated than "big business bad", but it wouldn't be a loophole if it wasn't legal. Defining only illegal things as loopholes is not a great line in the sand, it's kind of a tautology that loopholes aren't illegal. I would expect that the specific definition varies a lot by person because democracy. One person's corrupt loophole is another person's tax incentive, but either way the loophole is legal.

What specifically the parent was referring to I'm not sure, but that would be why it is consistent to describe a company as both "in compliance with tax law" and also as "using loopholes". If they weren't in compliance with tax law they'd just be breaking the law. No one is accusing the companies of breaking the law, they're accusing the tax system of being biased and corrupt.


Do you play board games?

Which games don't have edge cases, loopholes, exploits?

Of the games which can be "gamed", are they more or less complex than any given tax code?


Thank you for explaining this. As an American, I was unaware.


In the US, you're already a sole proprietorship without any registration. Of course, if you're actually doing business, you probably want the protections of an LLC, which requires registration and fees. But you can accept uncompensated gifts as an individual, and you can accept business income as a sole proprietor, all without registering for anything in particular. You are, as always, required to file accurate taxes, including estimated withholding.


> the protections of an LLC

Won't protect one guy or a small team in case of legal disputes, it's called piercing the corporate veil. I wonder if the EU has something similar.


Number of employees or members isn’t relevant. Types of behavior performed is. It is worth talking to a lawyer about this if you have enough revenue this matters.


You can take donations but AFAIK business licenses are required in every state in the US whether you provide product, service or something online. If you take donations then by law you have to declare that as income.


There is no generally “business license” in Arkansas. Some municipalities require them (but have very limited means of enforcing that requirement), and some specific occupations require licensure, but unless you fall under one of those narrow categories you only have to file taxes.


I've always found it deliciously ironic that the Articles of Confederation and the Constitution both dealt with interstate commerce and set up the federal government as superseding the states in this regard... but then corporations are a state level entity not federal, complete with 50 states worth of regulations.


>It is like this in most western countries.

No it isn't... In Canada, you can happily accept money from people and just stick it in the "other income" box on your tax return, where it'll get income-taxed appropriately.

If you're trying to do business deductions or want to pay business taxes instead, yes you need a business. If you're trying to set up a physical location, yes you need a business license from your city. But if you don't care about the pennies and your work is digital there's absolutely no requirement.


"It is like this in most western countries" can still apply even if Canada is an exception.


Generally speaking the same is true of “gifts”, though. You don’t have to report a gift as income if it’s reasonable, but drawing that line is where things get... complicated. Then you have to call in specialists like tax lawyers, etc.


In the US, gifts of up to $15k are untaxed.


Are you sure that you’re not operating as a sole proprietor under that set of facts? If I sell something with the intention of making a profit using my own name as the seller, bam, I’m a sole proprietor. If I file a doing-business-as (DBA) form with my city, I can sell under another name and still be a sole proprietor.


> It is like this in most western countries.

This is not the case in the USA. There is no general federal legal requirement to register a business or obtain a business license in order to sell things. However, there are specific industries for which business licenses are required (at any of the federal, state and local levels) and forming an LLC might help personal assets if you are sued.


It's different here - for revenue from intellectual property rights in particular you do not need to be a business (you do need accounting & to submit an annual declaration to the revenue service; but you can do that as a regular person, there's no need to register a business).


Untrue, you can work with a freelancer tax card. You can't bill with VAT and deduct that from your costs as an entrepreneur if you do so, but you don't need to register anything in order to work as a freelancer.


In Australia you don’t need to set anything up. If annual turnover is over $75,000 you’ll need to register for GST which requires an ABN, and if you want a .com.au domain name you’ll need an ABN, and other entities you deal with may want you to have an ABN, but for the sorts of things in question here you won’t need an ABN.


In the US, AFAICT "sole proprietorship" is just the label for a natural person doing business; the extent of the registration can just be DBA ("doing business as") so that you can cash checks in a name other than you own.


Is it illegal if you sell an item/service/upgrade for a clearly absurd price?

The obvious workaround here is to paywall some tiny feature with choose-your-own-price, or perhaps offer something akin to Reddit Gold. I presume the law already thought of that?


Surely there's a difference between ”Buy this PNG file for €200” and “Buy it for €10,000,000”


Lots of brands sell things with prices only justifiable by the branding and associated prestige.

The authors tactic of paywalling things behind a "donation" seems legally much more dubious.


It wouldn't be a donation, it would be a premium account that has access to extra features. I just don't want those features to make the free users feel second class.


Could you share a link to your project? I'm curious what it is.



Yeah, we have an active person in the Sandstorm community from Finland who maintains Wekan[1]. I didn't previously know the specifics, but he's had to tell a lot of people "sorry, I can't accept donations" too.

It's so much easier in the US. If you're an individual it's going to be taxable income, but there's no up-front paperwork to do (for that matter, you don't have to "set up" a sole proprietorship here either -- that's just what the tax code calls "some rando doing business by themself"). I've done contract work for years, have a bit of my income coming in through GitHub sponsors now.

Now, if we could only get health care covered for folks who don't have an employer...

---

> I host a free project myself and I've had to set up a business (sole proprietorship) and sell things in order to get money for server costs.

What's your side project? Speaking of Sandstorm, I'm wondering if it might be relevant; dealing with the problem of developers needing to monetize things in order to cover hosting costs was one of the motivations for the project:

https://sandstorm.io/news/2014-07-21-open-source-web-apps-re...

[1]: https://github.com/wekan/wekan/


If you haven't done so already, you REALLY should look into setting up an LLC for contract work in the US. Legally separating your business assets from your personal assets is very important. It doesn't cost a ton -- varies by state and whether you involve a lawyer or not. It will make your taxes a bit more complicated, but consider that the cost of insurance against somebody trying to sue you and take your house.


Literally just buying an insurance policy is significantly less complicated and roughly the same cost, IME. Professional liability, errors and omissions, etc. cost me ~$1k a year when I was doing consulting for $1mm in coverage. My LLC taxed as an S-corp cost more than that just in tax prep services.

A single member LLC provides some benefits but those benefits often require a lawyer to invoke (i.e. you're getting sued, gotta file things and work the legal system). If you have insurance you just tell the insurance company and they hire the lawyers.


Perhaps the US is different, but here in the UK, I reckon that 95% of software developers will never go to court in their lifetime, and the remaining ones that do will settle for small amounts (ie. Refunding the customer the cost of the contract). Multi-million pound judgements against individuals are pretty much unheard of...


As a freelancer in Sweden I can't even imagine how big I would have to fuck up for a customer to sue me for anything beyond what they had already paid me.


Imagine you are paid $100 to build a website to sell some new widget to be delivered on November 1st just in time for the holiday season. The company also spends $1000 on a one-day internet marketing campaign that's around the launch.

Then there's a technical issue at launch and orders are being rejected left and right.

They could be out basically the whole value of the marketing campaign which is 10x your salary. You might owe them compensation for that, unless of course you got paid through an LLC and only have the $100 in your account.


That's why you have contracts/ToS, so it's clear what is and isn't your responsibility.


And if you have any sense, the contract expressly limits your total liabilities to the client to at most what they have already paid you.

(ps. With some careful lawyer drafting to exempt things which can't be limited in that way (negligence etc.), while carefully wording the exemption so any part voided doesn't take the whole limitation with it.)


In the US lawsuits typically open with the closest thing a lawyer can imagine to infinity dollars of damages, and then you have to have your lawyer work it down.


E&O insurance is in absolutely no way a replacement for incorporation. In most cases if you need the former, you need the latter also, but there are many uninsurable cases where you want the protection of an LLC anyway.


I guess never really analyzed it in depth and just had both. What does E&O miss that a single member LLC protects against (and vice versa)?


LLC[1] mostly does what it says on the tin: it limits the liability to the company, not yourself or other owners. Without this any debt or judgement against your company can consume potentially most of your net worth (subject to bankrupcy, etc.). In practice for a freelancer this means you can limit your liability pretty strongly, if you are passing everything through as payroll the asset value of your company can be quite small, and it's value without you nil.

On the other hand various types of corporate insurance cover you for particular risks. Depending where and how you operate you may have to have them by statute or by practicality. So you may have to carry liability insurance by law if you have an office where people visit, or a contract may require that you hold E&O insurance up to a certain amount. In a way the latter is actually your customer protecting themselves from your use of a LLC. Without it, in the case of a settlement against you, you could easily just turn around and say "fine, the corporate account has $5 in it, here you go" and then fold up the company leaving them with no recourse. With E&O coverage for certain types of errors, they know they can get covered in a settlement up to a certain amount.

E&O covers you for particular failures in providing the service you are contract for. Say you were an electrician and did some work on a new building. They sue you claiming your work wasn't to code and caused them $100k in trouble with the city - you disagree. E&O insurance covers your court costs and potentially your settlement if it goes that way. It isn't going to cover you if you get sued for libel because of things you said about them, etc.

This is also why, for example, it may be hard/impossible to get underwriters for some software consulting. Because there are not professional standards groups that are well recognized and because potential damages from software can be difficult to asses (your script change cost us $10mm in AWS fees) insurance companies may not want anything to do with it.

So that leads to a third prong of protections which you didn't mention, which is you need to pay attention to your contract terms (and set them as much as you can). Depending on your situation this can range from easy to impossible, but can have a huge impact. For example, I've successfully added clauses to limit all liability to actual spend on previous 6 mo.

[1] this is hugely dependent on jurisdiction, particularly with single member variants.


Oh contract terms! I completely forgot, you’re right. I’m actually pretty happy with my final retainer contract. It limited damages to the last three months of retainer spend.


I seem to be in the most expensive state in the country for that. That's rent & food for a month.

But it's a one-time fee, so you're probably still right in general, but for the moment I'm mostly coasting on savings & sponsorships, focusing on the stuff I care about while I have the breathing room. I might consider being a bit more organized if/when I ramp up business again and am considering looking for new clients.


My side project is a programming statistics service: https://codestats.net/

It's mainly for fun and I want to keep it free, but of course I wouldn't mind if there was some money coming in to pay for the costs and motivate to work on it more. Currently I'm selling stickers and in the future I will implement some kind of paid accounts which will have some minor features that free accounts don't have – the dilemma is to keep it balanced so that free users don't feel second class.


> It's so much easier in the US. If you're an individual it's going to be taxable income, but there's no up-front paperwork to do

In the UK it's even simpler if you are recieving less than £1,000 a year in donations or similar. HMRC have basically decided taxing people's side hustles would costs more than it returned. https://www.gov.uk/guidance/tax-free-allowances-on-property-...


"For each donated dollar, I will create and send you 100 random bytes that you can use in your cryptographic applications."

$7 = 700 random bytes

$15 = 1500 random bytes + 500 bytes free!

$99 = lifetime* subscription for 25k random bytes per year

* your lifetime or my lifetime, whichever terminates earlier


Do you have any collectible limited edition bytes?


Those would be the special one-of-a-kind bytes that we log to ensure no two people get the same bytes twice. Bonus: the logs are numbered, so we can validate those bytes. Downside: we’ll have to ask for a monthly donation to cover storing the bytes and bandwidth ;-)


How about The Original: 00000000


High entropy edition: with RSA padding, signed by famous cryptographers.


I'd buy the $99 option and use it as the trigger for my dead mans switch :).


I'll take a nibble just for taste.


Word.


But do you warrant that they are actually random?

Truth in advertising and all that.


Sell licenses. People can buy a licensed version of your project. It's exactly the same as the free version, but it comes with a different licence.txt (which allows the purchaser to say that they supported you).

If you're not allowed to sell copyright licenses in Finland, then your whole software business is screwed.


I don't even see the point. If there's no enforcement of this law, why even bother with the illusion of legality? Just accept donations - and likely no one will ever bother coming after you.


Not sure you understand the Scandinavian/Nordic psyche.

My non-Scandinavian girlfriend never understood why people pay for the bus there if they never get checked. Or why people bother to leave money in a little box at an unmanned coffee/waffle/etc stand in the middle of nowhere. But most do as it is the right thing to do, guilt free.

And if there is a slight chance the tax authorities might contact him the guilt/embarrassment is worse than any token fine.


This is different. In those examples, someone is getting screwed. In this case it's just a pointless bureaucracy that can be circumvented.

They aren't the same from an ethical perspective.


I’m on the other side of a Nordic relationship and some times I have similar thoughts coming from a third world country. My partner’s mentality seem like utopia to me. I would love to understand it a bit better, do you have any references or reading material that discuss this psyche?


Not from a Nordic country, but with some similar-minded tendencies.

You understand that you enjoy living in a system that you can trust. You understand that being able to trust the system means that the system has to trust you. You value a working system more than a petty dollar or some other short-sighted piece of self-interest, because you get more benefit from having the system work in your favor than taking a little for yourself but eroding/ruining the system in the same go. If most people do the right thing, the system works and everyone benefits.

Simple as that! It's the opposite of the tragedy of the commons.

In non-utopian countries, you have to make an advance deposit into the system and may never do enough to make it universally trusted. People may never stop jaywalking, or taking a free coffee/waffle/etc. from the unmanned stand, or cheating your taxes with family income and business expenses. But I'm doing well for myself, so what am I really losing by doing the right thing? Life already put me ahead. I'd rather contribute a small part to a working system I can trust, than to grab another small pie just for myself.


Well, if they reach the 100k mark like the article’s author, the risk of a tax audit may start to keep them up at night


It's true that at my scale it would likely never be noticed. Personally I just don't like the risk even if small. But when looking at OP's case, that would absolutely be noticed by the tax authorities and they'd have to explain the nature of the income.


>I don't even see the point. If there's no enforcement of this law, why even bother with the illusion of legality? Just accept donations - and likely no one will ever bother coming after you.

This only works if you never piss anyone off, have no enemies and the government only stands to look bad from going after you.

Obviously accepting donations in an illegal manner is a stupidly low hanging fruit for someone who wants to screw you over. Sure you'd probably only have to pay back taxes (or whatever) in the end but it's a massive hassle and better to just keep it on the down low.


This assumes the government would even care if someone reports it to them.

...which they probably wouldn't.


Well, GGP said that accepting donations costs money. So perhaps selling licenses is more profitable?

Also, if you receive more than a few hundred dollars, perhaps the Finnish IRS will start noticing.


We call that the WinRAR model.


The exact same thing is for India. Individuals can't get non-profit status. So you have to sell something. A software dev friend tried donate button with cta "Get exclusive support" for few months. But international audience didn't quite get it.

I have seen some gamers in India asking for donations and giving direct account details(UPI[1] details), but I am very cautious against this. I am just waiting(selfishly) for Income Tax dept to serve notice to someone and get this clarified via court case.

1. https://en.wikipedia.org/wiki/Unified_Payments_Interface


Accepting sponsorships like this is not non-profit. You still have to report it as income and pay taxes on it.


True donations are not taxable in the UK, because they are not part of a trade.

In other words, they are not given in exchange for something; the something is freely given without the donation.

Of course there is the question of whether something is truly a donation. But charities have to deal with that question, so there are formulaic approaches to it, and advisors. Sometimes the wording that accompanies a donation must be written carefully, to clarify what is and is not expected for it, because donations can be directed to a purpose, which isn't (apparently) the same as paying for something.

I assume it's similar elsewhere?


"Tax-deductible donation" is a subset of "donations", at least in the US. I can "donate" (syn: "give") money to anyone. I don't have to do anything special for that, and in theory they should report it on their (personal) taxes as income. If I'm giving it to a registered charity (non-profit), I can deduct it as a donation on my taxes. Maybe that's part of why this piece generated so much discussion: for some, just the word "donation" carries certain connotations that others might not ascribe.


I wonder; if you had a list of donors, then you could be selling the privilege of getting your name on the list.


I'm actually curious if some type of phrasing-related arbitrage is possible. Like:

    Like my work?
    DONATE
    
    * all donations automatically receive (whatever)


What if donors are actually purchasing a spot on the contributions page? It would be like purchasing a classified ad in the paper or a normal internet ad. Their name or specific message would be displayed on the 'donations' page for a set duration. You might have to put some clarifying language on the page as well.


I mean, you can "sell" anything. For $15/mo, I will say "thank you, [your name]" out loud to my cat. For $20/mo, I will give a thumbs-up to the tree in my front yard and think about what a great person you are. Is the government really in a position to tell me that those things aren't "worth" what I'm "charging"?


Can you not do a "pay what you want" product? Here is this software which is open source. You can pay me what you want to for it- here's the link.

The software (Or service in your case?) is the product.


I'm not a lawyer so I don't know. I wouldn't risk it myself.

Currently our air carrier Finnair is under investigation because they offered a climate compensation payment for flights. They say the payment went towards biofuel and other compensation methods but it's being investigated if it was considered a donation.[1]

[1] https://www.helsinkitimes.fi/business/17392-finnair-discards...


You can create that and I think in 99% percent of cases you can also collect github donations without problems in Finland. If it were to go in court I think it could be easily explained as non-donation because there is work performed.

Also OPs explanation is not so straightforward, the money collection act is being contested all the time and many succeed in collecting money here.


Can you link sources to contesting it? I'm interested in learning what kind of things are approved.


Basically you state that it isnt donation but payment for gig. Which would apply to github "donations" as well, they arent donations but payment for the open source work.

Finnish peoples problem isnt the laws, but the fact that they are total pussies when it comes intrepreting the law.


Sure if you set up your sponsor tiers like "$5/mo: x minutes of bugfixing for you" then it would be just sales. I think if you just accept money and say "thanks" in return with a vague promise of working on open source, that's a pretty grey area and I'd rather not have to explain it to the authorities in the first place. :P


I think you’re thinking in the right direction. One could do some dual licensing, with a (slightly) different license. Eg BSD by default, and sponsors get the MIT license.

Seems like there would be a clear value exchange here.


IANAL (anywhere), but when you sponsor someone you're listed as a sponsor. I'd say that social credit has some intrinsic value.


Interestingly, while you can't be donated money in Finland people can certainly and rather freely give gifts to another person. It's even tax-free as long as gifts from one person remain under 4000€ for any consecutive three years.

Surely gettings lots of monetary gifts from foreign friends would probably not hold during a tax audit (they'd accuse you of trying to evade taxes unless you could provide a plausible reason why all these people would be sending you gifts) but it's an interesting counter-example nevertheless.


I just commented above, but isn't this actually what's happening? I mean, isn't giving something of value to someone, and expecting nothing in return, the textbook definition of a "gift"? This feels more and more like something is getting lost in translation.


The restriction isn't on receiving donations. It's on soliciting donations from the public.


(Not saying one country is better than the other but) in the US, there are no taxes on gifts until you gift more than $11 million in your life. If you go above $15,000 in any calendar year, you do have to notify the government, though.


> It's even tax-free as long as gifts from one person remain under 4000€ for any consecutive three years.

Not something to be impressed by; gifts are tax free in the US under $15,000 per one year.


As a fellow Finn who is also on Github sponsors, you would be correct if this would constitute as collecting money. Earnings through Github sponsors go through Stripe and have to be declared as income and is taxed as such. You have to fill out your tax information to get an North American tax card and after that, it's basically identical to income you get from abroad.


In Finland, a new law was made to allow small-scale money collection up to EUR 10000, but it has also other restrictions, so it may not help you: https://intermin.fi/en/police/fundraising


Cool I didn't know that. It does say that it's not for business purposes or accumulating "wealth" of a person but it's nice to learn.


There is an exchange here. Software is being provided in exchange for a discretionary payment.


That is a very interesting interpretation of the law.

Another would be to regard such a construct as income. Report your income. Pay your taxes and be happy.

It only becomes "gray" areas when people think it is possible to have non-taxed revenue streams.


> It only becomes "gray" areas when people think it is possible to have non-taxed revenue streams.

This may be true in some countries, but it's definitively not an universal truth. Some business models are not allowed even if you pay taxes on the income. This is what the user is describing, and reading the (English translation) of the text of the Act, I'd be worried too.


What is the ostensible purpose behind that law? Seems like something you could get changed (with considerable effort) considering there appear to be no strong interests who benefit from it.


People pretending to be charities and scamming donations. The idea would be that all legitimate charities are registered and have a permit. If they don't, it's likely a scam.


I think it's originally to prevent scammers. Like if someone was collecting money door-to-door and then said that people willingly donated to them (which would be true). I think it's just to add oversight into those kind of situations and to prevent scam money collection campaigns.


Write to your member of parliament and explain why you think it's terrible you can't just add these sort of extra earnings to your tax assessment at the end of the year. It's certainly possible in the UK to operate in this way but also more tax efficient once you get past say £40000 to run a limited company.


Yo send this thread to your representatives. They may help change the law. They're leaving GDP on the table


This is exactly the kind of problems cryptocurrency was made to address. I would just say each donation comes with a postcard so you are giving them something in return. If my government ever tries to do something like this, I will leave it up to them to figure out that I’m collecting donations.


That sounds like a very quick way to get a tax evasion charge...


Right. It must be such fun trying to figure that out from the monero block chain...


How common are bootstrapped (i.e. non-wealthy, non VC-funded) entrepreneurs in Finland?


From what I can tell this has nothing to do with that. Anything that could be considered commerce or an exchange for goods (even abstract goods) falls outside of it. This only applies to donations; it's just that the internet has created this in-between category where "donations" are made to someone working on a product that can't really be "sold" in the traditional way, and the law doesn't have a proper carve-out for those cases.


It was just a simple question.


Common. It is a capitalist, moderately wealthy country.


Couldn't you circumvent that by selling a really expensive bowl of fish soup or something like that? Or just say that you prostituted yourself?

That you would need to open a business is probably something most countries require though.


You can accept a gift. It's also possible for someone to give a grant. But I'm not sure how they would work out in case of open source. I know that people write books using a grant.


The thing about gifts is that the person wishing to give one needs to ask proactively how to do it and then you can give e.g. your bank account details to that person only. You cannot put your bank account or instructions how to ask publicly available. Years ago we asked about this from the authorities when I was in a non-profit and this was the answer.


In the states non-profit means a company that is not for profit. It doesn't mean you can't pay yourself a wage that is inline for the duties and title you have.


What a joke. Here in the US, as long as you don't give over $15,000 per year to a given individual, you don't have any tax or reporting obligations.


That's a strange law. I assume it serves some purpose (or must have served one when it was introduced, at least). What's the argument for it?


The US has a lot of charity scams and dubious NPOs collecting cash. There’s news about fraudulent GoFundMe’s pretty regularly, for example.

Finland is probably too far the opposite direction, but the whole sector could use a lot more scrutiny over here.


It seems like a lot of charities in the US are just a way for the wealthy to avoid paying taxes or for the founders to become wealthy


Yes, it’s not uncommon to have do-nothing NPOs that associate themselves with a noble cause and then spend most of their funds on one or two people’s salaries and perks. This is why apps like Guidestar and Charity Navigator were invented.

The IRS doesn’t seem to give these orgs much scrutiny unless they’re egregiously bad or become a big news story.


The IRS has been co-opted by the very wealthy. The IRS spends way more resources auditing the very poor than the very wealthy


Grifters calling or walking door-to-door and asking for money, for some made-up charity or organization. Especially targeting older people.

It's extremely frowned upon to begin with, but at least the laws make it illegal.

(Not that it necessarily hinders those that really want to scam someone. Some of these BS "organizations" just contract their work to foreign call-centers. Every year a lot of young European people are lured to some low-cost country in southern Europe, where they'll have to work for some call-center at below minimum wage - and these centers will sometimes work for anyone...)


What was the justification behind this law? Was it meant as some kind of consumer protection?


Write a haiku and make that the "reward" part of your project?


I'll sell you a pixel for $10


That is draconian


[flagged]


>That's what socialist policies gets you, permits from the state to do anything

Donation regulation is not a 'socialist' policy, and at a stretch, you could only say it's simply a policy which happens to be implemented in a capitalist social democratic country, in this case Finland.


It's really incredible how much the hatred for 'socialism' goes in certain circles.


Even more incredible are the lengths certain types of folks will go to defend these policies even when faced with very real examples of the negative consequences of ceding liberty in return for the state to "take care of you".


It's almost like different people have different ideas of what are acceptable negatives to trade-off for various positive benefits.


Don't worry, people do the same thing to defend the capitalist dystopia we currently live in.


I am not hating on socialism. It has it's merits like providing healthcare if properly implemented but having excessive permits and licence is one of the facets of socialism. Socialism is not the perfect system.


To be fair, all systems can be (and are) criticised.


I agree. Given this truth, complaining that people complain about your system of choice seems pretty silly


Would you mind describing why permitting & licensing are so linked with socialist policies?


The original comment read as if you blamed socialism.

If you did, you got rightly called out. If you didn’t, then I don’t understand what you meant.


How is blaming socialism a bad thing? Has humanity learned nothing from the failure of socialism throughout the 19th and 20th centuries?


The more individual developer stories I look into on Sponsors or Patreon or wherever, the more I see a recurring pattern. The vast majority of developers don't make any significant money. The outliers that do use the platform as a general-purpose payment processor. They take donations, but they also sell things. The line between isn't terribly clear.

The platforms help style all the payments as "donations" or "sponsorships" or "patronage". That avoids harshing the project vibe with overtly commercial overtones that turn off the financially immature and preternaturally entitled. But in reality, they're often really payments for products, services, access, and so on. Some people do simply donate, usually small dollars, and don't receive or care about "perks". Others buy the perks on offer specifically, as a simple exchange. Somewhere in between, people and companies may be inspired by donation-like feelings, but use the benefits to get their payments approved and expensed.

It's hard to draw any broad conclusion from outliers. But it all points to there being strange value in muddying the concept of paying developers with a lot of ambiguity, on both the buy side and the sell side. It's like one of those statues that looks like one thing from one angle, and something completely different from another.


In class and race struggles it's not uncommon to see someone worry aloud about token individuals who are "allowed" to succeed out of proportion to their peers. It gives the rabble hope, which keeps them sedate. But the success rate barely exceeds attrition at the top of the pyramid.

I don't think I personally will ever know if this is just an accident of the system (being happily exploited), planned, or a little bit from column A and a little bit from column B.

Enough notable success stories satisfies the Availability heuristic in your brain, but that often tricks you into thinking things are quite different than they actually are.


We see power-law distributions everywhere, notably the 80-20 Pareto rule. They are the rule with uniform distributions being the rare exceptions. The claim of a hidden puppeteer running this gigantic con that occasionally allows success and precisely mixes column A with column B such that the rabble attack one another only and never the mastermind pulling the strings is truly extraordinary.

https://en.wikipedia.org/wiki/Pareto_distribution


I agree there's a lottery-like dynamic in open software funding. The winner-outliers are well known, broadly remarked, and frequently advertised. The long, long tail of financial busts gets downplayed, though we all know it's there.

Same for startups, by the by.

I don't think it's necessary to personalize the rules, odds, and constraints that reinforce these outcomes. We could find individuals who see how it works and like it. But I haven't seen evidence to show they add up to any kind of conscious conspiracy. I'm more concerned about the smaller players who aren't winning and haven't seen how the game is skewed.


>Now, people watching the screencasts will naturally encounter these “private” screencasts and if they like the free ones, they will sponsor me (at $14/mo.) to get access.

Why are we calling this 'sponsoring'? It just factually is selling a product to people for a specific amount. Sponsoring/donating is more like people giving money for something that would otherwise be free. Otherwise Microsoft could also require a 500 usd 'sponsorship or donation' for a Surface Go. And requiring it monthly is just plain subscription service payment.


It is collecting money with an expectation of additional content in the future. So it isn't just a purchase. A subscription is closer, but sponsor adds the implication that your sponsorship is what allows the content creator to keep doing it.

Also, one of the dictionary definitions for sponsor is: "provide funds for (a project or activity or the person carrying it out)."

So it seems accurate enough of a term to me.


"provide funds for (a project or activity or the person carrying it out)."

So does a subscription or purchase. So not sure what you are trying to imply with this.

He gives access to stuff if you pay him money, with a promise of more stuff in the future. This just sounds like an subscription to me.

While I do agree there is a disconnect between open source dev payment and business, I don't think mislabeling a subscription as a donation does anyone any good.


we can argue about semantics but it's not really productive, imo.

He implies nothing, he states that sponsor definition covers the OP use case. Having more than one word to describe the same thing is not surprising.

You imply that your definition of sponsor exclude OP use case and there is mislabeling.

The interesting point is the revenue issue in open-source business. This guy solved it for him and present for all how he did it, with no lies and no hypocrisy.

That someone got hung up on a correct word usage shed an interesting light on where this disconnect between open source dev payment and money really lies.


That was my reaction as well.

He's selling courses using a freemium model.

The software is the inbound content.


I think sponsoring invokes a feeling of supporting an individual person, or small group. It says this product in of itself may not be worth $X/mo but the feeling of the buyer enabling a creator to continue their passion is what compels the buyer to pay.


Spot on. It's like they are discovering capitalism again from first principles and trying to cover it up with brand new coat of paint / terminology.


sponsorship != donation. That's why github chose the former. Part of the copy in the sponsor dashboard is even:

> You can set sponsor tiers with different prices and rewards


Joel Spolsky does a good job of explaining what's actually happening here in his old "Strategy Letter V" from 2002 [1].

Caleb hasn't discovered some secret means of convincing people to pay for OSS they can download for free. What he's done is create a commodity (the open source package) and then once it's popular, make a tidy profit off its complimentary product (training videos).

Unfortunately it's still true that people generally won't pay for software they can download for free, but if you're willing to dip into some other types of work (e.g. consulting, creating training videos) then you can make more than enough profit top keep going indefinitely.

[1] https://www.joelonsoftware.com/2002/06/12/strategy-letter-v/


I wonder if you could just pick a big open source product with a large community and sell complimentary product products for it... Or that you first must be a celebrity? Or at least have enough social proof.


Risk with that approach is that your complimentary products could become irrelevant or redundant as the open source project evolves e.g. training material could become outdated as functionality changes, a product that relies on some API could get broken by API changes etc. By owning both the open source project & the complimentary product, you can avoid nasty surprises (and be ahead of any competitors in the "complimentary product" space when you make changes in the open source project)


I can't say I'm an expert on RedHad's business model, but I think this is what they've done with Linux. Mysql did something similar as well, but in their case they built mysql from scratch themselves rather than attaching to an existing product.


I hate sponsorware concept OP is proposing. It seems to work for him but it’s opposite to the spirit of open source. His idea is that keep code secret until you find N sponsors. Further, he will hide important tutorials if you are not sponsor. I would hate to use this kind of open source project.

Here is more viable freelancing:

- create framework/library that everyone needs

- for feature requests/bug fixes, prioritize sponsors

- do office hours for sponsors

- invite sponsors/allow them to vote for future road map

- offer consulting credit to sponsors


What you're proposing requires him to sell his time instead of his work (which was already a portion of his time). It is impossible to scale that type of consulting work to multiple clients because you'll always be limited by your available time.

The spirit of open source isn't so sacred. In most cases it is hundreds or thousands of businesses benefiting financially from the work you've done.


This exactly


I started the journey out (sorta) this way. It's a hard life.


exactly, and that's a good thing. scaling means basically exploiting of other people's labour.


> Here is more viable freelancing

Implying his approach is not viable is weird, given that what he's doing is demonstrably working (at least at the moment). He's making free software and then selling subscriptions to training content, which is where he seems to be making something like 80% of his revenue. It's like Railscast, Laracast, Egghead.io (originally just angular tutorials!) etc.

The main difference to railscast, egghead.io etc. is that he's using Github as a payment processor & to manage subscriptions.


Well from what I've seen the Sponsorware concept is the ONLY monetization strategy I like from both a developer and a user. What alternative is better?

- Consulting, usually means the project is too complex and hard to use without help. Changes to make the project easier to configure are often not even considered...

- Donations, not sustainable for the developer (no users need to pay anything).

- Open-core, one of the worst strategies, as the developer's motivations are almost completely opposed to the open-source community. The developer wants people to upgrade to premium, so the premium features are always prioritised over community features, and people can't extend the software themselves...

- Hosting, not a bad strategy, but is slowly becoming less relevant as deployment of services is becoming increasingly easy.


That sounds more like straight up working to me. This way he's building features he's interested in and allowing some people to get a sneak peek, if you will.

I'm not sure how sponsorware is the opposite to the spirit of open source but your proposal would essentially allow someone to buy out the product roadmap which seems worse.


You are free to hate and free not to use such a product.

The truth is that many developers have taken the high road, and done the right thing, and they have been unable to make a living out of their open source efforts.

I hate that the ecosystem is so weak the OP has to resort to this model, but I have nothing but sympathy for the OP.


+1, Parent comment comes off as devs owe others anything labeled “open source” but OP is not selling open source — it’s software that’s been paid for, made public.

The whole entitlement that devs and companies have around open source drives me crazy.


Genuine question time: assuming that someone has created the "framework/library that everyone needs"[1], at what price points should that person be setting their sponsorship tiers, along the lines that you suggest, on GHSponsors? Perhaps something like:

- Thanks/gratitude: $5

- Prioritise issues raised by sponsors: $25

- Sponsor influence/vote on project roadmap: $300

- 1hr/month video-call/consult with sponsor's company/team[2]: $600

- Add sponsor's logo on the project's home page[2] (say for 1 year) - in a fun and engaging way, of course: $1000

[1] - I've done this, except for the bit where I convince everyone that they really, really need to use the library.

[2] - I've not yet seen a way on GHSponsors to limit the number of people who can sponsor a given tier. Which puts me off offering this sort of tier as over-subscription could quickly steal all my time and ruin my project's home page.


Nice idea, but most people want open source for free, and never contribute back, and so we only get code that big companies want, and not individual driven things that often have better ethics behind them, instead of the companies ulterior motive.


Do you have an example of that actually working for someone?


I have an example of my npm install logs being spammed by someone trying.


While the term open-source is a bit more vague, I'd argue that the software he's developing fits squarely into the term "free" (as in speech), as the FSF defines it. The source code is available to modify and fork, even if you must pay to access it -- which is allowed while still considering it "Free". I've always wondered how the FSF thought that would work exactly, since it seems weird to have something be forkable to only a select group of people, but this makes a lot of sense; it will be open sourced to everyone after enough people pay for it.

I'd also argue that this is one of the most ethical ways to pay developers fairly for their work, even if the author wasn't able to make that much money from it. The product the developer creates is FOSS, available to everyone after some time, and they still get paid for it (bonus; they're paid by the open source community for their work, rather than from one person/corporation that dictates their salary).


Practically it is closed-source and then once financial targets get satisfied (sponsors, sale, maintenance contracts) one open-sources it. Thus is how a lot of enterprise software gets opened.

If it is trully open-source from start then anyone can freely dostribute the copy outside of the elite group.


There is no singular "spirit of open source". Ask a hundred developers, get a hundred answers.


That's how my sponsorship tiers are set up actually :) https://github.com/sponsors/arximboldi

It doesn't seem to be working great though, at least on the page. I end up making a living through ad-hoc client work, which sometimes supports the open-source side as well.


Your arsenal of tools look impressive.

I am a little bit heartbroken it is not working out yet. Hoping you the best of luck.


It might be worth it to lower the 4H tier a bit. IMO 1500 seems a bit too much for 4H/month. Who am I to know tho.


> - for feature requests/bug fixes, prioritize sponsors

Isn't this equivalent to "keep code secret until someone sponsors you?" Except in his case, the work is done before you're sponsored, and in yours, the work is done after?


No. Not at all.

Because there is always a infinite amount of work to do.

Usually you do the most rewarding work.

With no money involved, then it is usually the most fun part.

And with money, it is what other people want. That can be the same, but does not need to.


His idea has better incentives. He doesn't have to insert himself or make consulting necessary, he has an incentive to make the running costs as low as possible, and the manuals as good as possible. Among other things.


These are great ideas thanks.


Comparing $90k as a W2 employee doesn't really compare to making $112k as a LLC or contractor. Taxes, health insurance, retirement...

On the other hand, his amounts are going up, so I'm interested to see how high they will go, and what it will consistently level out at.


If you set the entity up correctly and work with a decent accountant, your $112k turns into more like $40k taxable, and if you are married, that $40k drops to $20k @ 10% + $20k @ 12% or ~ $4500 in taxes.


Aha. And now you understand why we don’t have universal healthcare, crumbling infrastructure, and so much cash in the hands of the wealthy that interest rates are near zero.


I would like to point out that Universal Healthcare would be funded by a separate tax and probably would not come out of Income Taxes.


This is sorta already how it is in the US. While we obviously don't have universal healthcare, or a national pension, we do have Medicare/Medicaid and Social Security. These are separate than income tax. On your pay stub, it's the FICA ("Federal Insurance Contributions Act") deduction. There is also a smaller separate supplemental Medicare-specific tax. Federal income tax is a separate deduction.


Wait till COBRA runs out, friend.


I believe this is how the UK does it as well. You pay income tax, then you pay your NHS fee.


We pay a "national insurance" tax in addition to income tax, but this is mainly to cover the state pension from what I understand and maternity allowance etc.

As I understand it, NHS comes from general taxation.

Obviously there is no actual "fee" to use the NHS at the point of use - it is all free apart from prescriptions which are the same price regardless of what you get (and you might get it for free anyway depending on your circumstances)


Prescriptions are also completely free in Scotland. Same for Wales and Northern Ireland, as far as I know.


the NHS is mostly funded from general taxation

https://www.kingsfund.org.uk/projects/nhs-in-a-nutshell/how-...


I.e. so it can be properly regressive, right?


The US Government is projected to make 3.8T for 2021.

Isn't that enough to fund the programs you are speaking of?

https://www.thebalance.com/current-u-s-federal-government-ta...


This is news to me so I'm just saying, if you wrote about this in more detail, I'd read the shit out of it.


I think what he's generally saying: aggressively deduct expenses used to support your business. This would include rent, home office, computers, phones to conduct business, business meetings, travel, health insurance, retirement, etc. Then the member and spouse would draw low salaries putting you in low income bracket and thus low taxation. The 2017 TCJA further reduced taxation for business owners via the Qualified Business Income (QBI 20%) deduction.


I suspect a large part of it is a SEP IRA which lets you pack away like 57k in a tax advantaged account. Business deductions are almost like icing on the cake vs that.


Deductions sound good to people who haven't actually run a business or thought very hard about it. You have to be purchasing stuff to deduct. As a software engineer why not just not buy stuff since all you really need is a computer. Then you keep 100% of that money rather than 10%.

Some outliers are home office and utilities and things like that.


The attraction of deductions for sole proprietors working from home is not buying new stuff, it is the opportunity to pay for stuff you would buy anyway with pre-tax dollars.


> draw low salaries

The IRS has rules (typically unenforced) regarding this. You are supposed to draw a salary that matches your job in your local area. So if you are based in Tinyton, Flyover State, you could probably get away with paying yourself $30k/yr, but in NYC (where I'm based), my accountant told me $70/hr is basically as low as I can safely go. So I do $70/hr and then $14/hr in my retirement account.

The $70 turns into ~$78 after all the employer taxes add into it, and I take home only $52 after employee side of taxes are taken out of it.


> safely

What's the risk - audit? And if so, what's the risk from the audit? A fine for tax fraud? Jail time?


In lots of countries you definitely can't deduct rent, non-business travel, health insurance, or retirement. And home office only if you have a dedicated room for it.

I'm freelancing currently myself, and available deductions are honestly miniscule and well-defined.


IRS Publication 334: https://www.irs.gov/publications/p334/index.html

It's actually a very interesting little booklet.


This. In US there are many benefits of owning a business. Cars are an expense, home office is an expense, etc. When you work for someone else you don't have this flexibility but your risk is lower and you are not worried about finding clients.


Its difficult to deduct cars as an expense--that is one of many expenses that the IRS will scrutinize.

The broader point still remains, for a business (a 1099 is considered a sole-proprietorship) generally net income is taxed, and as a W2, your taxes are witheld per pay period.


Same in the UK, and I believe in other countries, it's not strictly a US thing.


What do you mean set up correctly? And how does 112K turn into 40K taxable?


I'm not an accountant or tax lawyer, so this isn't advise, only my back of the envelope calculation, not even using things like the 172 deduction, or business expenses, but my estimate was actually way off almost double.

Gross Income: $112k

- SEP IRA 25%: -$28k

- Owner Health Insurance: -$15k

- 199-A Deduction (20%): -$12k

Total business income for taxes: $47k

- Married Filing Jointly Deduction: -$24k

- Total taxable income: $23k

Tax on $23k (10% of first $20k, 12% of next $3k): $2360


With S-corps you do have to actually pay yourself wages, thus incurring some FICA taxes. Rule of thumb I believe is 50% of net income, up to ~$100k. Given that, you can then also contribute (and deduct) as the company up to 25% of salary towards 401k

Another gem many people don't know about is "Increasing Research Activities", for certain industries this essentially translates to 5-10% of your total payroll becoming a credit. That's huge.


I was doing my estimation based on an LLC, since most people don't set up S-Corps. I do operate through as an S-Corp, and I pay myself ~60%, and put 20% into my SEP-IRA.


> Owner Health Insurance: -$15k

WTF? Who pays $15k PER YEAR for health insurance? That's nuts. In most countries USD$15k would pay for healthcare for 2 or 3 people for their entire lives.


$15k is a cheap family policy in most of the country. My wife and I pay $24k/year for the cheapest silver option with a low deductible. My wife gets pneumonia and bronchitis almost annually, and every few years gets hospitalized. On top of that, she has 5 medications she takes for her asthma and allergies that without insurance would add up to almost $1000/mo, so sure we could go uninsured and save close to $12k/year, but the second she gets pneumonia and ends up in urgent care or the ER, we've lost all of the savings. And that is just her, I have to get my blood drawn quarterly for a thyroid condition, and each time they bill that to the insurance it's $1600.

So sure $15k is ridiculous to pay for health insurance, but in the US, its the cheap option for a family.


That’s actually fairly “cheap”, if it’s covering more than one person.

For a brief period I lived in Virginia and had no medical coverage through my employer. The legal minimum coverage was $1,400 / month for my family of four... and it was basically worthless; I would have had to have paid out something like $40k in a single year for medical services before I would have broken even.


I'm privy to my company's books to see the employee cost (free for the employee, usually ~$150/month to cover their family as well) as well as the total cost for all of our employees across several states. We have very high quality insurance as standard, and the full coverage plans are more like $20k - $25k/year. It's completely out of control.


> In most countries USD$15k

is more than they make in their entire lives.

Trying to compare US COL to "most countries"

And if you wanna only look at western countries that's obviously demonstrably false.

Whatever people pay as part of the healthcare tax is gonna come out to about $15K for someone who is making $100K in most EU countries.


I'm currently paying over $2K USD monthly, and that's cheap for my area (family plan) :-/


That's not uncommon. US healthcare is expensive. People don't realize socialized healthcare would likely not change their paychecks negatively.


Do you use a service for bookkeeping?


I do not. Bookkeeping for a small business really doesn't take much time. I spend about 2 hours a month working the books, then come January, I have my accountant's clerk come back and do a final pass over everything to prep for taxes.


Many expenses related to the operation of the business become tax deductible. At minimum, that usually includes internet access, hardware/software upgrades, and potentially some % of your living space dedicated to the business. If you do it properly (usually via documentation), you can often include miles driven to meetings, professional travel, meals with customers, prospects, and contractors, and a ton of other things.

And still none of that considers things like Simplified Employee Pension Plan (SEP), health insurance, home maintenance, etc, etc.

The list can go on and on depending on the type of your business, jurisdiction, and supporting documentation.

* Talk to someone about your local tax rules before taking action.


What in the world....mind sharing tips or any links where I can learn more about this?


Get a good accountant. They are seriously worth it.


This advice is invaluable.

I only pay my accountant around $2000 to handle a bunch of housekeeping at the end of the year that I'm to lazy to do during, and to file my taxes. For years I did my own taxes using Turbo Tax Self Employed and Turbo Tax Business Editions, but in 2016 I decided to outsource all of that headache, the first year, my taxes were half of what they were the year before with similar income. Then after the TCJA in 2017, my taxes were only 1/5th what they had been before the accountant, with close to double the raw income.

The biggest changes from doing it myself: I got an accountant; I incorporated (s-corp) instead of doing self-employment income; I draw W2 income now (using Gusto); I set up a SEP-IRA and put 20% of my W2 earnings as an automatic debit from my business account (in Vanguard); TCJA chops off 20% of my distributions on my K1; and I'll state again, I hired an accountant.


I hear this advice a lot, but what does an accountant actually do differently? It always sounds magical. Are there super secret deductions and credits that aren't on Turbo Tax, and only accountants know about?

I feel like I'm doing 90% of the work already, having organized all my expenses and income. What are they doing other than typing it into their own Turbo-Tax-equivalent?


My brother explained it to me this way:

“TurboTax will take what I did last year and minimize my taxes. My accountant will tell me what to do differently this year to minimize my taxes next year.”

In other words a good accountant is a forward-looking advisor, not just a calculator.


Any advice on how to hire a good accountant vs one that just talk so they can charge a lot?


I actually don't. I lucked into mine, he's the brother of a business partner.

Almost every accountant out there will be better than an H&R Block or Turbo Tax.


Would love advice on how to find a good accountant.

It’s pretty easy find an accountant but they might not be good and it’s hard to tell, especially in advance.


tax laws change routinely, so you'd be best off consulting an accountant

somewhat relevant reading on what can be done if you're well versed with tax laws: https://scottestill.com/buy-new-used-car-2018-get-100-tax-de...

Surprisingly, this dealer has an entire page dedicated to it this, and why you should buy one of their SUVs: https://www.landroverhuntvalley.com/business-tax-advantage.h...


Comparing working as a W2 employee doesn't really compare to working as a contractor. Getting to choose your own hours, the direction of your project, who you get to work with, etc. is far more valuable to me than a bit more money.


The article is the one that compared the two, saying that he now makes "more". It is completely correct that you cannot directly compare W2+Benefits to Contractor Revenue. The rule of thumb is to add 50% to a W2 salary to include health insurance and other benefits.

So he is nearly there, but not yet.


I worked as a contractor in 1099 for years. It was exactly the same as W2, except I had to pay estimated taxes 4 times a year. I didn't get to choose hours, direction, who to work with.

I think you're confusing it with personal projects.


> I didn't get to choose hours, direction, who to work with.

There is nuance in that statement. The IRS has a test for whether a person is an employee or a contractor.

https://www.irs.gov/newsroom/understanding-employee-vs-contr...


You're right. The 112k as his own small business is far, far better. What he's built has real durable value and new people will continue to pay for old content.


I hit $500/yr on Patreon this week for my open source work! :)

Nice work, I should think about having paid only videos as well, I believe I can do that pretty easily on Patreon. Good tips in here.


Lol I didn't notice there wasn't a 'k' in there and was really impressed for a moment.


I'm still impressed. It makes me happy to see that people are getting a bit of money for the value they bring us.


Anybody have opinions/reasoning on Patreon vs Github Sponsors when it comes to open source work?


The biggest difference would be that GitHub Sponsors has no fees [1], so everything people put in will go to the developer. Where Patreon can take 5-12% depending on the plan [2].

Additionally, GitHub is just so much closer to the actual open source work and more easily discoverable for users of your product.

As a supporter, I'll pick GitHub over Patreon anytime.

[1] https://help.github.com/en/github/supporting-the-open-source... [2] https://www.patreon.com/product/pricing


That's what I was surprised the most about. 0% cut and they also mentioned a 5k match? What? How is that even viable for Microsoft?

That seems superior to basically every single platform out there. It's an instant win for GitHub Sponsors.


It's a promotional incentive. Fees will happen, and matching will end. But in the meantime, it means my sponsoring a project I care about magnifies my money for a cause I value, so I'm happy to participate.


Paying 5k to high profile people is probably just a fraction of what they spend on marketing, but probably more effective.

Say you are a marketer and you bring hundreds of paying users to a platform, 5k is cheap.


Microsoft has such deep pockets, they can probably afford to lose a bit here to get people to migrate to their platform.


Yeah the $5k match seems easy to game


I for myself, coming from a privileged situation wonder if 500$/yr would be worth it for me.

Do calling it "work" it is too little. Won't pay the time spent on a job.

At the same time it is an amount of money, causing responsibility. Giving the feeling that one has to return something for it ...

So how does at affect your fun-level?


I don't have the feeling that I have to give something in return. It's a voluntary donation, people can donate, or not. They can cancel at any time. I don't feel any pressure to 'deliver' anything. They're paying because they want to reward the value I have provided, and likely will continue to provide. If I stop providing it, I assume people will slowly cancel their donations, which is how things should work.

If anything the fun-level has gone way up because a community has formed around one of my projects, which has been great.


I have my own little company and I feel like since its profitable (7 figures/year) I'm able to take my time and perfect parts of the project (like SQL indexing, UI/UX, new features). The money allows me to have the freedom to have fun. I've built internal libraries where I could have just used an open source version, but its mine and I enjoy it.

I had started another company before that I spent over a year on and I made $0. Not fun.


Congratulations! That's great! How long have you been doing the open source work and what industry does it serve?


Thanks! Years now, though the project that has gained traction lately is HomelabOS. https://homelabos.com/

Not really serving industry, self-hosters and home-labbers.


That is actually quite cool. If people had to pay for facebook they wouldn't. What do you think is missing for self-hosters, easy sign up ? I don't think it is easy create to DNS and private server for normal folks.


> Here’s how Sponsorware works:

> Create a cool piece of software

> Make it exclusive to people who sponsor you until you reach a certain number of sponsors

> Then open source the project to the world

This is how ICOs worked, for the teams that actually delivered anything. Without any other monetization path they resorted to taking presales of tokens shoehorned in convulated ways into products that didn't need them, but frequently involved open source code for a community. This resulted in many misaligned interests for people that eseentially were sponsors.

It's nice to see the same sentiment reflected in other parts of the tech industry in a way that more people respect and can relate to.


Or Kickstarter or any other kind of fundraising effort I guess. It’s a pretty cool adaptation of a fairly established practice.


His data clearly shows most "sponsors" only sponsor him to view his webcasts. Is it really right to call that a sponsorship, as opposed to a subscription? What are the legal implications? (and yes, I'm aware that this is how most of patreon works too)


I'm a lawyer, but I can't give legal advice here. See https://notlegaladvice.law/.

If you're interested in the issue, however, you might start by reading a little about "money transmitter" regulations. An early payments platform for open projects shut down at least partly on account of it. I suspect the concept of "perks" became widespread in part to differentiate fundraising platforms from money transmitters.


In the UK at least this kind of revenue is taxable and hmrc doesn't really care if it's called donation, sponsorship or subscription. It makes a difference when it's a charity of course but open source projects usually are not.


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