NonProfit

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Most OnlineCommunities are paid for by their proprietors, and consequently they are owned by their proprietors. For the most part this works as online communities are cheap to create and don't have a long life expectency. Further, they have a small number of participants, so there is a small pool to draw resources from. However, TheSeptemberThatNeverEnded and the subsequent .com boom brought with them a large number of users to the Internet. This made a few OnlineCommunities really large, like SlashDot, KuroShin, and WikiPedia. For a long time, these communities sustained themselves through large private donations as part of the DotOrg rush of OpenSource. However, that business model collapsed with the dirth of .com money and the inability of most open source projects to fund themselves through commercial ventures.

However, if you realize that online communities are really volunteer organizations, and you give up on the myth that InformationWantsToBeFree (particularly bandwidth and server space), then you can ask your membership to donate to sustain the online community. While original expectations for a while were that donations were unnecessary, many people online are now aware that funding is necessary to survival.

Of course, money is power, so as soon as you accept money from someone you are responsible to them. This creates a serious burden for the online community. For one, it creates CommunityMembers that you cannot in good faith sanction. Two, you cannot be malfeasant with the money. You must employ OpenProcess to account for that money. Also, while not truly necessary, if you believe in "taxation with representation," then you might want to privilege paid voices over others in the say of the community--although that has other consequences. Finally, donated money to a private citizen is considered a gift and is taxable as income in most jurisdictions, which severely cuts down on the value of the money donated, possibly by 50% or more in some jurisdictions.

Further, running an online community is often the work of one person, the GodKing. But if she turns into an AbsentLeader, the community may suffer. While it's natural that the community will suffer socially, it will also suffer technically as there is no one to maintain the servers or do administration. While the common method is to appoint co-administrators (wizards, co-sysops), this is hardly democratic. It fails completely if the GodKing exercises her RightToLeave or dies as the community no longer has an owner to sustain it.

Therefore, DevolvePower of ownership and consequent responsibility to TheCollective by remanding ownership of the community to a NonProfit corporation. This is the natural way of things for most large volunteer organizations, and so it should be for OnlineCommunities. A non-profit has the advantages of being accountable and subject to special tax laws. It also can last longer than the life or interest of the owner of the community as the community gains control over itself.

It is easier to get a few large contributors at first, and these donations may simply be in-kind donations, such as someone to donate server space and bandwidth. Nonetheless, you can use a number of MicroPayment schemes to solicit money, such as PayPal. The strength of a large number of small contributions is greater than a small number of large contributions as if one person changes their mind it does not impact the community as much.

While there are many models for a non-profit, typically at the very least the organization must have a board of directors, so at least decisions have greater PeerReview. One can further democratize by allowing wider membership and electing the board of directors or voting on major changes, although of course you could vote without a non-profit as well.

But, most online communities have memberships from many countries. You may need to create several related non-profits in order to properly solicit donations from a large enough proportion of your membership. Further, non-profits cost money to operate, as you need legal advice to create one and you also need to file your accounting books, which means you need proper accounting. They require a lot of work too, so one must be serious before starting one lest it drag on time. Also, your membership may consist mostly of students as many online communities are, which may limit the amount of cash you can gain.

See also the CollaborativeMediaFoundation.

The case of Wikipedia's server failures

I think it is instructive to observe the difficulties that WikiPedia has been suffering over the last two weeks and the response by Wales (the BenevolentDictator).

See http://wikimedia.org/letter for a recent summary of the situation by the site's founder.

There are a few points to be taken away purely as matters of technology management. Sites, wiki or otherwise, with the complexity and traffic load that Wikipedia experiences require more careful technical work than has been the case. That BrionVibber and the others involved have been expected to handle server maintainence, without being paid, on a site of this size is inexcusable. Nonprofit ventures beyond a certain size ordinarily have a paid staff. Wikipedia clearly reached this point some time ago. Wales, apparently, failed to grasp both the magnitude of the problem and the fundraising potential that is present. Vibber and the others would be wise to point out to him that the responsibility, coordination, and time commitment are such that it is unrealistic to expect the effort to continue on a volunteer basis.

Which brings us to another point. As of today (29 December), Wikipedia has raised over $20,000 to address the outage, with a modest effort to raise funds over a period of only a few days. This has occured despite Wales' refusal to accept an independent board and despite the absence of any sort of public statement about the actual costs Bomis (Wales' business) occurs on an ongoing basis to support the project. If these issues were to be addressed, it is easy to imagine that $100,000 to $200,000 could be raised from individual contributors -- perhaps more than that through grants from foundations and other institutional sources of funds. -- LouisKyuWonRyu, a pseudonymous Wikipedia user

The success of Wikipedia's fundraising was in part because of SlashDoting after the letter went up. There appeared on slashdot to be considerable support for Wikipedia among non-Wikipedians because of the value of the content to those outside the community (tangentially related: ContentOverCommunity). Wikipedia is nominally owned by a nonprofit -- WikiMedia -- but the nonprofit appears to be on a relatively short leash held by the BenevolentDictator.

Discussion

A related observation is that GodKings frequently tire of their reign with time. They have no RightToLeave per se, because they cannot just disappear and expect the community to continue to function as can other contributors. At a minimum they must appoint some sort of regent, or a more permanent successor. I have seen both solutions used. Particularly in communities of relatively narrow focus, GodKings can lose interest in the community as their own hobbies or personal or social interests change.

Many on-line communities have formed around mailing lists and web resources that are operated by portals, such as Yahoo and Google. Such groups face their own set of problems.

I was inspired last night to do something new and interesting. One of the ongoing problems with online organization is that years of work may be destroyed when the owner gets bored, leaves, goes broke, or dies. The obvious solution is to transfer ownership to a non-profit organization or a LLP.

The legal and fiscal problems that surround creating (international) non-profit organizations are scary to most Internet-based organizations who are populated by geeks not activists. But geeks are activists these days.

Copyright was a similar problem, but the Free Software Foundation and the Creative Commons have it as easy as linking to a "ready made" license.

The collusion of civil society and open source (as we are working on) is not a unilateral relationship, but must also give back something to the open source community. Civil society has a lot of experience in the administration of non-profits that could be transfered back to the open source movement.

Therefore, I am now (as of today) shopping around the idea of starting a 'Creative Commons' like initiative to simplify the creation of non-profit organizations.

One should be able to download or read a kit on how to write such documents to fit one's particular context. This is exactly like how law firms do things internally, but there is no reason why such documents should be proprietary.

A SocialSource as I see it, should be more than software, but things like Constitutions and budgetary instruments that could be shared with other organizations. If there was room for those kinds of documents with the software, it would go a long way towards moving civil organization forward, I think. -- SunirShah, June 11, 2004 at the Wizards of OS Conference, Berlin, Germany

For what its worth I think we have all had a bit of a free ride in IT terms on the back of investors who have been prepared to put money in for nothing. In the end we need to get some kind of sensible funding together and I guess we'll have to pay. Personally I'd rather pay than put up with adverts: especially for a service for the kids (whom I do not allow to watch commercial TV for example). Incidentally the above is oldish but Wikipedia is still skint ;o) --AndrewCates

: We're [moving] WikiFur away from WikiA on this basis - the ads and branding they [wish to apply] are too much to bear. We're also considering forming a non-profit organization (a literary 501(c)(3) corporation) to own and operate the site, its DomainName? and registered ServiceMark?. It's a hassle, but it's probably worth it - the community has invested too much time and effort for any one person to control it. --Laurence "GreenReaper" Parry