Gov/en/Portal:Economy/Need-Driven-Funding

💡 In simple words: Need-Driven Funding is a rule of honesty: WikiDeal first says how much money it really needs to run, like a family writing its monthly budget on the fridge. Donations follow that real need, and each donor freely chooses how many of their thank-you Rewards they keep and how much they simply give to the project.

🎯 In 20 seconds (scientific summary): {{{1}}}

Formerly known as Boost, Balanced Boost or Funding Stabilizer: those names are deprecated.

Need-Driven Funding

Need-Driven Funding is currently proposed as the rule that keeps WikiDeal's funding aligned with what the platform really needs at each stage, rather than with market forces. It goes in this tendency: the Foundation declares its need, donations follow that need, and each donor decides what their donation becomes.

Type	Second algorithm
Separate from	Bonding Curve
Purpose	Funding aligned with declared needs
Cap	None, continuous curve
Driver	The Foundation's declared need (need gauge)
Speculation	❌ None, at-cost, donation-based
See also	Rewards · Rewards FAQ

The two building blocks

The mechanism currently rests on two building blocks, proposed as a basis for discussion:

• The need gauge. The Ynternet.org Foundation would declare its real need publicly: an initial requirement (for example CHF 100,000 invested before the call for funding) plus a variable functioning cost (for example CHF 12,000 per month of operating costs, set at launch and adjustable). While this declared need is not covered, donations would carry the full multiplier of the bonding curve; once the need is covered and a provision builds up (typically a few months of costs), the effective multiplier would descend continuously — no fixed cap, no sudden thresholds, no arbitrary percentages — and the difference would feed a provision fund intended to be managed by the Ynternet.org Foundation for the maintenance and development of WikiDeal.
• The donor's free choice. At donation time, the donor sees how many Rewards their donation generates, and simply chooses how many of those Rewards they keep and how much they leave to the project as pure support. This choice is made at donation time and does not change later.

The mechanism is not about maximizing returns: it is about aligning funding with what the platform actually needs at each stage of growth. The exact formula is intended to be published and reviewed; the research context is documented in the state of the art below.

Starting at zero or in negative territory

A key point: the funding starts at zero or in negative territory, because investments by the founders take place before the call for funding. This is what makes the beginning very attractive. The key variable is the funding cost ratio: how much has already been spent when the first call is launched.

Donors and potential donors would receive notices (suggesting a complementary donation, or informing their network) and would see a reward multiplier that theoretically decreases over time, though not necessarily continuously: the effective multiplier for donors decreases while the share feeding the provision for maintenance and development grows with revenue.

One single type of Reward

The model currently proposed uses one single type of Reward:

• 1 Reward = CHF 1 when cashed out, without guarantee of timing.
• The prototype plans about 100 million Rewards in total: about 50 million for donors (Roundtable 1) and about 50 million for early supporters.
• Rewards exist only once generated by actual donations, and become activated for redistribution under the conditions described in the Rewards FAQ.

How subscription revenue would be distributed

Subscription revenue would follow the 25/25/50 rule:

Share	Destination
25%	Donors: shared equally between all activated donor Rewards
25%	Early supporters: shared equally between all activated early supporter Rewards
50%	WikiDeal operating costs

Within each group, each subscription franc would be divided by the number of Rewards activated at that moment: only activated Rewards participate. Credits accumulate with every subscriber; Rewards convert 1:1 into the cash-out balance, and transfers become possible from CHF 100. There is no guarantee of distribution timing: it depends on revenue growth.

The donor's free choice: proposed formulas

To make the choice easy at donation time, simple formulas are currently proposed (see the Rewards FAQ for details):

• Pure Patron (×0): everything is given, the pure gift of a patron.
• Seed Keeper (×1): a break-even operation, you get the same amount back.
• Harvester (×2): if it works, you harvest double.
• Gardener: the maximum amount, according to the bonding curve and Need-Driven Funding.

An illustrative example

The variables matter more than the figures: all figures below are placeholders, and contributions remain non-speculative donations.

• About CHF 100,000 invested before the call for funding (the initial requirement), plus a functioning variable of about CHF 12,000 per month of operating costs (salaries, servers, steering committee meetings).
• After 6 months: CHF 100,000 + 6 x 12,000 = CHF 172,000 raised would bring the declared need below 100 percent.
• After 12 months: CHF 244,000 raised would mean the initial requirement covered and 12 months of costs covered.
• The variables are the monthly amount (here 12,000) and the number of months of provision wanted (typically 3): a provision target of 3 x 12,000 = CHF 36,000. The criteria themselves (what counts as the real need, which costs are incompressible and which are reducible, such as Open Call budgets) are proposed for study in a draft wave 2 Open Call.
• On a funding curve where the multiplier is blocked at x100 for the first CHF 200,000 raised (out of a CHF 1,000,000 target), then declines towards x30: once the declared need is covered, the difference between the multiplier promised by the curve and the effective reward attributed would benefit the provision fund of the Ynternet.org Foundation.

Relationship to other mechanisms

Need-Driven Funding is a companion to the bonding curve, not part of it:

• Bonding curve → determines total Rewards generated per CHF.
• Need-Driven Funding → aligns the effective reward with the Foundation's declared need, and frames the donor's choice of Rewards kept versus support left to the project.
• Subscription model → provides the revenue that would make Rewards convertible, following the 25/25/50 rule.

The combination of the bonding curve and Need-Driven Funding creates a self-regulation that makes Exit to Community much less speculative: based only on real flows and real needs.

Karma tokens

Karma tokens are a separate, non-convertible form of recognition for contributions to the ecosystem. They are not part of the subscription revenue distribution and cannot be cashed out.

Principles and transparency

• Non-speculative: funding follows real, declared needs, not market sentiment.
• Transparent: the need gauge and the distribution formula are intended to be published, auditable, and subject to Open Call review.
• At-cost: no extraction beyond what the platform needs to operate.
• Free choice: each donor decides how many of the generated Rewards they keep and how much they leave to the project.

Public reporting of subscription revenue, distributions and operational spending is intended to give donors visibility into how the money flows through the system. The Court of Auditors is currently proposed as the independent body verifying these distributions.

State of the art

Adjusting rewards to the real needs of a shared platform relates to the economics of clubs, nonprofit enterprise and threshold funding mechanisms. The references below situate this invention in existing research.

• James M. Buchanan (1965), An Economic Theory of Clubs, Economica, 32(125): doi:10.2307/2552442 · club good on Wikipedia.
• Henry Hansmann (1980), The Role of Nonprofit Enterprise, Yale Law Journal, 89(5): doi:10.2307/796089.
• Alexander Tabarrok (1998), The private provision of public goods via dominant assurance contracts, Public Choice, 96: doi:10.1023/A:1004957109535 · assurance contract on Wikipedia.
• Ethan Mollick (2014), The dynamics of crowdfunding: An exploratory study, Journal of Business Venturing, 29(1), on threshold (all-or-nothing) funding: doi:10.1016/j.jbusvent.2013.06.005.
• René Bekkers and Pamala Wiepking (2011), A Literature Review of Empirical Studies of Philanthropy: Eight Mechanisms That Drive Charitable Giving, Nonprofit and Voluntary Sector Quarterly, 40(5): doi:10.1177/0899764010380927.

See also

• Bonding Curve
• Rewards
• Rewards FAQ
• Revenue Structure
• Subscription Model
• Court of Auditors
• Funder Stories