Crowdfunding a volunteer's prize for a non-profit startup


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In order to float this particular startup, I need a prize mechanism that can: 1) take money from a crowdfunder like Kickstarter; 2) select a winning volunteer based on the funders' votes; and 3) transfer the money to the winner. The purpose of the prize mechanism is to attract the attention of prospective volunteers. Attention is the blocker for this particular startup; promising to award a prize (say $5,000) to the "most valued" volunteer should get us over that hump. I'll be pitching both the prize mechanism and the startup plan to the funders, but funding is needed only for the prize mechanism; the rest of the plan will execute pro bono through my contributions and those of the new volunteers. Only the new volunteers, however, will be eligible for the prize.

Is there a kind of standard "crowdfunded prize mechanism" that I could copy and paste? Or has anyone else attempted a similar prize offering who I could ask for advice?

I have no experience in fund raising or volunteer recruiting. I can ask the crowdfunder for advice, but probably I should first put together a rough proposal. So I'm asking here for rough pointers, please.

Edit: Searching the crowdfunder sites (something I should have done earlier), I found just one unsuccessful bid to fund a clean technology prize.

Non Profit Crowdfunding

asked Aug 11 '13 at 15:08
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Michael Allan
1 point
  • Just a heads up, I don't think what you're describing would fit under Kickstarter's terms. "No contests, raffles, coupons, or lifetime memberships." http://www.kickstarter.com/help/guidelines?ref=footer. Perhaps I'm interpreting what you're asking incorrectly, but it does feel borderline to me. Perhaps there's another alternative besides Kickstarter. – rbwhitaker 6 years ago
  • @rbwhitaker Thank you, I didn't know. I couldn't use Kickstarter (for unrelated reasons) and ended up looking at Indiegogo and Bountysource. See my answer below. – Michael Allan 6 years ago

2 Answers


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First, you should consult an attorney that specializes in the topic of such contents.

Gambling and other schemes like the one you're describing are heavily regulated by the government. See e.g. http://www.nals.org/?p=1340 for one description of complexities involved.

Your question seems to assume that you're allowed to create such scheme. I'm not an attorney but it's quite likely that doing so would be illegal for you. Hence, consult an attorney.

Only if an attorney confirms the legality of your scheme, worry about mechanics.

answered Sep 17 '13 at 16:37
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Krzysztof Kowalczyk
1,950 points
  • A misunderstanding I think. My question is not about gambling because no prize is offered to financial contributors. I ask about funding an achievement prize, e.g. Nobel, Booker, Pulitzer. It's unlikely to be illegal just because it's funded by a crowd instead of a wealthy man. – Michael Allan 6 years ago
  • The thing is: you're not a lawyer. Neither am I. Therefore: talk to the lawyer. Unless, of course, you're fine with the possibility of going to jail because you did something that you, a non-expert on the subject, *thought* was legal but wasn't. – Krzysztof Kowalczyk 6 years ago

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One possibility is a self-governing fund. Assign ownership and governance of the prize fund to the backers themselves and let them decide the award mechanism together, and after the fact. So you just have to collect the backers' pledges and pay them into the fund (perhaps on some trigger such as a funding threshold, or achievement of a project milestone), then let the constitution (example below) come into force. Thereafter the backers govern the fund according to the constitution; they award prizes and maintain the fund, or they dissolve it, or whatever else they choose. The initial constitution might be something like this:

(A.1 ). The fund shall initially be administered by its original proposer (the administrator) on behalf of the backers.

(A.2 ). The original proposer of the fund shall not personally receive any money from the fund, neither in payment for services, nor in a prize award, nor in any other form.

(A.3 ). While the original proposer of the fund remains the administrator, he may dissolve the fund at any time. He shall then return the assets of the fund to the backers by some reasonably efficient and timely means of his choosing. The purpose of this rule is to unwind the fund in the event of a failure of governance.

(C.1 ). Each backer and the administrator may put forward motions, and each may second the motions of others. Nobody else may put forward motions, or second motions.

(C.2 ). The administrator shall provide a publicly archived mailing list for purposes of putting forward motions and other communications concerning the fund.

(D.1 ). The administrator shall schedule a decision for each seconded motion. The decision shall be scheduled no sooner than 3 months and no later than 6 months after seconding.

(D.2 ). Each backer may cast a single vote on each motion. Only a backer may cast a vote. The weight of the vote shall be proportional to the backer's monetary contribution to the fund, up to a maximum of 10% of the total. No vote shall carry more than 10% of the total voting weight. Additional money contributed in excess of the 10% shall be ignored for purposes of vote weighting.

(D.3 ). The backer shall cast the vote in the form of an email message (vote message).

(D.4 ). The administrator shall publish all vote messages such that anyone may read them. Email addresses in the vote messages shall be obfuscated enough to deter spambots, but not enough to be unreadable by humans.

(D.5 ). The administrator shall mark each published vote message with its voting weight such that anyone may tally the votes and determine whether the motion has carried.

(D.6 ). The motion shall carry only by a plurality of weighted votes.

(Z ). This constitution (rules A to Z) shall not be altered except by a decision according to rule D.

See also my complete proposal draft. I eventually posted it on Indiegogo. But then I didn't go forward with it; I decided I haven't the marketing chops to sell a complicated mechanism like this. There it is anyway, in case others can use it.

Meantime I'll leave the question open, because this answer doesn't satisfy me.

answered Aug 18 '13 at 15:18
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Michael Allan
1 point

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Non Profit Crowdfunding