Polar
Upcoming changes to Issue Funding #3001
Replies: 2 comments 2 replies
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This is super interesting, thanks for sharing. In my current situation I have to attend mandatory counseling from someone working in a agency in relation with my government and employment systems. And let me tell you, they are not accustomed to the sponsorware strategy I'm following 😅 Barely catching up on Youtubers and streamers more generally. I think I'll send this to them 😄 The changes to issue funding sound good! Thank you for doing the hard work 🙂 |
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How's this coming along @birkjernstrom |
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Thanks for asking @HDVinnie. I should have updated this discussion when I wrote the following: https://github.com/orgs/polarsource/discussions/3998 As mentioned in that thread, we will not be making any changes to issue funding in it's current state. It was our first feature and has a different flow of funds & architecture than our core billing engine (products, subscriptions, memberships with MOR). We want to continue expanding on our core billing engine (merchant of record) with additional fundamental building blocks which would ultimately allow us to rebuild a version of issue funding on top of it. Streamlining the product experience + billing operations & flow of funds. |
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Awesome. Your own core billing engine must be exciting. One less service (stripe) to rely on as well. |
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We need to make some changes to issue funding on Polar.
Upcoming changes
We’re removing disputes for “Pay upfront”, and renaming it to “Fund”. No more 7-day review cycles for backers upon issue completion with potential disputes for refunds. Just direct funding behind an issue regardless of outcome, i.e a donation - not subject to VAT.
We’re adding VAT to “Pay on completion”. For backers seeking a guaranteed outcome in exchange for funding, we need to charge VAT (if applicable).
Example
Jane Doe wants to fund feature X with $50.
In both cases, Polar revenue share (5%) and Stripe fees are deducted from the net amount paid.
Why?
When?
Our intent is to make these changes in stages:
We wanted to share this with our community prior to build; capturing any questions and feedback in advance.
Q&A
What are the benefits?
What are the downsides?
For individual backers seeking a guaranteed outcome since:
Resulting in either:
What happens to outstanding funding made before these changes once they're introduced?
Of course, we'll honor those.
Why can't I receive the money from the “Fund” option directly upon payment?
In order to support contributor rewards without requiring additional transactions on your part. Say you set 70% upfront to be rewarded to contributors or want to reward ad-hoc once the issue is closed. Payouts beforehand would require additional transactions to satisfy rewards. A more complex & costly (payment fees) option.
However, for issues without public rewards, we are likely to introduce the ability to withdraw early. Combined with doing so for donations after 6 months without the issue being closed/completed.
Why hasn't VAT been added before?
We've worked with international tax accountants, experts and lawyers from day 1. Open source issue funding is a unique case. Normally, services like custom software development are absolutely subject to VAT. However, since multiple parties can contribute funding behind issues and none gets individual ownership of the deliverable (open source code), it's been debatable – as all unique matters before the law.
Polar as the merchant of record is in charge of VAT. Meaning, we take the risk of being wrong. After all these discussions with experts, we've reached the conclusion that we need to distinguish intent. In cases where funding is clearly in exchange for a satisfactory outcome, i.e more like payment for service vs. donation, we should charge VAT.
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