Jeff Atwood's Coding Horror is a blog ostensibly about "Programming and Human Factors". So then Jeff's proposition about donating money in OSS is a little troublesome. Jeff is confused and needs help spending money, like a popular novel and film. I've stopped reading Coding Horror on a daily basis long ago, but the goals behind this particular theme are well placed, and it seems like a worthwhile initiative. He writes about donating $5,000 to an open source .NET project:

I had hoped that $5,000 grant money would be converted into something that furthered an open source project -- perhaps something involving the community and garnering more code contributions. But apparently that's more difficult than anyone realized.

[...] I'm absolutely dumbfounded to learn that contributing money isn't an effective way to advance an open source project. Surely money can't be totally useless to open source projects... can it?

What follows below is the kind of research Jeff Atwood should have done in preparation of giving that money. What I think would have been most useful to Jeff is researching what has already been done, though I suppose he's not got time for such trivial things.

Ubuntu

A familiar infusion of cash into a project likely to be well known by my readers is Mark Shuttleworth's founding of the Ubuntu project. In his wiki page, under "Why are you funding Ubuntu, instead of giving the money to Debian?" he writes:

And finally, it seems to me that the hard part is not making funds available, its allocating them to people and projects. I could easily write a cheque to SPI, Inc, for the same amount that I've invested in Ubuntu. But who would decide how that money was spent? Have you actually read the financial statements of SPI, Inc, over the past few years?"

Instead Mark chose to start Ubuntu as a paragon, demonstrating how changes might improve Debian through example, probably expecting to remain a small unpopular beacon on the hill. There were a number of things wrong with Debian at the time, and I think Ubuntu rapid popularity helped light a fire underneath them at a time when some Debian people were thinking "So what if we're losing users to Gentoo? Gentoo can have those idiots." XKCD has a tongue-in-cheek examination of why that line of thought is wrong.

To that end, several people were hired and a company formed. Lots of time was spent picking who would be hired, what would be done, and explaining what was broken in Debian and how Ubuntu would work differently.

Inkscape

Bryce Herrington, intimate with the development of Inkscape, writes in "Pay in Time, not Money":

I can't count the number of times people have offered $100 bounties for implementing some feature or other in Inkscape. From what I've seen - and I've seen MANY features come into Inkscape from folks who aren't developers - $100 is the wrong way to do it.

Not that people are anti-money or anything like that. Certainly we've gotten rabid success out of our Google Summer of Code projects, but these pay out $4500. So maybe $100 just isn't the right price point to stir interest (even a simple feature is going to require 10-20 hrs work, at which point you might make more flipping burgers!)

Bryce wrote this after Jeff's decision, so it might seem unfair to cite him, but I think it's fair to say Bryce's thoughts reflect many of the developers Jeff could have asked. Bryce offers advice reinforcing Jeff's perception that time is more important than money. Bryce goes on to laud the advantages of documenting failure in a wiki, for others to read and overcome. Perhaps Launchpad should have offered wikis instead of bounties.

Bryce also cites Google's Summer of Code as a success. He rightly chastises these chump change bounties, but I wonder how Bryce feels about the apparent failure of Jeff's larger donation that matches Google's SoC in scale.

Google Summer of Code

Google Summer of Code is probably the most well known project spending money on open source. They've certainly paid for at some kickass projects on behalf of Ubuntu in the past. But unlike most bounties their model is a bit different -- they're targeting a specific group of people and asking for specific goals. The specific group is important -- college students interested in working at Google. $5000 motivates these students, since students don't have long term employment needs or expectations, a job to quit or family to feed. Additionally, because Google puts it out there as an "internship in open source", there's an implicit assumption that a job with Google can be had via this project, and that's something most of us can't rely on.

Asking for specific goals is another part of the equation. Google rightly recognizes that many projects don't have a lot of management. By asking groups deal with deadlines and requiring all parties to come to them with ideas and choices, they embed management principles often ignored into open source projects. They also sidestep organizational problems by sending checks directly to the people doing work and doing some of the footwork beyond cutting a check themselves.

Google asks organizations and people to plead their case. It's anti-democratic and it works. That's important to note, because Debian's own attempts at funding have been met with fierce democratic resistance.

dunc-tank

Debian is a rough and tumble society. If you disagree, look at Sam Hocevar's homepage some time. They elected a weapons grade troll as DPL. (A title Sam might proudly wear, I think). Still, he's been an effective leader, and his platform was entirely reasonable after a highly contentious year. He writes on the subject of money:

Debian has money. Last time someone wanted to use that money for something, we disagreed, and he found money somewhere else. So we still have that money, and I would like to use it at least to fix our broken hardware. I cannot believe this is in a DPL platform, but escher has been down for ages, developers do not have access to an alpha machine, and we have not even tried to fix that problem with money.

Speaking of money, one thing that requires lots of it is meetings. IRC meetings are not enough for some tasks, and isolating people in a remote place to work together on nothing else than their Debian project has proven to work very well. Though I am getting scared by the escalating luxury of the DebConf accommodations, I believe we can and should afford even more meetings to take place. There are local structures in many countries (Extremadura in Spain, Cetril in France) that can take care of the logistics.

Sam's DPL-ship followed a long and painful debate about raising funds to compensate key people for their work. I don't want to open wounds here, but its a risk that must be taken to review what went wrong. dunc-tank was (is?) a project to compensate the volunteer release managers of Debian for their work. The proposal was received so poorly that a small minority of people didn't just reduce involvement in the face of compensation from others, but aimed to see the goals of dunc-tank fail, by filing as many RC bugs as possible. In one sense, the introduction of paid workers failed -- Etch released late.

But in another sense it succeeded wildly. Suddenly a group of people had been motivated to test Debian and report RC bugs in far greater numbers than before, in spite of not being paid for their efforts. Clearly something else was at work here, beyond compensating key players. I suspect that Sam Hocevar's role in that contra group greatly contributed support to his bid for DPL; it certainly demonstrated his ability to drive community contribution to release engineering. Sven Muller gave an opinion in his summary of events

The whole thing might have been a lot different if some random, mostly unknown DD (or even better: non-DD) had started dunc-tank, collecting money and finally paying some DDs to work on some specific tasks.

Much of the controversy appears to have been around whether the DPL could approve the use of general Debian funds to pay some developers but not others. That's a tough question, especially when a few developers appeared to despise money itself. Prescient Ben Mako Hill wrote something on mixing volunteers and money that Dunc Tank might have neglected. It covers a few other examples of how money complicated things, including the historic X Consortium's collapse and the revival in the form of the Xfree86 and later the X.org Foundation.

Nouveau

Nouveau has a spectacular example of crowd-sourcing funding. Rather than raising $10,000 from a monied few, David Nielsen offered the [following pledge[15]:

"I will pledge at least $10 USD towards the development of the open source nouveau driver for the nvidia card series but only if 1,000 other people will do the same."

David was astonished at the rate of success of the pledge drive, and the nouveau developers were as well. So did the developers choose to spend it on beer, cigarettes and hardware? Surprisingly, no. Despite overwhelming support, none of the money raised has been collected or spent, for many reasons, some unique to this drive. I asked Stephane Marchesin, prolific nouveau developer, what happened, and he replied:

My bank said the issue with small donations, especially international donations, is that the transfer itself costs you money (up to $10, which is the amount for each donation). They also said under banking regulations, 1400 $10 transactions could look suspicious and freeze my personal account. I don't know to what extent this would have been taxed. This was not my major concern, as setting up a non-profit organization would have solved that issue anyway.

American readers may not realize it, but European taxes are quite high. The frozen account part is troublesome but the separate non-profit legal entity insulates Stephane's bank account from both these problems (but not the transaction fee problem). We have many such entities, though as Mark Shuttleworth alluded to above, sometimes they don't inspire confidence. Unfortunately, it appears [not a single one of the public entities] supporting open source was ready to risk legal battles by accepting responsibility for nouveau's pledge money. Stephane tells me that the Software Freedom Conservancy has since improved:

We recently got an acknowledgment from the Software Freedom Conservancy that nouveau would have been a suitable project for them to harbor (they are not afraid of being sued, for example they host the finances for samba and wine). It's just unfortunate that at the time we looked for a helping organization they were still in the process of setting up theirs.

Additionally, there's concerns over who gets what. When I asked on #nouveau about the pledge drive, it was suggested that simply putting money on the table is a recipe for epic drama, and their current system works well enough: groups of people pitch in to buy hardware and ship it to a specific developer.

Conclusions

$5k or $10k is enough money to get attention, enough that people worry about doing it right. But not enough that people are actually motivated to do it right. Projects won't waste time thinking about spending money they don't anticipate receiving, so they generally don't have anything in place to take your money. They might not even realize they need it; the ScrewTurn wiki author Dario self nominated his project for the donation, apparently not fully aware how much paperwork and red tape might be involved. Some projects do indeed appear to use their money-agnostic traits as an insurgent model like Jon Galloway suggests; not only do they not know what to do with it, having it makes them more legitimate targets.

If not every project can use money, it's important then to review what does work. Google's approach neatly circumvents many of the problems above. They seek projects with the infrastructure to accept money. They amortize the costs of organizing by handling a huge number of projects, and they invite projects to participate in the stewardship of the resources Google's money has bought for them. Transaction costs are minor because the numbers involved are large.

One thing that's clear from the evidence is that travel expenses are a uncontroversial way of spending money on a project. It's heavily recommended by the comments to Jeff's own blog, Sam Hocevar, and Ben Mako Hill. The comments suggest paying for PDC and using the other half for flight, food and hotel. ($2,500 for a conference sounds expensive to me--does PDC stand for "Pretty Damn Costly?")

The obvious answer to Jeff's problem is to reduce the candidate list to those projects capable of spending his money. That seems like the number one lesson Jeff can impart to the growing .NET Open Source community, and maybe open source at large.