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The threshold pledge or fund and release system is a way of making a fundraising pledge as a group of individuals, often involving charitable goals or financing the provision of a public good. An amount of money is set as the goal or threshold to reach for the specified purpose and interested individuals will pitch in, but the money at first either remains with the pledgers or is held in escrow.
When the threshold is reached, the pledges are called in (or transferred from the escrow fund) and a contract is formed so that the collective good is supplied; a variant is that the money is collected when the good is actually delivered. If the threshold is not reached by a certain date (or perhaps if no contract is ever signed, etc.), the pledges are either never collected or, if held in escrow, are simply returned to the pledgers. In economics, this type of model is known as an assurance contract.
This system is most often applied to creative works, both for financing new productions and for buying out existing works; in the latter cases, it is sometimes known as ransom publishing model[1] or Street Performer Protocol (SPP).[2]
- ^ Clive Thompson. "The “ransom” model of publishing". Collision detection, June 2005
- ^ John Kelsey; Bruce Schneier. "The Street Performer Protocol" USENIX Press, The Third USENIX Workshop on Electronic Commerce Proceedings, November 1998.