Threshold pledge system

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 or Street Performer Protocol (SPP).

Street Performer Protocol is an early description of a type of threshold pledge system. SPP is the threshold pledge system encouraging the creation of creative works in the public domain or copylefted, described by Steven Schear and separately by cryptographers John Kelsey and Bruce Schneier. This assumes that current forms of copyright and business models of the creative industries will become increasingly inefficient or unworkable in the future, because of the ease of copying and distribution of digital information.

Under the Street Performer Protocol, the artist announces that when a certain amount of money is received in escrow, the artist will release a work (book, music, software, etc.) into the public domain or under a free content license. Interested donors make their donations to a publisher, who contracts with the artist for the work's creation and keeps the donations in escrow, identified by their donors, until the work is released.

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