I want to talk about sustainability. Not because it’s an easy or fun thing to talk about. I mean, we’re talking money, which can be pretty off-putting to some. But, it is an important topic.
It’s also a challenging one because, like many things in CiviLand, everyone has a different view about what it is and how we should go about it. Achieving sustainability involves more than just making money and includes accounting for the view of different community members/groups as well as ensuring the project stays true to its original mission and open source ethos.
This isn’t unique to CiviCRM, though.
Nearly all open source projects face the question of sustainability. As a result, there are lots of different models out there. Some have large for profit initiatives that drive funding, whereas others have some pretty crafty licensing models. Some fall under the sponsorship of large foundations, and others rely on providing support as an income generator.
So, while open source sustainability is complex, the good news is that it is doable.
In CiviCRM, we have neither foundation nor large for-profit backing, nor do we offer different versions of CiviCRM that carry different pricetags. We don’t fall under a foundation nor do we offer any sort of support model.
We are entirely self-funded by the CiviCRM community and by the work (and occasional rebalancing) of the CiviCRM Core Team.
For this post, I want to focus on one particular income stream in our model of sustainability: Revenue Sharing (or RevShare as we record it in our books).
What is RevShare?
In simple terms, RevShare is when company “A” shares in the revenue of company “B”, most often because company “B” has somehow benefitted indirectly from company “A” and wants to reward them or otherwise incentivize them to continue doing whatever they’re doing.
In our case, CiviCRM has revenue sharing agreements with PayPal, Stripe, iATS Payments and TSYS. These are payment processors that have literally processed millions of transactions for organizations using CiviCRM and, as a result, have voluntarily chosen to share a small portion of each transaction fee with CiviCRM.
The income from RevShare has generally represented around 20% of our annual budget, so it’s quite important. You can see past performance in our annual reports.
Amounts aside, there are a few other important points to understand that speak to how potentially valuable RevShare is for CiviCRM.
It doesn’t cost organizations anything
Our revenue sharing agreements don’t increase the transaction costs that organizations incur when using the payment processors. If they did, we would not entertain them. The rates that payment processors charge is the same regardless of whether CiviCRM participates in the RevShare or not.
Likewise, CiviCRM has no ability to increase, decrease or otherwise change those transaction fees.
By using one of the above payment processors, organizations are directly supporting CiviCRM at no additional cost to them.
It’s highly scalable
The more payment processing is done through CiviCRM, either via more orgs using the system or an increase in average volume per organization, or a combination of both, the more income CiviCRM receives.
This is one reason why the CiviCRM Core Team has been so focused on ecosystem growth (that's been a central message of the past several annual reports). It’s consistent with both our mission (ensuring access to a world-class, open source CRM) and our model for sustainability (the bigger the community and the more effective the product, the more sustainable we are).
Time-out for 1 sec
At this point, I want to stop and hammer the combination of these two points home: revenue sharing 1) doesn’t cost users any extra and 2) it scales based on the success of both CiviCRM and the organizations that use it.
The better CiviCRM is as a product, the more market legitimacy it will have and the more its ecosystem will potentially grow. The more the ecosystem grows, the more significant the revshare.
It’s the proverbial virtuous circle.
It requires minimal overhead
As an income stream, our revenue sharing agreements stand out from the other income streams in another important way: they require minimal administrative overhead to manage.
This is not the case with other community initiatives such as the member and partner programs, make it happen campaigns, events, etc., all of which require more non-dev oriented capacity from the Core Team.
The minimal overhead of our RevShare allows us to focus all of our effort on our development objectives and to continue to deliver both stability and new features to the CiviCRM community.
RevShare for the win!
A final point that I want to make is that all of these integrations were integrations before we entered into the revshare relationships. The only exception to this is TSYS, which was developed and brought online as an integration and revshare partner at the same time.
Still, the point that I want to make is that these were supported before and would be supported even if we didn’t have revshare agreements in place. In other words, while we benefit from them, supporting these payment processors specifically for the revenue share is not our objective.
Nonetheless, we’re very grateful to our revshare partners for their commitment to CiviCRM. We believe CiviCRM provides them value and is a better product as a result of its integation with them.
The support of our RevShare partners, along with other community funding streams and the work of the Core Team, has not only sustained CiviCRM for the past 10 years, it has helped lead to the development of major improvements such as APIv4, SearchKit, FormBuilder, RiverLea and more.
Comments
Thanks Josh for outlining this important source of revenue and all it's advantages - go RevShare!