5 ms·

1. Marketing 2. Kickstarter money is technically a donation, so you can spend the money right away if you need to. (taking a typical pre-order is little tricky

by mbesto 10y ago

1. Marketing 2. Kickstarter money is technically a donation, so you can spend the money right away if you need to. (taking a typical pre-order is little tricky from an accounting perspective if it's considered revenue)

maxerickson 10y ago
Kickstarter money is technically a donation Says who? Here's what the terms of use say: https://www.kickstarter.com/terms-of-use#section4 https://www.kickstarter.com/terms-of-use#section4
- adrusi 10y ago
  Just in terms of law: it's not an investment, it's not a purchase (since there's no guarantee of backers receiving their rewards), it's not a loan. It works exactly like when your local public radio station offers t-shirts to donors. IANAL but it seems pretty clear that kickstarter revenue would be a donation from a legal perspective.
  - dragonwriter 10y ago
    I think the actual litigation that has already occurred -- e.g., the Washington State and FTC consumer protection suits -- have treated it mostly as a purchase (money exchange for a specific obligation), and certainly not as a donation. It's certainly not portrayed as a pure donation (money given with no specific reciprocal commitment) in Kickstarter's terms.
  - maxerickson 10y ago
    As a backer, I'd treat Kickstarter just like setting the money on fire. As a project, I'd be unlikely to offer a complicated physical device that I was not yet able to produce. I might put weaselly bullshit about a reward being a great sticker and up to 1 device.
taylorwc 10y ago
Donation is the wrong way to think of it from an accounting perspective (though perhaps not from a legal recourse perspective.) Preorders are not recognized as revenue. They are a debit (increase) to Cash and a credit (increase) to a liability that's usually Unearned Revenue. As you ship, you credit (increase) Revenue/Sales and then debit (decrease) the Unearned Revenue liability account. Edit: renamed 'Prepaid' to 'Unearned' -- had to brush up on my GAAP nomenclature
- ascorbic 10y ago
  Agreed. That's pretty much how my (UK) accountants treated my Kickstarter revenue.
neves 10y ago
They are borrowing with almost zero interest rate. You can't find a better deal.

by mbesto 10y ago

maxerickson 10y ago

Kickstarter money is technically a donation Says who? Here's what the terms of use say: https://www.kickstarter.com/terms-of-use#section4 https://www.kickstarter.com/terms-of-use#section4

adrusi 10y ago
Just in terms of law: it's not an investment, it's not a purchase (since there's no guarantee of backers receiving their rewards), it's not a loan. It works exactly like when your local public radio station offers t-shirts to donors. IANAL but it seems pretty clear that kickstarter revenue would be a donation from a legal perspective.
- dragonwriter 10y ago
  I think the actual litigation that has already occurred -- e.g., the Washington State and FTC consumer protection suits -- have treated it mostly as a purchase (money exchange for a specific obligation), and certainly not as a donation. It's certainly not portrayed as a pure donation (money given with no specific reciprocal commitment) in Kickstarter's terms.
- maxerickson 10y ago
  As a backer, I'd treat Kickstarter just like setting the money on fire. As a project, I'd be unlikely to offer a complicated physical device that I was not yet able to produce. I might put weaselly bullshit about a reward being a great sticker and up to 1 device.

taylorwc 10y ago

Donation is the wrong way to think of it from an accounting perspective (though perhaps not from a legal recourse perspective.) Preorders are not recognized as revenue. They are a debit (increase) to Cash and a credit (increase) to a liability that's usually Unearned Revenue. As you ship, you credit (increase) Revenue/Sales and then debit (decrease) the Unearned Revenue liability account. Edit: renamed 'Prepaid' to 'Unearned' -- had to brush up on my GAAP nomenclature

ascorbic 10y ago
Agreed. That's pretty much how my (UK) accountants treated my Kickstarter revenue.

neves 10y ago

They are borrowing with almost zero interest rate. You can't find a better deal.