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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)




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


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


Kickstarter money is technically a donation

Says who? Here's what the terms of use say:

https://www.kickstarter.com/terms-of-use#section4


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.


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.


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.


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




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