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When a small site begins it is often funded entirely by the founder, and as it becomes more active the associated costs increase.

What are the pros and cons of advertising vs seeking donations to offset the cost of maintaining the site? I am particularly thinking about knowledge-distribution sites (with Stack Exchange and Wikipedia being two large examples). There are many example for smaller audiences as well with myhouserabbit.com as advertising-funded and rabbit.org as donation-funded.

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It really depends on what your end goals are. Both are okay options, each with their advantages/disadvantages.

To make the most money: You can go with either one, just try both and see which generates more money. If you can, donations and advertising together could possibly make the most money. The amounts depend on your site's atmosphere and other factors such as traffic from different groups of people (contributors vs. viewers).

However, advertising might make a lot of people upset. If you have too many ads, people might not like the distracting banners and the slow loading times. Also, your contributors might get mad if you're basically selling their work that they gave to you for free.

To keep the best reputation with your users: Run off donations always. It doesn't always pay the bills, but you should be able to get along fine without having to pay too much out of pocket before the site starts taking off. If you're constantly coming short, I might add that you could add a post on the donation page that you're not receiving enough cash to keep it running and might have to turn to ads to stay afloat or shut down.

Try to keep users happy but make a decent profit (or 50/50%): Use a strategic plan with both of them. If you only do one or two ads per page that aren't annoying and you don't make too much money from them, then you could put them there. If a user donates, you could disable ads for them for a short while (a "gift," you're not trying to sell anything to them) or remove ads if they're one of your top users.

You need to re-evaluate your goals and try to figure out a plan that makes everyone happy. If you don't want to make anyone mad, you could reveal some of your server costs. If it costs you $500 a month, people will be less mad if you turn ads on than if you just turn them on without waning.

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