Collaborative Governance of Charities

I’m interested in using a DAO to oversee the transparent effective giving to those most in need with an informed donor community. Direct giving from donor to recipient avoids the institutional cost and bias of traditional charities.

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I want to focus on this quote as I see some opportunities to make this a two-way street. A DAO could:

  • Reward donors with decision-making authority (Reputation)

  • Reward donors with a token or NFT that may or may not grant special privilages (perhaps a special key that unlocks a photo album of how the proceeds are used? Sky is the limit!)

I think there are other rewards that could be automated here. But the main thing I’m trying to emphasize is donorship doesn’t have to be a one way street!

Have you considered running a pilot for an NPO that does exactly this?


Admin note: Moved to DAO creation and design as this is a use case spec.

Thanks for the suggestion to include donor Reputation, the feedback would be an encouragement for donors. To start, I plan writing Solidity code to develop and test the smart contracts. This will hopefully lead to a to pilot for an Non-Profit Organization.

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So if I was designing the scheme, I would have it structured like so:

  • Whitelist of Rep generating tokens (e.g. DAI, USDC, PAX) and how much Rep is generated for a donation (setup that might most most sense is probably 1 Rep / 1 stablecoin)

  • The proposal structure itself should be a “tribute style” proposal. That is, somebody proposes to give 100 DAI to the DAO in exchange for 100 Reputation, and the DAI is put in escrow at this time – if the DAO accepts, it receives the DAI and mints the Rep; if the DAO refuses the DAI is returned and no Rep is minted.

This is one of my favourite use cases - I think it has fantastic transformational potential.

From your proposal there is a possible immediate win for Genesis that would warrant the creation of a proposal for development: We’ve been interested in somebody designing an escrow scheme for alchemy since forever! Are you already familiar with Alchemy and Genesis?

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Many traditional charities spend a lot on staff, marketing etc. I know an accountant that received a 6 figure salary working for a transnational charity. The justification is they needed to pay market rates to attract the properly skilled personnel and that paying the higher overhead increases the overall effectiveness of the charity. It is hard to measure the potential increase in effectiveness, but the efficiency in existing charities can be as low as 50%, where efficiency is defined as the percentage of funds received by recipients compared with to the total funds received by the organization. We can never achieve 100% efficiency, for example gas (transaction costs) for many micro-payments will always be an overhead. In a Non Profit DOA the accountant’s function can be done by smart contracts to file transactions on the block chain and produce audit trails.
There are set-up costs such as development and testing the smart contract/constitution/policies. We can think of founders/governors as a special case of donors who give to the start-up/administration of the DOA. Voting rights based on founders tokens would be an effective governance mechanism. Reputation is a strong motivator. Meanwhile, regular donors can be guaranteed 100% efficiency for their contribution, reinforced by donation tracking, public verification and immutability of the blockchain.

Hi Felipe, Escrow is important to deal with issues such as refunds, failed delivery in a purchase contract between unknown parties. However, I think the gifting use case can be simpler - don’t allow refunds. The first gift is free. Future giving is dependent on the recipient’s reputation, built from their history of contract deliverables. The lack of escrow will allow just in time (JIT) flow of funds mitigating the risk of large pools of funds being misused.

Hey Charles,

When we’re referring to escrow we typically only mean smart contract escrow, that is, the creation of an address to hold funds until certain conditions trigger a release of funds.

@Felipe is simply re-articulating what I said before: a proposer can submit a proposal to donate funds, and upon submission these funds are placed in a blockchain escrow address, and then they are either returned (if the DAO refuses the donation) or received (if the DAO accepts the donation).

Sorry for the terminological confusion!