Circles Accounting and subDAOification

This one has been on the docket for a while, way back since we kicked-off the HR upgrade about a year ago. In the Governance WG we’ve been brainin’ how to handle the subDAOification process and achieve more fiscal accountability in our DAO (Thank you @Griff for the kick in the pants).

My dream end goal still looks to the Shapeshift model, where we eventually can have WGs as semi-autonomous governance units that manage their own budget. Contributor responsibilities, payment and performance are held to the scrutiny of the WG rather than the whole DAO, which will not always have the right context to make well informed, granular decisions.

However we’re going to do this gradually rather than all at once so we have time to adapt and make the right decisions for the Giveth DAO. At the end of the day we want contributors contributing, not bogged down in seven levels of accounting hell. :fire: :smiling_imp:

From facilitating the last year of Governance calls I’ve surmised that we generally agree to begin on a macro level, focusing first on our 3 Circles (Community, Platform, GIVernance).

To that extent I think we are ready for Phase 1 - Circles Accounting :bar_chart: :tada:

What does Circles Accounting look like?

We would define three important tasks of Circle Accounting (for now):

  • Using hours and salary data collected to set a soft-budget for a given Circle to operate within.
  • Monthly tracking and reporting of WG expenditures (recurring service subscriptions and non-salary costs) and profits (e.g. technical services partnership).
  • Monthly tracking of salary costs categorized by WG.

How do we make this happen?

We should move forward on this by first creating a role of Circle Accountant (CA). The CA will be responsible for all of the tasks mentioned above. We will invite DAO members to nominate an active contributor to take on the role of CA for a given Circle. This first set of CAs will be expected to hold up their duties for at least 6 months until we’re ready to transition into the next phases.

THIS IS NOT A LEADERSHIP CONTEST, THIS IS AN ACCOUNTING JOB. :nerd_face:

CAs will have a standardized and easy to use spreadsheet template developed by the Governance WG that allows them to produce monthly fiscal reports. We’ll also open up a public category on our forum for managing CA roles and for posting monthly Circle Finance Reports (CFR).

From the Governance WG, our imminent transition to using Coda instead of typeform to collect contributor hours will make this WAY easier. The Governance WG will also provide assistance for CAs to set up their respective Circle’s soft budget

Salary information for individual contributors will not be disclosed :no_entry_sign:

Some minor issues to figure out will be sorting WGs into the most logical Circle and defining the WG task list better.

Also, take some time to review your role proposal and make any updates now!

What do the next phases of subDAOification look like?

I believe it would be prudent to let this first phase run for up to 6 months then decide the next course. Here’s my suggestion on how we should break the full transition down:

Phase 1

Duration: 6 months

  • Giveth elects Circle Accountants (CA), 1 for each Circle.
  • Using hours and salary data collected, CA sets a soft-budget for a given Circle to operate within.
  • Monthly tracking and reporting of WG expenditures (e.g. subscription costs, bounties, rewards) by CAs.
  • Monthly tracking of WG spending on contributor payments by CAs.

Phase 2

Duration: 3 months

  • Working Groups define their KPIs and/or measurable goals.
  • On-chain DAOification of Circles (Probably via Aragon DAOs)
  • The DAO assigning hard budgets for Circles

Phase 3

Duration: 6 months

  • Circles assigning hard budgets for WGs
  • Circles requesting quarterly budgets from the DAO
  • Circles pay contributors from their budgets

Phase 4

Duration: ???

  • WGs requesting quarterly budgets from the Circles
  • WGs manage their own budget and pay contributors out of their own subDAO Treasuries
    :point_up: :trophy: THIS IS THE GOAL :trophy::point_up:

Setting this out there for advice process. If you find any gaps in our theory or any strong objections to carrying out the subDAOification process in this direction, now is the time to be heard! Specifically feedback on Phase 1 will be the most useful so we can at least agree on where to start.

Following advice process, I will set up the forum so we can begin choosing CAs for our 3 Circles.

We’re doing a great job so far in our DAO practices and now it’s time to take it to the next level! :muscle:

Props to @clara_gr @freshelle for collaborating on this proposal.

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Praise @mitch for pushing this forward! I’m excited for this to unfold.

The next steps for Phase 1 seems clear to me. @Nicbals and I will work on making sure that we’ll be onboarded to Coda asap to making time reporting easier.

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Outstanding work @mitch !!
This was a topic of exploration when we (re)formed our Circles into these 3 and I can confirm that this subDAOification was a long-term intention in how we structured them at that time… exciting that we have reached the scale and momentum to initiate decentralizing our budget management responsibility; moving it into the hands of those closest to the work.

Also appreciate the longer term commitment being requested here, it will certainly take 6 months of consistent management of the data to inform subsequent phases.

I’m not seeing any at this time, especially in light of having this Coda tool selected and ready to implement.

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I love how this topic is taking shape and am interested in participating as a CA.
The spreadsheet template link is not public so could not check it.

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Hey Santi! I just updated the permissions. Kindly check the spreadsheet again.

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Great work @mitch ! Thanks for bringing this forward! I appreciate the timelines set for each phase setting a clearer goal here :slight_smile: We’ll make sure to prepare CODA to generate all the reports needed for the Circle Accountants to use , working with this alongside @freshelle :smiley: :grinning:

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Thanks for putting this proposal together @mitch
I like the phased approach and the timelines.
@santigs I too am interested in participating as a CA :slight_smile:

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This is a really great post @mitch I definitely agree that a lot of finer information gets missed and over spending happens when accounting is done as a whole DAO.

I’m excited to see how Coda will bring more transparency to accounting. I’m curious, how will salaries be hidden during the accounting process?

Just guessing here: Only contributor reported hours only be shown. Then the working group will discern if the output, hours, and budget correlate.

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salaries will continue to be hidden - hours entered into Coda will be used to make salary calculations: CAs will see salary cost at group level and not on an individual basis.

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Wow, okay this is awesome! It looks like we’re moving into very significant milestone for affecient and transparent treasury managment. Your posts are always so organized and clear. Thanks for your awesome job! @mitch

The only thing which is unclear to me, since I am an hourly contributor and I am working withing specified hourly range. But together with my growth within the organization, therefore more roles and/or responsibilies bring more time spent…For example I am already seeing that my hours are getting higher after my last buddy review (which happens once in 3 months)…so potentially I will be adjusting the scale of my hourly monthly contributions my next buddy call again and asking for the dao approval…with all that said, how much of a negative aspect it can play in this model? Should I just stick to what’s in my role proposal and cut the hours down or what’s the right approach without having any radical effect on thegroup budget? Any thoughts on this?

Or you think it would make sense to move into a fixed rate and move away from hourly contribution in cases like mine? Like after passing aome specific hours line?!

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Thanks for pointing this out @NikolaCreatrix! For now, I believe it’s good practice to update your RP reflecting actual/estimated hours worked. Then discussing with the CA the additional work commitment which leads to increasing the budget. If the budget is not enough, then maybe the circle will discuss on how to find additional revenue streams.
By the time you think your hours are stable for the next 3-6 months and beyond, then moving to a fixed contract would be nice.

To @freshelle 's point - I think overall we need to create more consent and boundaries for the way we spend DAO funds.

Rather than simply working more and in effect, increasing the amount you charge the DAO there is a negotiation process that will happen that is currently not happening. We should take into consideration when a contributor wants to contribute more a few things:

  • Can we afford it? (as a DAO/Circle/WG)
  • How much do we value the contributors work?
  • How much do we value this contributor?
  • Is the extra work the contributor wants to take on aligned with the DAO/Circle/WG’s mission?

Right now, I can see a trend emerging among contributors where they simply generate/find more work, or go off on tangental projects. Sometimes these tangental projects bear fruit but just as often they don’t. Without any consent or oversight of how contributors are spending their time and thus charging the DAO for the time, we end up creating costly inefficiencies.

To clarify, this is in no way a comment or slight towards the work you do @NikolaCreatrix but I’m just framing one of the problems we hope to solve in this process. Creating a process that establishes consent, boundaries and negotiation avenues regarding how we spend our money.

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@mitch thanks, I see this gap too…I do agree with you on all of those points 100%

nobody ever asks these questions… also, nobody knows how much everybody costs.

And I really don’t like the fact that very few core individuals get to decide on who will and who will not stay in the organization, of course it makes sense if one person is holding the treasury…which in fact is their own private pocket. So yes, I am glad that this model is changing, and this pressure will disperse amongst wg stewards who will be forced to ask these questions the whole group…it will mean that contributors will have to spend more time thinking about who’s work is worth what, and that’s great step towards decentralization. But also…how do we measure the value that one contributor brings.

However, I am still not sure how to go about my own case. I want for things to be fair…I kind of thought that the process of pushing the raised amount of hours through the dao vote should be the value measure metric. But maybe we want to say - hey no raising amount of hours during bear market.

Also, personally, I am getting to a point, after 1 year where I feel like I can confidently show up to more tasks. But how do I know I can actually do it and not overcharge the DAO. And am I actually bringing enough value in my work?! I guess so, people are giving me really great feedback. But still I have a feeling of uncertainty…
Anyways, I’m going little wild here with all my thoughts.
Basically, I just want to know what to do…

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The biggest challenge I see in phase 1 - and like @NikolaCreatrix’s concern, this comes from my personal perspective - is when a contributor contributes heavily accross mutiple circles.

  • Will we be using the hourly reports in coda to basically take proportion’s of an individual’s salary and split it accross WGs?
  • Who will be giving the salary data to the CA’s? Will this be @freshelle on a 1st layer accounting of accounting before that info is passed of circles?

Also, I’m concerned with the process for electing CAs. We need to consider both the person’s willingness and also their abilty to perform effective accounting. We may also need to have @freshelle play the role of like “lead accountant” who coordinates with the CAs and make everyone is following the same processes… eventually perhaps creating clear documentation aorund these processes so that after 6 months the role can be passed off effectively.

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Also, talking about this with @griff - not sure that even breaking this up into circles is the best idea. The cirlces are so fluid… the scope of work under each so broad and unclear.

If a major function of this proposals is so that individual groups can request funds from the DAO for work, instead of budget just being decided in a centralized way… we should have budget request coming from individual product teams… not circles.

It’s a lot easier to say “I want funds to build QF” than it is to say “I want funds because we’re developing a bunch of unrelated things.”

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I agree we have to break costs deeper than just circles or the data will not offer us enough information to monitor what we intend to see.

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Very good points @karmaticacid - I’m starting to come around to the product team idea…

@MoeNick I know has been very keen on this for well over a year now

I think it will help us keep better track of contributors making them beholden to specific product team and leave less room for floaters to sort of wander about - I think it will help also developers and designers have clarity on who to ask for coordination and who is in charge of things like copy changes or UX suggestions.

I’m inclined to stick to my guns on phase 1 - meaning at least we can get into the habit of budgeting and provide some more public info to the DAO about how we spend our funds on a monthly basis.

I would envision in the meantime we can kick start a product team formation process, which tbh will take some time do it right. I also want to research into how Gitcoin did their transition process and maybe we can take some tips out of their playbook.

I’ll add this to come back to on our next gov call (March 13) with some ideas and from there we can maybe find a more agreeable process for the subsequent phases.

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EPIC @mitch - thank you

Yes I agree we have to start from somewhere. subDAO based on products is the goal I guess but with the current working structure we have, I doubt we could make it until we practice for 6 months. I mean every interaction and goal should change if we want to be product-based, from defining working groups, methods of managing, HR and resources management and their policy and also salaries. It’s late but possible.
I suggest we adopt “cost center” accounting policies in Giveth, the goal is to know how much income/cost we have for a specific product.

Then if we have data, for managing the funds and accounting we can delegate to teams, but without the data, I can’t see any benefit.

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Yes, I agree @MoeNick - we have to start working with the data to first understand what the drivers are.

Product-based ‘cost centres’ make sense here as our DAO does not have profit as a measure of success. Our measures are based on value that brings traffic to our platform, increased donations and product adoption ie which products and which supporting activities contribute to this?

We will need some time to understand how to apportion costs that currently ‘sit’ in Community and Governance Circles. If we define ‘products’ at the start of this new accounting process, each circle accountant can begin to identify costs that fit easily into a product ‘box’ and those that don’t, which can be brought forward for discussion at the end of each month.

We can then decide whether we should group practical activities and functions together and organise our working groups in a different way. However, I can see a model that maintains the operational separation of devs and support activities with an overlay of cost allocations to products.

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