Financial Reporting for Decentraland Grant Projects

by 0x2ae9070b029d05d8e6516aec0475002c53595a9d (CheddarQueso)

Linked Pre-Proposal

Should the DAO Require Monthly Financial Reports From Grantees?

Summary

This governance proposal seeks to establish guidelines for monthly financial reporting from grantees/projects receiving DAO funds. The objective is to enhance transparency, accountability, and data-driven decision-making within our community.

Abstract

The Decentraland DAO grants program, initiated in 2020, has made significant investments, allocating approximately 12 million dollars in funds to various projects. To ensure that these resources are utilized optimally and in alignment with our collective goals, it is imperative to evaluate the impact and effectiveness of our grants. Monthly financial reporting is a foundational step toward achieving this goal.

Motivation

The emphasis on financial reporting is not just to track expenditures, but to enable continuous improvement of our grants program, encourage grantees to reflect on their spending, share insights on how they can optimize their use of funds, and carve a pathway to success for future grantees to follow.

Currently, there is no mechanism for standardized and uniform financial reporting. This lack of basic oversight leaves the door open to abuse or misuse of DAO funds. By requesting that grantees provide a monthly accounting of funds released and expenses, we have a better foundation from which to ask questions, seek more information, determine the whether or not a grant should be paused/revoked, and most importantly, compare the effectiveness of funds used amongst different grant projects and across categories. The more information we have at our disposal, the better equipped we will be to help future grantees succeed, and make decisions about future iterations of our grants framework.

Specification

This proposal aims to achieve four key goals:

1. To Increase Transparency: Each community member will have direct access to monthly financial reports through each grant’s monthly updates. Grantees can upload reports without the need for a request or intervention from the GSS, facilitating direct communication with the community and further decentralizing our grants accountability system.
2. To Help Us Evaluate the Effectiveness of Our Grants Funding: The community can utilize this information, coupled with the required metrics reporting, to better evaluate the outcomes of our grant projects from an objective perspective. This evaluation focuses on making improvements in future iterations of the grant framework based on the lessons learned.
3. To Enhance Data Reporting: Our squads work diligently to compile data that informs our future decisions. It is equally important for the community to have the ability to manipulate and compile information for their own research, as many projects stem from data originating from grant projects. Reports should be provided in a standardized spreadsheet format to facilitate ease of analysis and comparison across different projects.
4. To Improve Spending Categorization: Financial reports will offer a more detailed breakdown of how funds are being utilized. This breakdown can provide the community with insights into the primary areas of fund allocation, such as development, marketing, community events, and more.

Overall, these goals will collectively contribute to a more transparent, accountable, and data-driven ecosystem within the Decentraland DAO.

IMPACTS

1. Improved transparency, reducing the opacity of fund allocation and expenditure.
2. Data-driven decision-making, enabling the community to make informed judgments about grant projects.
3. Enhanced accountability, fostering responsible fund management and allocation.
4. Valuable historical data for trend analysis and informed planning.

IMPLEMENTATION PATHWAYS

To implement this proposal, the following steps will be taken:

• Creation of a dedicated mechanism within the grant updates section of the DAO website for grantees to upload financial reports.
• Development of a standardized and easily accessible method for grantees to conduct monthly reporting.
• Regular communication and guidance to assist grantees in understanding and fulfilling their reporting obligations.

Conclusion

In order to build a robust, decentralized, and effective DAO grants program, it is imperative to foster open and community-driven accountability for our grant projects. For every disbursed fund, we must maintain a detailed record of its allocation, enabling us to objectively assess the impact of our grant projects. This information will serve as a foundation for refining future initiatives and enhancing the efficiency of our grants framework. There is an abundance of resources available to develop Decentraland, provided we exercise prudent financial management. However, our first step must be gaining a clear understanding of how these resources are allocated.

This proposal is summarized due to technical limitations. To view it complete and vote on it, visit the DCL DAO Governance dApp