by 0x2ae9070b029d05d8e6516aec0475002c53595a9d (CheddarQueso)
I would like to open up the discussion around a new requirement for grantees to submit financial reports in their monthly updates.
I believe a monthly financial statement detailing how much money has been released, and a basic accounting of all expenses would be a simple and elementary requirement that would shed light and provide much needed data as to the impact of each grant.
If the community supports this initiative, I will draft a detailed proposal that will include a template, with input from the, GSS, DAO Committee, Governance Squad and current grantees.
Should grantees be required to submit monthly financial reports?
What information should be included?
What are some pros and cons of this new requirement?
Should receipts/screenshots/invoices be provided for off-chain payments?
What are your thoughts?
The goal of any proposal that arises from this open discussion is to increase accountability, transparency, and fiscal responsibility, without adding unnecessary blockers or complicating the work of grantees and the GSS. I would like to place special emphasis on working with all stakeholders to improve our current processes and not discredit the work that has already been done.
Thank you in advance for taking the time to be a part of this conversation.
I agree with your sentiments and will be voting YES. However, there is also accountability on the community side, of which vote on these initiatives in the first place. I’d hope that all green-lit grant proposals have come to fruition + yield measurable (and favorable) results. Perhaps an “annual roundup” would also help with transparency and everything else.
Should grantees be required to submit monthly financial reports? Yes, a rolling 30-day period based upon the first day payment was received.
What information should be included? A detailed accounting based on the line items they are requesting funds for. As example if they are submitting a budget request toward travel expenses then they should submit a dollar amount around why, where, when, what and who as the minimum requirement.
What are some pros and cons of this new requirement? Pros: Grantees should expect less questioning from the community. Cons: Maybe more “paperwork” for Grantees and Committee members.
Should receipts/screenshots/invoices be provided for off-chain payments? In the US Grant recipients are required to abide by federal accountability standards and are subject to an audit where, at a minimum, they would be required to provide receipts. I am not sure about the WEB3 laws or requirements now however I can assume that soon there may be similar standards of accountability. This last paragraph was mostly CHATGPT
The existing monthly updates are sufficient in my opinion.
As a former grantee myself, a small business owner, and online marketer, I understand the importance of removing unnecessary overhead and for the flexibility to shift funds around as roadblocks come up due to unforeseen circumstances.
At the end of the day, a proposal is an agreement to deliver a product/service from the requested grant amount. I am not concerned with what happens month to month since no one can predict the future with certainty and things dont always go as planned every month.
Keep in mind that being a content creator is already hard enough as it is. Making things extra difficult for grantees doesnt help DCL grow.
Disclaimer I (probably not needed, but anyway): I’m involved in an active grant.
Disclaimer II: I hate paperwork
Thanks for putting this together and raising those questions @CheddarQueso!
I tend to be in favour of almost everything that increases transparency and accountability and reduces the risk of fraud. In this case however, I’m not sure how this would really help. While there are a few items that would be easy to just prove with invoices (server costs, travel expenses, ads, …), usually a lot of the grant funds are being allocated for work done by the individual/team (3d, coding, event management, marketing, …).
And there simply is no way of proving those expenses that wouldn’t be incredibly easy to fake for someone with bad intentions.
Even if there are no bad intentions this can (and probably will) cause a lot of frustration. Let’s say I’m coding something and it took me 5 days. Who can/should/will judge if that was reasonable without doing a lot of deep diving? Even with deep diving: A lot of creative Stuff (3d, design, marketing, writing, idea generation, coding) - if done right - ends up being/looking very simple. So by looking at the result, anyone might go “ok, but I could do that in 2 hours, wth would you need 5 days for that?”.
I guess what I’m trying to say is: you would need a lot of experts in a lot of different fields putting in a lot of work to actually judge the numbers that are being reported.
Imho, this mainly leads to more paperwork for everyone while not really solving any issues.
This is great feedback and it makes perfect sense… thank you. My hope is that the requirement will be as simple as possible, without keeping time cards… but to get a general, even basic picture of how grant funds are being utilized, so that we can have more data at our disposal, and better evaluate past projects and grant categories… that will in turn help us make better decisions in the future. Right now the community has a lot of questions, few answers, and not enough data. I would like to see if we can find a healthy balance.
TLDR; transparency on work quality and goals, not on untrustable financial information.
It depends on the type of grant. It’s quite common in remote jobs to report working hours. However, it’s not the same to hire an employee as it is to buy a product or service from a provider. Moreover, this is not a company nor a DAO but rather a forum and a multi-signature wallet with funds, cannot hire, cannot ensure worker rights, cannot sue, cannot ask for returns. Regarding invoices. What legal entity will be recipient of invoices to the DAO?
When I pay for a bike, I expect to receive a bike that functions properly and can be used. Otherwise, I wouldn’t pay for it, regardless of how transparent the bike provider is or the manipulated financial reports they provide. It’s unfortunate that some people may want to enforce the provision of some information but won’t dedicate an enough good time reviewing previous grant work in detail, testing it to evaluate the resulting product, or at least to check with experts. Additionally, I believe that most financial reports could be falsified or manipulated.
It’s better to focus on the product and its results; grantees cannot fake that. If it works, it works, and that’s what matters, specially regarding software development. It would be good to have periodic reviews for long-term grants to ensure the desired outcomes.
In addition, it would be beneficial to make more informed voting decisions by recognizing teams that have a track record of producing high-quality products and can be trusted to build something valuable.
I think the idea here is admirable, but I agree with other commenters that this would add a lot of extra work for grantees, and the financial reports would not necessarily be useful or reliable.
During our recent grant we took time every month to meet with the grant support squad, create detailed updates about work progress and blockers, and otherwise communicate with the DAO community and our own players. Those things take time and that’s time not spent delivering on the roadmap for the grant.
We should remember that grants aren’t the same as venture capital funding. The DAO isn’t buying an ownership share in the grantees’ business. VCs usually do get access to company financials, but that’s because they are part owners and provide lots of guidance and connections that help further the business A grant given to an existing business to develop a new feature or project doesn’t give the funder full access to the accounting or business plan for that entire business.
I can only imagine how contentious the public discussions will be if grantees are forced to publish details about every transaction and receipt they spend money on. People who aren’t experts in software, game development, financial accounting, and so on might nitpick or start flame wars about every item.
I think the grant support squad is doing a good job keeping tabs on grantees’ progress. If we’d like them to ask for more specifics about financial transactions for the grant, that’s fine. Lets let them handle that as part of their normal work and try not to add to the workload for grantees.
@Doug-NFTWorld they are sufficient to let people pocket funds. And it makes sense why you like the ease of not reporting financial data. Wish you the best!
Hello @CheddarQueso
Thank you for initiating this important discussion around grantees submitting monthly financial reports. Your goal of enhancing accountability, transparency, and fiscal responsibility resonates strongly with me. Here are my thoughts.
Core Argument: Prioritize Results Over Expenses
While financial transparency is crucial, I’d like to argue that the primary metric for assessing the success of a grant should be the results or impact generated. For example, if a grantee receives a grant to produce a specific number of articles with particular characteristics, the primary concern should be whether these deliverables are met to the quality and standard outlined. In this context, how they allocate their funds is secondary if they are consistently delivering high-quality outcomes.
Balanced Approach: Simple Reporting
That said, a complete disregard for financial responsibility is not the answer. I propose a balanced approach: grantees can submit simplified financial reports that give a snapshot of their expenses without going into excessive detail. This would ensure a level of accountability and transparency without putting an undue administrative burden on the grantees.
Main 3 benefits of this are: 1) Resource Allocation: By prioritizing results, grantees have more flexibility to allocate resources where they see fit, enhancing project outcomes.
2) Simplified Administration: A less stringent financial reporting requirement saves time and administrative effort, allowing grantees to focus on deliverables.
3) Higher ROI: Ultimately, focusing on results could lead to better return-on-investment for the community backing the grant, as it prioritizes the project’s impact over rigid budget allocation.
My recommendation are: 1) to have a clear and easy way of monitoring that evaluates both financials and key performance indicators. 2)Create a template for Simple Financial Report: If the community agrees, develop a simplified financial report template that could be part of the monthly updates.
Disclaimer: I’m a grant recipient and my vesting contract is still active.
I agree with a lot of the points Unikorn brought up and am not sure how I feel about forcing this on people.
That said, I recently released all of the grant-related financials for Virtual Land Manager in its channel within the DAO Discord server because I believe that transparency can only help my own reputation and the reputation of the product. It makes it a lot easier to address accusations of misappropriating funds. I am fully in support of transparency when it’s feasible.
My grant is also one of the few instances where a grant included retroactive payment for work that was already done, and I think we’d need to come up with clearer definitions on how to handle situations like that. If the community decides “Yep, looks like you did the work you said you did, and that sounds like a reasonable amount to pay you for it.”, seems like that’s a done deal as long as the GSS can independently verify that the thing was actually built. You don’t get to revoke payment from your roofers after your roof is installed…but then again, not many roofing companies go around installing a roof and then asking if it’s good enough to get paid for. That would be a terrible business model.
Anyway, I’d vote yes for this but only under very well defined circumstances where finances are not tied to labor. Though I think we would need to consider the loopholes people would find. i.e., instead of a grant covering server and infrastructure costs, it covers hiring a contractor of some sort that will absorb those costs into their pricing.
Trust is a fundamental element for the ecosystem. In my experience participating in other protocols there are many people who have bad intentions with projects and ecosystems and are only looking to make money.
At the same time, in many cases the financial reports (for example of face-to-face events) have Web2 user data such as bank account number, ID number, address and others. That many prefer not to share.
Considering these two points, it is necessary to reach a balance where the information provided by the applicant of the proposal does not affect their privacy and the information provided to the DAO is not abused. But also generate confidence in proving that the funds were used correctly.
It is important to maintain a healthy community, and to this end we ourselves must monitor and, based on our common sense, ensure the well-being of the Decentraland ecosystem.
Who are we going to pay to do the accounting? I thought we were paying the GSS too much already? What happens if there is an accounting error? I agree with whomever stated that a general accounting of funds is good but if you are going to make every penny be accounted for, that’s not gonna be so good. Thank you.
No one said anything about accounting, those are words you put in there. It is about the grantee sharing where the money they took, went. This is project budgeting 101. If you cant give a financial report on your project, then you don’t deserve the money. This report should be public, and it gives a chance for anyone to verify it. What’s the big deal?
Ok, no problem if it costs us nothing. And if there is another word for adding up the receipts and comparing them to where they went and verifying those on the blockchain in essence accounting for them all, then please insert there. Maybe reconciling, I guess. ." In accounting and finance, reconciliation refers to the process of ensuring that two sets of records (usually the balances of two accounts) are in agreement. So who are we going to pay to do that? Thank you.
And, yes, the term accounting is used in the proposal.
Blockquote
I believe a monthly financial statement detailing how much money has been released, and a basic accounting of all expenses would be a simple and elementary requirement that would shed light and provide much needed data as to the impact of each grant.
Reconciliation of accounts is pretty easy especially with simple software. I would assume grantees on major projects are already doing some reconciliation of their own accounts. This would just be a report that would allow outside eyes to see. All that is needed is a report that explains where the money is going. Incoming transactions are from the vesting contract. Outgoing transactions should have receipts or at least some way of people sharing where the money went. It is then up to us to verify. Anyone can verify at no cost to the DAO. Just like anyone can see transactions on the blockchain. It’s just a move of transparency.
Ok, then what about just required for large off chain payments. Realistically we cannot expect everything to be on the blockchain so this seems reasonasble. Even some people in Web 3 would prefer cash money at times and there are services that just don’t accept cryptocurrency. This I can agree with, require non blockchain large payments require a reciept of some kind. Thank you.
This last paragraph was mostly CHATGPT 
