Blockchain has cleared the way for DAOs, the Charity sector should be exploring this to revolutionise the industry.
What is a DAO?
Before we start to dive in to how charities should and could be capitalising on this new movement of DAO's, let's first explain what a DAO is and how they are currently being used.
DAO stands for "Decentralised Autonomous Organisations", let's go through each word and hopefully the pieces will begin to start forming, and then at the end we can piece it together and how Charities can utilise this.
There are three key words that I think about when I see the word decentralised - transparent and community focussed:
Decentralisation brings new meanings to the word transparency than we are traditionally used to from organisations. For example, traditionally, whilst organisations may claim 'transparency' by sharing financial records, business goals and projections, a lot of the time this information is not freely open, verifiable and can easily be changed along the way with people rarely noticing.
We see this often in charities, where financial records are hard to confirm and often extremely skewed via salary payments, payments going as 'donations' to not particularly charitable causes.
Instead, a decentralised approach would focus on providing all of this information on a blockchain. A shared ledger that is immutable and cannot be tampered with. Essentially, financial records can be easily tracked and verified to ensure that the charity is acting as they say. Further, the transactions could be followed from the charity across other organisations to ensure that investments are making a positive change. Giving the organisation greater accountability and verifiability.
Additionally, within a decentralised organisation, there is rarely one clear authority, the structure is not hierarchical but instead responsibilities and activities for the charity are shared.
Often, it can be argued that charities take up a large decentralised approach, whereby it relies on the community to participate, improve and deliver. Which I agree with, however, as much as the community within current charities support, charities are often riddled with bad press due to the founder, lead, or authority figure within the charity undertaking scrupulous activites. In a decentralised organisation, this is less likely to happen when there is not one clear authority and transactions are transparent. Instead, decisions across the whole spectrum of change made by the Decentralised Organisation are cast out as a vote to the community and they can vote on their decision. Based on this, code changes are executed.
Which brings us onto our next letter in DAO.
You know what autonomous means, we have seen the rise of the word being thrown around to describe transport, work and even our kitchen appliances!
An autonomous organisation is similar to what you are thinking - something that runs on its own.
An organisation is able to do so via the usage of code and programming, enabling conditions to be set whereby actions are executed once a certain condition has been met. For example, releasing funds to x organisation once a certain amount has been invested, or the community has made a vote.
This enables an organisation not be tampered with by a person, but instead, run on a strict and clear set of code (Currently, whilst this does work at present (examples later) there is the risk that code is only understandable to developers, so this is, admittedly a restriction at the moment).
And finally, an organisation - this one is quite self explanatory
Please note, "Hackernoon" provides a great deepdive into the above if you'd like to learn more.
So what does this mean?
Hopefully the above paints a picture of how we could improve charities through this great new initiative. Whereby charities would remove any hierarchy and additionally, be transparent with donations and funding. In a world where charities are regularly used as alternative motives, we can bring back the human value of giving and importantly, being able to trust and participate more in where our money goes.
How can we start building charity DAO's?
Currently, DAO's are in their evolution phase, mainly being tested in finance (or, DeFi (Decentralised Finance)), which is making huge strides in increasing the understanding of DAO's, whilst also increasing trust through insurance (to avoid the risk of a DAO hack). As a result, there are not many charities that have been set up as a DAO (or converted into a DAO), however, are slowly growing - some examples are Ethereum Foundation and Binance Charity
My best recommendation currently would be to look at setting up your own DAO via DAOHaus if you have a large community to follow. Testing what works and continuing to improve. In a space this early, there is lots of new tools and space to learn!
In all honesty, we are barely in phase 1 of charity DAO's being built. We are so so early and adoption has not yet come. Mainly due to the uptake of cryptocurrency across companies not yet being mature enough whereby donations can easily be made to any person, organisation, research fund by cryptocurrency, and also, without the donation needing to be cashed out for fiat (which would take it off the blockchain and make it less easy and clear to track).
Additionally, DAO's are still very early, as noted above, and we are still learning many many things today. What might be the best practice today, could quickly change in days, weeks, months.
A very interesting prospect is the SingularityDAO built by Ben Goertzel, focussed on building a DAO ran by a robot. Perhaps an artificial intelligence would be able to better allocate funds?
I would recommend following this space and participating where you can! Something great is definitely brewing...