For some time, I’ve been thinking about the use of a fiscal sponsor for handling payments for DAOs created with Aragon. I did some research and found out about the Open Collective platform and its innovative use of fiscal sponsors.
Potentially, the use of a fiscal sponsor might help those of us organizing DAOs to solve the legal entity and legal wrapper issue for funds collection, invoicing, and payments. You can find out more about how Open Collective works here:
Within the context of a DAO, basically when a client wants to sponsor, donate to, or pay a DAO, they pay a fiscal sponsor instead (usually a nonprofit with legal status), and the fiscal sponsor in turn pays the individual members of the DAO for work done, or reimbursement for items or expenses paid on behalf of the DAO (such as DAO related computer equipment or travel expenses).
A fiscal sponsor could have multiple projects or collectives under its wing and handle funds collection and payments for all of them. This opens up the possibility for a DAO to operate separate projects or collectives under the umbrella DAO, with separate accounting for each, and have all funds collection and payments handled by a single fiscal sponsor.
Open Collective is a platform that enables projects to raise money without having a legal entity or bank account. The use of a fiscal sponsor facilitates these fiat transactions, from the sponsor/donor to the fiscal sponsor, and from the fiscal sponsor to the individuals who supply the goods and services.
Open Collective also provides a platform for transparent accounting where the movement of funds can be seen and tracked and invoices can be submitted and paid transparently.
Open Collective is fiat based, but perhaps a similar structure or fiscal sponsor could be used for Aragon based DAOs. A DAO could deal solely with crypto, or both crypto and fiat. If fiat is handled, then it may be easier to use the Open Collective platform.
I think the use of a fiscal sponsor opens up interesting possibilities!!!