Use of a Fiscal Sponsor as a Legal Wrapper/Legal Entity for Aragon DAOs

Questions re Open Collectives

This Open Collectives thing is really interesting!! I’m excited to see projects providing more flexibility to community initiatives and DAOs :smiley:

However I don’t get why the fiscal sponsorship or legal proxy model is avantageous vs. the model described below by @burrrata where the DAO is simply coordinating freelancers.

In the latter case the main DAO could centralize payments from clients and forward them to freelancers. Freelancers invoice the clients directly. Moreover, using a legal proxy or Open Collectives Consultants would still have to issue invoices and have their own legal entity set-up.

Isn’t the legal proxy just adding an intermediary in the process? Is the advantage that we have a central hub with an access to a bank account and fiat?

Another question that comes to my mind is that open collectives is designed to ‘collect recurring or one-off contributions from sponsors, backers, or members’. Is there any way we could tune our consulting initiative to fit within this legal framework?

There is a possibility to open our own Fiscal Host. I’d be curious to go through the process and report what we find here! It might be worth it as well to ping people from Open Collectives. They may have valuable insights for us!


Hi Louis! Love your awesome feedback!!! Been mulling over the same thoughts as you! :smiley:

If we have two scenarios:

  • Scenario A: An individual, project, business, or organization paying a freelancer directly.

  • Scenario B: An individual, project, business, or organization paying an established nonprofit organization with the donation being tax-deductible.

As a general rule, the chances of a deal closing with Scenario B is higher. Both individuals and organizations alike feel more comfortable dealing with and paying an established organization. This is especially true if a freelancer for hire is personally unknown to them. People believe that established organizations are more trustworthy and that they will keep their word. If something goes wrong, the organization could fix it or provide an alternative solution. An organization typically does not suddenly disappear like a freelancer could.

In terms of one-off or recurring contributions, to make it less awkward, a DAO such as DAO Consultants could have a primary stated purpose of education and teaching the world about the benefits of organizing initiatives with Aragon DAOs. Consulting work is very closely related to that mission. Many corporations, even mega ones, would not have a problem contributing toward an educational/open source initiative, especially when their payments are in the form of a tax-deductible donation to a nonprofit organization (the fiscal sponsor).

Check out this Open Collective contribution page for Babel. There are corporate sponsors, like Adobe, Airbnb, Google, even Coinbase:

What do you think about this?


Nice! All of that makes sense to me! It would be nice to sync on a call next week to discuss extensively and pick one or the other scenario and dig more. What do you think? :slight_smile: @burrrata may want to join as well. We can report findings on this thread!


Hi Louis,

Sounds good!

I could always test either scenario with the potential clients and see which one they prefer? I mean we could even give them both options.

Here’s BitMEX:

According to that page, BitMEX contributes $500 monthly to Babel and $100 monthly to Sinon. The Open Collective site is very transparent. So we have to be careful with the mission statement as people associate contributors with the causes they contribute to.

Hmmm…if Aragon is a fiscal host on Open Collective, it might attract some of the collectives and communities there to form an Aragon DAO! Some of them look like great candidates for an Aragon DAO.

The idea is that the reputation DAO would act as a signal of integrity and reliability for consultants that are ranked highly. Not saying that this would solve all problems, or that it’s the best idea for this use case, but this is the exact thing the reputation only model aimed to address.

I’m so into this. Let’s make it happen! :slight_smile:

Wasn’t the goal of the DAO Business Models and Consultants - #4 by Amazongirl to be for profit though?

Yeah totally. That would be awesome.

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I’ve started a related community thread about what could happen if Aragon Association or another Aragon DAO became a fiscal sponsor:
How Aragon DAOs can empower and enhance Corporate Social Responsibility (CSR) and Corporate Shared Value (CSV)

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According to Open Collective, a fiscal sponsor could be any legal entity, including an individual, since a human being is a legal entity. So the fiscal sponsor could be a for-profit entity such as an LLC or corporation as well.

Since Aragon software is open-source and somewhat experimental, I feel that a nonprofit fiscal sponsor is more suitable and makes it easier to collect donations from companies.

What we could do is this:
Create an offering to collect contributions:
*$500 monthly contribution or
*$4500 annual contribution (savings of $1500 if paid annually)

(The above amounts could be increased or tiered contribution levels could be offered.)

The initial monthly contribution of $500 paid to DAO Consultants via a fiscal sponsor would include:
*Initial one-on-one consultation (four hours worth) about possible use of an Aragon DAO
*assistance with onboarding and implementing an Aragon DAO, including basic technical assistance

Out of this $500 collected, $350 would be paid to the actual DAO consultant(s) who do the work.

In addition, if contributors contribute on a monthly or annual basis, they would be entitled to participate in public speaking and networking opportunities and an online forum for sharing ideas, and receive a 30% discount off Aragon premium publications, events, conferences, and virtual exhibitions, etc.

Note that Aragon will always have a rich repository of free information and open-source tools available to the public.

If a contributor requires more than four hours of consultation, then the contributor (could be a project, corporate entity, or individual) has the option of executing a consulting agreement with an individual DAO consultant directly (now that they know each other). DAO Consultants could provide lawyer-approved consulting agreement templates for this purpose.

If DAO Consultants takes off, then it could later form its own legal entity if desired or voted upon by members. Perhaps the state of DAOs could have evolved further by then and there could be other options available enabling DAOs to interface with the real world via fiat and other channels.

Before DAO Consultants achieves its own legal status, the fiscal sponsor would only be in charge of funds collection and disbursement, leaving all creative, administrative, and operational decisions in the hands of the DAO and its members.

What do you think? Happy to hear any countervailing points of view. :smiley:

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This seems really cool, but I think it’s something that an independent entity focused on consulting would be better suited to take on. Aragon needs to focus on product development and user onboarding. Fiscal sponsorships and premium publications and events are not part of our M.O.

That being said, Aragon could provide the decentralized infrastructure (DAOs) and dispute resolution (Court) for a team/project that wanted to do this. That would be ideal.

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What do you mean? Like an end-to-end solution?

Not an end-to-end solution. Someone else should figure that out. The Aragon Court, however, can help provide accountability and security to that process. So Aragon DAOs and the Court would be pieces of the puzzle, but not the entire thing.

I am coming from the other side - a long-term and active NP ( with a number of projects / sub-projects that could probably each benefit from their own DAOs.


This would suit my situation - if I can ever get to “consultant” status - donations to my existing NP would be tax-deductible (for Australian entities) - so I am thinking of doing work where the donation stays with my own NP - but I wonder if there is the possibility of the NP also being a disperser for other organisations but charging a fee as you mentioned?

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This is awesome! Would be happy to help you figure out how Aragon could help. Do you have a rough idea in mind of how you want to integrate DAOs into your current organization structure?

Well my first thoughts for a specific project were posted here:

and a following idea for raising funding for brain research generally (not just for my own NP NAF) was here:

but it occurs to me that if I can make some more progress with building the NAF Research Facility (on my nominally for-profit site - which will eventually be owned by the NP NAF), then there are sort of many “Dandelion” DAO entities that could be used for smaller, ancillary and related projects.

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Hey Philip, :smiley:

I suggest that you start with a very simple DAO, initially just as a way for the donors to your Neural Archives nonprofit to be more actively involved in your cause, which also hopefully closely aligns with their personal goals.

Perhaps enable voting so they can have a voice in how donated funds are spent.

Maybe you could also have a bounty program and reward those donors who help spread awareness about your nonprofit and cause in specific ways you have found effective. Rep tokens could be created for that purpose and the tokens could be redeemable for cash or crypto from the nonprofit at a predetermined ratio.

Here is an example of a community site where members are rewarded: AVA Labs is the latest client of DAO Maker, which specializes in these types of community bounty platforms for integration into clients’ websites.


Yes, but I think I will do this with a separate DAO from any that I might do for the NAF - to get some more immediate real / actual experience with something that is not so consequential . . ie my SF AI book writing idea at the end of:

There is a potential large donor I need to approach first - who may actually be interested in supporting directly or via a DAO - I’ll see how that goes first.

Interesting idea!

Thanks! I will have a closer look at that . .

@burrrata , @Amazongirl ,

Well I am finally surfacing again from other, more pressing, involvements and prior to setting up my first, less critical (but fun!) DAO, I have bought a few ANT so that I can start participating in votes etc and start finding my way around so I am a bit more clued-up . . so if you could point me in the right direction it would be appreciated!

As time goes on, I will increase my ANT holdings.


@philiprhoades Hey Philip! :smiley: Please fill out this founder outreach survey and we could do a phone call afterwards:

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I agree with option B, this is the easiest way to implement DAOs and test fiscal processes. then, as you mentioned, interactions between clients and DAO would have donation basis while interactions between DAO and consultants would have supply costs basis. Non-profit organization can be made based on Estonian law I suggest, cheap costs and digital processes :slight_smile:

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