The Big Green DAO is doing something that has never been done. Namely, allowing those on the front lines of non-profit work to determine who should receive funds. Kimbal Musk – who created the DAO – not only believes in changing the decision making process, but also believes the approach to be a far more efficient way of distributing funds. Musk provided an overview of numbers in an interview:
Let’s say you’re giving away $100 million. And this is per year. You’re taking $15 million and providing it towards the staff who will figure out who’s going to get the grants, and then there’s the reporting and all that stuff.
Now you have $85 million. And you’re giving it to nonprofits that use 25% of their time towards fundraising. So the actual money that goes towards the work on the ground is 65%, maximum. You’re starting with 65% that goes to the real work.
With our DAO, we have a 5% overhead allowance. So you’re starting with 95% of the money versus 65% of the money. Already, out of the gate, you have less headache for the nonprofits. You have no work needed for a foundation, so that’s amazing.
I’m a philanthropist. I have a group of people that help me give money away, and it’s very frustrating that it costs so much money and time to figure out how to give money away. So, you’re already starting with almost 50% more money than you would with traditional grant-making.
OuterHaven was one of the first six nonprofits to determine what other organizations would receive money from the DAO, and they selected ten (10) additional nonprofits. The now sixteen (16) nonprofits will then vote on the next fund recipients.
Anyone can join the DAO for $1, and those willing to donate one Ethereum can also obtain a vote, but Musk noted that most Entereum donors don’t use their vote and allow the front line nonprofits to make decisions. “Over the past decade we have seen a movement in philanthropy, and especially in the effective altruism movement to give money directly to those that need it, as they will determine the best use of funds.”