How to Start an Impact DAO
Impact DAOs use blockchain technology to power their work toward a good cause.
In the last few years, impact DAOs have emerged as a clear use case for DAOs. From raising funds for a good cause to providing direct help to people in need, impact DAOs have already created tons of good in the world.
Today, we’ll explore two impact DAOs, Ukraine DAO and HumanDAO, to learn how they approached starting their organizations.
What is an Impact DAO?
An impact DAO is a DAO formed with the purpose of achieving a good cause, enabled by web3 technologies. Think of it as a charity, non-profit or social enterprise that’s super-powered by the blockchain!
Impact DAOs might use tokens to raise money or incentivize certain actions in a community. Or, their activities might be entirely on the ground, and their treasury is stored in a DAO on-chain. Impact DAOs come in many flavors, so let’s explore three impact DAOs that have flourished recently.
The Power of Impact DAOs: Use cases
Ukraine DAO’s mission is to defend Ukraine against the Russian invasion. The DAO started out by raising funds to support the Ukrainian people and their troops during this time of war. Now, they've transitioned into other work that supports Ukrainians. They've supported initiatives like the Kyiv Tech Summit and translated hundreds of articles about crypto and self custody of assets into Ukrainian. They're also working with the Stanford-backed Starling Labs, which records evidence on the blockchain, to document Russian war crimes.
“The initial goal was to raise funds for Ukrainians charities that had been accepting crypto for years,” said Alona, cofounder of Ukraine DAO. “Within a few days, Ukraine DAO raised $7M in crypto donations, transferring most of the funds to Come Back Alive, a charity supporting Ukraine’s Armed Forces.”
The DAO is over one year old, and is still supporting Ukrainians and the armed forces necessary to protect them, but their means are different now. Instead of raising funds, they're focusing mostly on bringing awareness to what's happening in Ukraine and working to document evidence.
“Those first days were absolutely critical for our defense. The central bank introduced limits on foreign currency transfers in and out of Ukraine to stop the run on the hryvnia,” she said.
Without the power of blockchain technology, they wouldn’t have been able to mobilize funds as quickly as they did.
“Using the power of the Ethereum blockchain, Web3 tech, and social media platforms, Ukraine DAO was able to establish itself, mobilize, and collect and deploy funds rapidly and with maximum transparency,” Alona said.
Ukraine DAO is a great example of how DAOs can be a mechanism for pooling funds quickly to achieve goals they care about. But it also shows how impact DAOs can pivot away from a simple use case of raising funds to encompass more work such as documenting evidence and doing important translation work.
HumanDAO helps under-served communities earn crypto through play-to-earn gaming, play-to-learn via a blockchain academy, and a gig economy assistant program in which you can earn crypto by completing tasks.
“Through its P2E (Pay-to-Earn) opportunities, learning platform, and Pocket Assistant platform, HumanDAO provides a range of opportunities for individuals to learn and earn income,” said Chris, founder and builder of HumanDAO.
The issue with blockchain-based gaming is that you often need assets to get started, because all the in-game assets are financialized and therefore cost money. HumanDAO solves this by lending blockchain gaming assets to players so they can earn money in games such as Axie Infinity. The DAO takes a portion of the earnings to be able to continue funding more players.
Through the learn-to-earn track, users can learn about web3 through the HumanDAO Academy. Users learn how to set up their web3 wallet, web3 basics, how to stay safe in web3, basic financial literacy, and how to get job opportunities in web3.
People can also become a Pocket Assistant to earn crypto. Users purchase a Pocket Assistant NFT, which gives them access to an assistant who can perform tasks for them, such as finding information online and completing tasks. The NFT holder gets a certain amount of “energy” each month, and 1 energy corresponds to 30 minutes of a pocket assistant’s time.
The assistant receives crypto in return for completing tasks. This is a simple, easy way for people to earn crypto and have access to financial opportunities they might not have had before.
When you create a task, such as “research and link to the top five DAO creation platforms,” the task goes to a pool of assistants. The website specifies that “anything beginning with Find, Collect, Make, Add, or Search” is typically a valid task. Most assistants come from Nigeria, the Philippines, and South America.
HumanDAO has shown that there are tons of ways to leverage web3 technology to help people in need!
How charities & public goods projects can benefit from a DAO structure
A DAO structure can be particularly effective for charities and social impact work, because DAOs manage assets that span across borders. So, instead of limiting your donations to one country’s Fiat currency, you can get more donors and more people involved in the project.
This is especially true for Ukraine DAO, because they wouldn’t be able to raise funds from people all over the world as quickly as they did without crypto.
HumanDAO finds that a DAO model is best for achieving its mission to provide financial opportunities for people in need. Chris spoke about how DAOs have financial and decision-making transparency that traditional organizations typically don’t. “DAOs offer a unique and different business model that provides incentives that are different from traditional charity or nonprofit organizations, and they are also much more open and transparent when it comes to governance and spending,” he said. “Furthermore, we think they also provide greater autonomy and flexibility in terms of decision-making and allow for more efficient and effective allocation of resources.”
Roadmap to start your Impact DAO
Now that you know why Impact DAOs are a revolutionary step forward for charities and social impact, you may want to start your own! We’ll take some learnings from the three DAOs to see what their process of getting started was like and what advice they would give.
Step 1: Define your mission
Like with any DAO, you’ll need to define your mission first. Identify something that will get people excited and want to work towards.
Impact DAOs often bridge from the web3 to the “real” world. They seek to solve a real world problem using web3 technologies. So, setting a mission that resonates with people on both sides of the spectrum is incredibly important.
For example, Ukraine DAO’s mission to support Ukraine in wartime resonates with people both in and out of web3. They simply use crypto rails to further this mission.
Step 2: Set incentives and decide if you’re launching a token
Once your mission is set, you can use that to determine how you’ll use incentives to inspire people to act.
Incentives are an important way to get people interested in your project. While you might get some participants who are intrinsically motivated, you can get even more people to support your project by leveraging a token structure that incentives them to hold your token and benefit your cause.
For example, in HumanDAO, you can stake the $HDAO token to earn rewards, but 80% of staking rewards are distributed back to the DAO members to use in the charity efforts.
But, a token might not always be the best fit for your specific context! Ukraine DAO does not use a governance token and find that this strategy works for them. They need to stay lean and move fast, so they let working groups make decisions on their own.
Step 3: Define your governance
Before you start onboarding members, it’s best to decide how the DAO will be governed. Think carefully about how much people will reasonably want to participate in your DAO’s governance.
Members who are there to simply donate to your cause might not want to be burdened with keeping up with the governance of your organization.
HumanDAO uses a forum to discuss new proposals, which are then put to a vote. $HDAO token holders have governance rights and vote in signaling proposals off-chain.
Ukraine DAO does not have token-based governance. Instead, they use pod-based governance, meaning that working groups make decisions autonomously. As long as each pod is acting in service of the DAO’s mission, they are free to make decisions within themselves. This method of governance is effective for staying agile and needing to adapt to the constantly changing situation on the ground in Ukraine.
Some of our DAO Experts specifically help Impact DAOs. Get in touch with an expert like General Magic, which helps launch impact DAOs!
Step 4: Gather your community around your cause
Gathering your community is the next important step in forming your ImpactDAO. Your community might include token holders, DAO contributors, and people who support your initiative, rather financial or not.
HumanDAO used gaming to bring people into their cause.
“To build a community around our cause, we leveraged the power of gaming,” said Chris. “This has enabled us to grow quickly and to reach a large number of people. We believe that gaming can be a powerful tool to introduce young people to the world of crypto and Web3 and to provide them with education and opportunity.”
When starting your impact DAO, it might make sense to identify where your community spends time and focusing your outreach efforts there. To learn more about building a DAO community, read our guide.
Step 5: Get the word out through media and marketing
ImpactDAOs especially need to focus on getting the word out about their cause, so people can donate to their cause and further the mission of the DAO.
One way to do this is through the media. For example, Ukraine DAO has been covered by a wide range of media, including Forbes, Fortune, Decrypt, and The Defiant.
Another way to get the word out about your impact DAO is different forms of social media marketing, such as Twitter, LinkedIn, Lens, and Reddit. These can be effective for gathering your community and getting people excited about your project.
Step 6: Use clear documentation and effective processes to scale
It can be hard to coordinate an entire community, but using clear documentation and effective processes can help.
“It is important to ensure that the organization is transparent, accountable, secure, and effective. Establish clear governance structures and processes that define decision-making and governance protocols,” said Chris.
Building a tooling stack that works for your organization is an important part of this. If members of your organization don’t want to spend time combing through Notion pages to find something, they probably won’t! So, making documentation simple and easy to find for new members can help set your DAO apart.
The future of Impact DAOs
Impact DAOs are a very exciting use case for DAOs going forward. The future of impact DAOs lies in your hands! You can launch your own DAO on the Aragon App today. To learn how to launch your DAO, check out this guide and this video.
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