Q3 - Finance Guild

Archive Guilds
1

FINANCE GUILD BUDGET

TL;DR

The efforts of the Finance Guild continue! For Q3, all CityDAO Guild contributors & efforts will be unified under this DAO Guild. Our highest priority for Q3 will be to file and pay taxes for our first fiscal year and refine processes for all of the financial and compliance related activity of CityDAO.

The Finance Guild is requesting a total of $100,800 and 18 NFTs for Q3.

Our focus this quarter is on the following 4 objectives:

  1. Tax Filing and Reporting
  2. Treasury Management
  3. Payroll Compliance
  4. Off-Chain Payments
  5. Printed Annual Report (under separate CIP, costs not included)

Q2 Recap

The Finance Guild made extensive progress in Q2 in our effort to bring our financial operations to a higher standard.

Here is the full list of key highlights & learnings from Q2.

Objective 1: Bookkeeping

  • We trialed several softwares and are in continued discussions to handle our bookkeeping needs.
    • Cryptio (current tool, used by other DAOs who take accounting seriously)
    • Gilded (good integration with QB, poor customer support)
    • DAOFront (not as mature, but could be a future partner)
  • Crypto/DAO Accounting Tools are in their infancy and there doesn’t seem to be a perfect tool yet.
  • Off-chain assets are going to play an increasingly important role for us going forward

Objective 2: Treasury Management

  • Passed CIP-57 Treasury Management Authority
    • This is important for creating accountability and follow through
    • A weekly plan has been developed and is being executed on to
      • Ensure adequate USDC for contributors
      • De-risk by reducing exposure to ETH (volatile)
    • First long term ETH position, stETH

Objective 3: Payroll Compliance

  • Discussions with many different potential payroll partners
    • Deel, Gusto, WorkDAO, Utopia
  • Utopia is the current preferred route, discussions ongoing with their service agreement.

Objective 4: Internal Financial Operations

  • Support to Guild Facilitators for processing payments via Gnosis and Utopia
  • Initiating guild budgets, amended payments via Snapshot, monthly payments to contributors
  • Budgeting guild funds and tracking of NFT Transfers
  • Conversations and leads on solutions for distributing virtual cards to a few DAO Facilitators/Co-Facilitators

Continuing Activities & Proposed Budget

This quarter, we are continuing to use OKRs (Objectives and Key Results) for workstream priority setting and planning, with 4 key objectives laid out below:

  1. Bookkeeping, Tax Filing and Reporting

Key Results:

  • Continue the work of bookkeeping and begin developing monthly reports for the community.
  • Vetting additional bookkeeping workflows
  • File Federal Tax Documents
    • Collect and organize contributor tax documents
      • US Citizens
        • Retroactive is done using a Partnership with Utopia
        • Alternative is done using custom intake form that delivers info securely to our CPA
      • Foreign Status
        • Using custom intake form that delivers info securely to our CPA
  • Make estimated quarterly tax payments
  • Make Tax payment for our fiscal year ending June 30, 2022
  • Reduce our tax liability to the greatest extent possible
  • Frequent communication with our CPA to ensure compliance and timely action
  • The Tax Strategy and Filing Award is anticipated to be split between our CPA, alexthims, and vortoxica. This is intended to award value to those for significant decisions and actions that will have saved CityDAO over $1,500,000 in tax liabilities. The amount to be awarded is far less than the cost of other strategies to reduce our taxes and is an appreciation of the DAO for this largely unseen work and a high ROI effort.
  1. Treasury Management

Key Results:

  • Responsible for distributing Guild budgets
  • Managing risk of Treasury Funds
  • Assessing risk of proposed Treasury Strategies
  • Executing swaps so that USDC is available based on budgets and projects
  • Investing long term holdings
  • Communicating strategies and reasoning to the community
  1. Payroll Compliance

Key Results:

  • Onboard any US employees with Utopia (W-2)
  • Onboard any US independent contractors with Utopia (1099)
  • Onboard any non-US independent contractors with a custom workflow (W8BEN)
    • Ideate and develop a secure information collection site so that private sensitive information can be gathered and transmitted to our CPA without anyone at CityDAO having access to this information.
  • Cataloguing payment in kind values for NFT transfers
  1. Off-Chain Payments

Key Results:

  • Improve our ability to make off-chain payments, which included:
    • On-chain funded virtual debit cards
    • Consultants who require bank transfers
    • Property purchases in fiat
    • Off-ramping with the least amount of trust
    • Redundancy in access to off-chain funds
  1. Annual Report (To be submitted under a separate CIP for funding as it’s above and beyond a basic function)

Key Results:

  • Develop an annual report to represent the financial operations of the DAO’s fiscal year
  • Integrate a high level of graphic design work
  • The Annual Report is envisioned as an on-demand printable booklet
  • The purpose of developing a physical Annual Report is to show the seriousness by which CityDAO approaches financial matters and to be used as an artefact, a tangible document that can be used to prove our legitimacy and support our future endeavours.

Q3 Budget Requirements

Budget Category Description Amount Miscellaneous
Facilitator Payment $24,000 8 NFTs
Core Finance Guild Contributions/Bounties $5,000 5 NFTs
Treasury Management Lead $10,000 5 NFTs
CPA $20,000
Accounting Software (Crptio) $1,650
Accounting Software (QB) $150
Dev + Legal Guild (Contractor Agr Form and W8BEN Intake Form) $6,000
Tax Strategy and Filing Award $30,000

Team

The Finance Guild will consist of Core Financial Guild Contributor Team, and a Treasury Management Lead with our facilitator being alexthims. Our ambition is to create a welcoming environment into Guild with mobility for talented contributors that want to be more involved.

Conclusion

We believe that the Finance Guild provides a core operational function to CityDAO mainly in ensuring its financial health, in managing and streamlining payroll and expenses of contributors and facilitators, in managing and setting up the Guilds’ budgeting process and allocation, compliance with business regulations, and in recording and reporting the accounting of the DAO in a clear and transparent manner.

4 Likes
2

Didn’t treasury lose millions via ETH exposure? Where’s this in the Q2 recap?

This report strikes me as only highlighting the positive & constructive.

1 Like
3

Yes, a lot has been lost.

The Finance Guild and Treasury Management Team have only been able to manage the treasury properly very recently due to permissions and DAO structure. Funds were lost but we are making huge savings, its a bear market we wont make much money.

  • $1.7 million roughly has been saved in taxes.
  • $300k roughly saved due to ETH sales.

Next quarter now that finance actually has the ability to manage funds, losses on such a large scale wont be seen.

2 Likes
4

Thanks for this info. Has anyone written a post-mortem on how / why these losses were incurred?

1 Like
5

Majority fell down to having no designated management and issues with the process of selling and the bureaucracy of a DAO that delayed us getting to this point.

We are still facing a few issues but things are improving greatly.

6

@alexthims who are the Faciliator & Treasury Management Lead payments going to other than yourself?

Also, $20k for CPA for 1 quarter seems very high. Can you expand on the need there? Especially given there is also $30k for Tax Strategy & Filing.

2 Likes
7

I would act as Facilitator and @Vortoxica is Treasury Management Lead.

CPA costs, I’m working on getting a formal proposal that we can share. This quarter is bound to be quite busy. We also believe he’s been under compensated for the last 6 months of which we’ve been in contact, having calls, fielding questions for finance and other guilds, understanding options for all aspects of our business, for which we’ve paid $5k in total.

  • Auditing of our entire bookkeeping records and quarterly statements
  • Ongoing auditing of monthly books and statements
  • Tax preparation and filing for our fiscal year ending June 30
  • Available for calls every two weeks, this helps us get ahead of any issues
  • Our CPA will act as the recipient of 1099’s and W8BENs for tax filings (before the implementation thru Utopia) via a web form so that CityDAO will never have access to sensitive information about it’s contributors (web form needs built)
  • Process contributor tax forms
  • Availability to address core groups on topics that come up

The Tax Strategy and Filing Award is an ask for a bonus to be split between our CPA, vortoxica, and myself, disclosed above. Compared to some other strategies we discussed for reducing our tax burden, we believe that we’ll deliver significant value for the cost to the DAO for this work.

It’s still unclear how these separate Guild posts get included, either in whole or in part to the CIPs that include overall budgets for Q3 and appear to have achieved the requirements for making it to Snapshot.

1 Like
8

Makes sense, my intent would be that each of these guild CIPs gets merged into 69, but not sure what current path forward is.

1 Like
9

Great proposal, thanks for putting this together thoughtfully with clear goals. Really, this is a model proposal for future guilds.

In light of the bear market, I am giving every facilitator cost cutting recs to help preserve the DAO treasury. Suggestions:

  • Reduce bounty budget to $5k
  • Do we need to pay a CPA and have a massive $30k tax filing award? What is our CPA doing then? What is the facilitator getting paid to do, if not helping file?
  • I feel like 10k for treasury management is quite hefty, it seems like the strategy should be automated - DCA into USDC every week.
  • This guild budget is one of the highest. I don’t want you to have to cut your comp is CityDAO is your main thing, but 8k / mo will be one of the highest paid roles, so consider taking less if you can.