Accounting for Collaborative Economics

A grant proposal for OpenCivics Gitcoin GG20

Introduction

This project reimagines accounting as a radically transparent tool supporting collaboration. Within this broad vision it initially targets a use case where transparent accounting is already recognized and valued, i.e. nonprofit fiscal sponsorship, and develops appropriate open-source blockchain-based tools.

Historically, accounting practices have been seen as tools for monitoring “enterprise value” (financial accounting) and for operational awareness (management accounting), but these functions serve only the enterprise itself and its owners. In general the company books are considered highly proprietary and are only shared on a “need to know” basis. This is rational in a “Game A” competitive mindset, where any information which I know and my competitor does not is seen as a potential competitive advantage. In contrast, in a “Game B” collaborative mindset, any information I share makes it possible for others to make better-informed decisions and improves the success of the community as a whole.

We are familiar with certain types of transparency in accounting, e.g. Corporate Annual Reports for publicly-held companies, project reporting for NGOs receiving public funding, and government entities themselves, which often operate under Open Records laws, (all with the caveat that transparency requirements today are often skirted in practice). The logic behind these rules originates primarily from fear of malfeasance. The tools this project builds are serviceable in such fear-based contexts; however the larger vision is one in which data is voluntarily shared in a spirit of public benefit.

Fundamentals

Accounting creates organized records of transfer and transformation of value. Today’s mainstream accounting practices are based on the Double Entry bookkeeping method introduced in the 13th century. Value is allocated to accounts (e.g. “sales income”, “cost of goods sold”) and each ledger entry involves a credit to one account and a matching debit to another account. A useful piece of accounting software must be compatible with this legacy architecture. Nonetheless since the 1980s a richer model of economic activity, the REA (resource, event, agent) model, has been growing in acceptance and we intend to eventually build our project to support both REA and Double Entry interfaces.

In any case, accounting begins with event capture, which (in the traditional model) creates one or more entries in the General Ledger record. At the outset, our goal is to enable an organization to (1) place a record of an economic event (e.g. paying a trainer to teach a permaculture seminar) on a permanent public ledger (blockchain), (2) categorize the event in terms of its function(s) within the organization’s mission, and (3) access, review, and summarize the data in ways that maintain integrity and increase understanding.

Accounting actions (e.g. approval of an expense) are often restricted to authorized individuals; this project provides a basic set of blockchain-based “badge” tools to represent authority assigned to individuals. In contrast, there are no restrictions on visibility of the accounting transactions and authorization history.

We understand that this radical transparency makes no allowances for limited-access records or protecting the privacy of transaction details. Using our tools commits an organization to participating in an open collaborative economic role which may exceed the comfort and risk envelope of many organizations. We therefore expect adoption to begin with situations which already call for openness (e.g. the Open Collective fiscal sponsorship model), and with smaller idealistic efforts whose mission explicitly involves exploring the collaborative-ecosystem space.

Development Roadmap

This proposal does not attempt to deliver a full-fledged transparent accounting system; such a scope would require, perhaps, 20 times these resources. We focus on delivering a first step along the path, demonstrating transparent blockchain-based accounting recordkeeping. Specifically, we support an important ecosytem role: fiscal sponsorship. This will be a springboard for the grander project.

We envision 3 milestones reaching an MVP (minimum viable product) serving fiscal sponsorship bookkeeping. As we proceed along this roadmap we will develop a more concrete vision of further milestones, beyond this proposal’s scope, with broader accounting functionality and potential for integration with other open source projects such as GnuCash and valuenetwork NRP.

Milestone 1: Specification for proof-of-concept [approx $2K]

In this milestone we will document the essential elements of our proof-of-concept deliverable (Milestone 2). We will produce UI wireframes for user actions (e.g. submit invoice, authorize reimbursement, confirm disbursement) and basic data viewing functions. We will finalize the selection of the implementation blockchain (we are currently leaning towards Telos or WAX) and identify the initial set of smart contracts and their interfaces. We will identify the back-end services required and determine which services can be provided by existing open-source implementations and which require new code.

Milestone 2. Proof of concept [approx $5K additional]

In this milestone we will deliver the smart contracts, front-end web pages, and back-end services required to support the proof-of-concept specification of Milestone 1. We expect to exercise this proof-of-concept platform as a pilot project in the context of a fiscal sponsorship relationship between Regenerate Cascadia (RC), a U.S. 501(c)3 nonprofit, and SEEDS Educational and Charitable Program Office DAO, a sponsored program of RC. This will be an “alpha” environment requiring developer attention and will not be relied upon as the definitive legal bookkeeping record. Note: The above sponsorship relationship has not yet been legally executed but this step is expected soon.

Milestone 3. MVP [approx $10K additional]

In this milestone, emphasis will be on robustness and UI refinement, although there may be some extensions to the feature set based on experience with the proof-of-concept. The intention is to provide a platform which is usable by third parties without close developer support.

Potential Architecture

Budget allocation

• We intend to allocate at least 80% of the funding to professional software development through Apex NFT Brasil.
• Some funds may be allocated to back- and front-end hosting up to 1 year
• Some funds may be directed as honoraria to advisors and other contributors
• Some funds may be held in contingency for unanticipated costs

Team

Chuck Harrison, Organizer

• Facilitator of Economics Circle at SEEDS Collaboratory DAO, governance organ of the SEEDS Regenerative Renaissance
• Participant in SEEDS regenerative economics project since 2021
• Author of “Rainbow Token” multifunction local currency token contract
• Member of Hypha DAO, DAO platform development enterprise, since 2022
• OpenCivics network member since Nov 2023 Victor Lopez, Principal Developer
• Founder & CEO at Apex NFT Brasil, frontend & blockchain NFT engineers since 2021 Xavier Damman, Advisor
• Co-founder, past CEO of Open Collective, fiscal sponsorship platform since 2016
• Core Contributor, Citizen Wallet, local currency platform since 2023 Brandon Letsinger, Pilot-project partner representative
• Founder & Director of Cascadia Dept of Bioregion bioregional coordination agent since 2017
• Co-weaver, Regenerate Cascadia 501(c)3 fiscal sponsorship program