Reports from AMT/EITC – DAO(c)(3)

In what I hope to be a series of reports from the AMT/ETIC confererence’s nonprofit participants, Sam Brunson previewed a really interesting project on using DAOs for charitable activity.  For the Luddites among us (including yours truly) , a DAO is a “Decentralized Autonomous Organization” – an organizational that exists in the blockchain-o-sphere, characterized by the decentralized management of token holders by a common purpose.   Here’s the Investopedia summary for more.  

The thing that makes a DAO interesting and unique – its decentralized management – poses all sorts of issues for nonprofit fidiuciary duties and compliance with the requirements of Section 501(c)(3).  Sam says:

So DAOs likely don’t meet the requirements for tax exemption. On top of that (or perhaps, organizationally, before that), their ethos also does not fit in with the rule-based requirements of tax exemption. DAOs, like much in the world of crypto, believes that it cannot and should not fit within existing regulatory structures. It believes that current rules do not really apply, that new rules should be implemented, and that, until they are, it should be able to act however it chooses. But that does not fit with the tight control that the tax law exerts over organizations that want to be exempt from federal income taxation, and that want to provide donors with deductions and nonrealization for donations.

Sam’s working through some potential soluations on this quandry, and hopefully the workshop helped him brainstorm some ideas.  I’m looking forward to seeing more on this cutting edge project!

From the admittedly technologically challenged eww