Communities, Associations, and DAOs
There’s a lot of talk about Web3 and what it all means for the future of business. I would be completely remiss if I didn’t transparently say that I’m still trying to understand it all. But something that is of particular interest is the subject of DAOs and how they might pertain to the association and nonprofit community space. Leaders within these organizations speak about the possible use of DAOs as part of their operations, but I think it’s too early to say, at this point, and making decisions around organizational (and community) governance in these spaces could completely dismantle the foundation of community and associations/nonprofits. Let me explain why.
Again, I don’t claim to fully understand DAOs or their implications, but I’d like to share some initial thoughts based on what I have learned to this point. For those who aren’t aware of what a DAO is, they are decentralized autonomous organizations. What does that mean? It means that there is no CEO. There is no board of directors. No hierarchical governance as we know it today. Rather, the steam by which it runs is powered completely by its members. Everyone who is a part of the DAO is on equal footing. Decisions do not get made without the vote of the full membership. However, to obtain voting power or membership in a DAO, you must buy governance tokens and typically, how much weight your vote holds depends on how much you spent on these tokens or how much of an investment you made. In short, you pay money in exchange for ownership in this DAO and everyone who has invested gets to decision-making power by vote.
And this makes me a little itchy when it comes to communities and associations/nonprofits. Why? Because by nature of the way members are invited to participate in DAOs, it seems to shift the motivation for engagement from shared purpose to power. It also potentially creates an environment where mission and purpose-driven organizations and communities become less accessible to those who believe in your mission and don’t have the money to “buy their way in” to participate. There’s a Twitter thread by Danny Zuckerman that explains it much more eloquently than I ever could. It’s a long thread, but well worth the time to read through. Along with this thread where a few more community builders voiced their concerns, as well. In the long run, it’s not that I think that DAOs can’t drastically change the future of business in a good way, but it’s way too early for associations and community builders to be thinking about incorporating this structure into their operational models without understanding how to prioritize aligning mission and community values over offering financial incentives.
This was in no way meant to be a comprehensive thought piece on DAOs and the future of communities and the association/nonprofit world. My thoughts are still baking and I’m working on some basic assumptions based off the research I’ve done so far. I’m sure there are plenty who will disagree with me, but I firmly believe there’s way too much for us to learn and uncover before we can see the benefit and I am far from thinking that DAOs could be the future of community building. I believe there’s this next level feeling of exclusivity that exists with membership in this model (which may be intentional) that is in direct conflict with the core purpose of building community and association/nonprofit missions and values and I’m not convinced that, in this aspect, it’s a game changer for this industry.
In all the things that we may be slow to adopt, I think it would be wise for community leaders in associations and nonprofits to be okay with being fashionably late to this party. Or maybe we don’t need to go at all. We’ll see what the future holds.
What are your thoughts on DAOs and association/nonprofit communities? Do you think this is the future for these spaces? Why or why not?