Using Both Categories & Challenges

Why shouldn't the suggested idea categorisations be used alongside a challenge setting process?

Idea

Broad categorisation is only one type of funding categorisation. Why can't we use both broad categorisation and challenge settings to get the best of both worlds?
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Analysis

The following looks to compare why the community may choose to use just categories for funding categorisation or a mixture of categories and challenges.
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Broad Categories Only

Advantages
  • ​Broad categorisation advantages - Using just broad categories would mean getting all the benefits that are outlined in the analysis of the implications of using broad categorisation. Those include:
    • Open funding
    • Low budget weighting complexity
    • Low categorisation justification
    • Higher categorisation familiarity
    • Low governance effort
    • Low stakeholder effort
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Disadvantages
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Broad Categories & Challenge Setting

Advantages
  • ​Some broad categorisation advantages - Having a mixture of these categorisation approaches gives some reduced benefits from those outlined.
    • Moderate open funding - The broad categories provide moderate open funding to all forms of idea and innovation.
    • Some categorisation familiarity - The broad categories bring familiarity to that part of the funding categorisation.
  • Encourages specific proposals - By giving certain proposal types an advantage it increases the likelihood that they propose and get funding. This however comes at the risk of other innovation ideas in different areas that could have stronger solutions not having the same access to funding so this advantage comes at a cost and comes with risks of innovation not presenting itself.
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Disadvantages
  • Removes broad categorisation advantages - The advantages from using broad categories are reduced or removed by using a mix of broad categories and challenge settings. Those advantages that get reduced or removed include:
    • Open funding - Funding is no longer as open as a section is now being restricted to only certain types giving certain product types, people or locations an advantage over others without there being any evidence that this will lead to better outcomes. The challenge setting part of this mix categorisation is not egalitarian.
    • Low budget weighting complexity - This benefit is greatly reduced as now the budget weighting problem is applied at the usage of specific challenge settings just on a smaller scale.
    • Low categorisation justification - This benefit is greatly reduced as now the categorisation justification is still present but at a smaller scale than before.
    • Higher categorisation familiarity - Only the broad categories side of this approach provide categorisation familiarity with the community.
    • Low governance effort - Increased governance effort is required for managing the challenge settings just now on a different scale.
    • Low stakeholder effort - Effort is required to manage the challenge settings each round and handle any overlap between proposals and categories, the assessment of challenges and voters needing to spend time understanding the changing challenge categorisation.
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Advantage false narratives
  • More choice - More choice does not mean there it is an advantage. An easy example could be that a given countries population could be given the choice to change all of their laws every day. This gives them the maximum amount of choice. However the implications of this are not practical in terms of time commitment and execution. Increased choice does always equate to a real clear benefit. Similarly with funding categorisation more choice adds increased justification and budget weighting complexity. Voters would need to know more about the ecosystem to make an informed decisions and even if they did there would always be a higher chance of making overly restrictive allocations and stifling innovation in other areas.
  • Less risk - It may be seen as less risky for the community to use a blend of categories and challenge settings initially. This is not an advantage to using both categories and challenge settings as there aren't any suggested major downsides at this stage. For a mixed approach to be less risky than just using broad categories there is a need to define the risks explicitly and also for those risks be larger than the risks that exist already for the existing challenge setting approach. The current analysis on broad categorisation vs specific categorisation suggests there is currently more risks with specific categorisation. The other reason changing categorisation should not be considered high risk by default is that this categorisation change each funding round. Negative changes can be reverted or amended.
  • Challenges help generate ideas - Challenge settings can be seen as a way to help generate ideas for what to propose. However what achieves any idea generation is the written content of the challenge setting. The budget allocation to the categorisation is not what generates ideas. In analysis on approaches to directing funding we highlight how community led priority reports can achieve the same goals of igniting inspiration for ideas. These types of reports should be integrated into the funding process to help to promote new ideas and innovation.
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Summary

  • Mixing broad categories with more specific challenge settings appears to provide little benefit and introduces a high complexity over just using broad categorisation.
  • Using both types of categorisation means reintroducing complexity around justification of challenges, budget weighting of each challenge, more effort for governance and stakeholders, lower familiarity with some of the challenges and more restrictions on where funding must be allocated.