Effectively Directs Funding

Suggested idea funding categories are able to effectively direct funding with complimentary approaches and an independent objective setting process

Why is it important?

The community needs to be able to effectively direct funding to the most impactful areas in the ecosystem. The objectives and problems within the community often change between funding rounds. Funding categorisation needs to accommodate these changes. There are a number of approaches for directing funding that can be used and should be considered when comparing the challenge setting process with funding categories.

Challenge settings

• Exclusive categorisation - As challenge setting are a changing form of categorisation that invite any categorisations it often leads to exclusive categorisations. This means that areas of the ecosystem can have access to no funding in certain funding rounds. This can mean certain goals and objective for the community could have little to no access to funding. This makes challenge settings less effective for directing funding to goals and objectives that do not get included in a given funding round.

• Guarantees funding is spent on the categorisation focus - A positive to custom categorisation is there is certainty in that funding is available and can be used for the focus of that selected challenge. There is an issue for specific categorisations in situations where the submissions for that challenge are too few or not to a sufficient quality. In that situation the community is not able to easily direct the funding to other areas that could be more impactful as funding has to be allocated to the specific categorisation being used. Broad categorisation solves this problem by allowing the voter to direct funding between multiple different proposal options.

Funding categories

• Effectiveness of budget weighting votes - Funding categories were created to be a recurring form of categorisation where the community votes on the budget weightings for each of the categories. The categories group proposals by certain types and focus areas. When the community believes that one category of proposals is needed more than another they can simply increase or decrease the budget weightings of those categories in the next funding round.

• Can direct funds to all ideas & innovation - Having inclusive categorisations means all forms of idea and innovation can be considered. The community is then able to more easily direct funding to proposals that could solve a mixture of objectives. Focus can then be given on which objectives are the most important and then look at which of the proposals submitted most effectively address those different objectives. The benefit of this inclusive approach for ideas is the voter receives the maximum amount of options to most effectively decide where to direct funding.

• Benefits from an independent objective setting process - Using budget weightings on categories gives less direct control over directing funding to more specific areas if used in isolation. However the benefit of funding categories is they reduce the risks around the potential to waste resources on low quality proposals in more specific categorisations. By adding an independent objective setting process on top of categories proposers will be able to attach which objectives apply to their proposal. Providing there are frequent votes in the community on which objectives are the highest priority the community will have a more complete picture on which proposals most effectively address the most important objectives. The combination of funding categories and an independent objective setting process offer a powerful path for the community to more precisely direct funding to where the most impact can be generated.

Summary

• Funding categories can be sufficiently effective for directing funding by using budget weighting votes on the amount of funding to apply to each category. The main benefit of funding categories for directing funding is it removes the problems around missing out on innovation from excluded objectives and proposal type areas and also situations where specific categorisations struggle with a lower number of quality of proposals submitted.

• Integrating an independent objective setting process and using different approaches for directing funding means that the Catalyst process can benefit from the simplicity of funding categories whilst also becoming highly effective at being able to direct funding based off the needs of the community.