Below is a draft amendment to the “MG Slice (Major Grants)” Section of ZIP 1014 as discussed in the second meeting of the ZOMG-ZIP 1014 Independent Review Committee. Please review and provide any comments by December 10. Following the comment period, I will incorporate the community’s feedback into a final version of the ZIP 1014 Amendment, which the Zcash Community Advisory Panel (ZCAP) will vote on in the upcoming Helios poll that convenes on December 20.
Objective: The ZIP 1014 Amendment allows ZOMG a discretionary budget subject to 501(c)(3) restrictions that permits committee members to allocate financial resources from the MG Slice to make itself more efficient and effective.
Background: The ZIP 1014 Amendment attempts to address and resolve some of the issues brought up by current/previous ZOMG members, primarily Chris Burniske and ML. It is also consistent with the results of the community sentiment poll I conducted on the forum in early September and the non-binding coin-holder poll conducted by the Electric Coin Company.
Summary Points: The ZIP 1014 Amendment accomplishes the following:
- Gives ZOMG more independence and autonomy without turning it into an independent operating company.
- Allows ZOMG to use its own funds for activities such as contracting services for support, promoting the Major Grants program, and attending conferences and networking events.
- Maintains ZF’s role in terms of administering and disbursing ZOMG’s funds.
- Reduces the friction between ZF and ZOMG.
- Alleviates some of the financial and administrative burden on ZF.
- Maintains the integrity of ZIP 1014.
- Does not disturb the balance of power between ECC and ZF.
Open Question: Per the amendment, ZOMG’s discretionary budget is subject to a monetary cap of $500,000 per year. This amount seems reasonable today; however, we don’t want to be in a situation where we need to amend the ZIP in the future to adjust the amount upward. Is there a better way to write this provision into the ZIP? For example, should the amount be inflation or index adjusted?
Note: The original version of ZIP 1014 is located here. The amendment is below; new language is in bold and present in subparagraphs 1, 4, and 8.
ZIP 1014-1: Proposed Amendment
MG slice (Major Grants)
This slice of the Dev Fund is intended to fund independent teams entering the Zcash ecosystem, to perform major ongoing development (or other work) for the public good of the Zcash ecosystem, to the extent that such teams are available and effective.
The funds SHALL be received and administered by ZF. ZF MUST disburse them as “Major Grants”, but subject to the following additional constraints:
- These funds MUST only be used to issue Major Grants to external parties that are independent of ZF, with the exception of the provisions specified in subparagraph 8. They MUST NOT be used by ZF for its internal operations and direct expenses. Additionally, BP, ECC, and ZF are ineligible to receive Major Grants.
- Major Grants SHOULD support well-specified work proposed by the grantee, at reasonable market-rate costs. They can be of any duration or ongoing without a duration limit. Grants of indefinite duration SHOULD have semiannual review points for continuation of funding.
- Priority SHOULD be given to Major Grants that bolster teams with substantial (current or prospective) continual existence, and set them up for long-term success, subject to the usual grant award considerations (impact, ability, risks, team, cost-effectiveness, etc.). Priority SHOULD be given to Major Grants that support ecosystem growth, for example through mentorship, coaching, technical resources, creating entrepreneurial opportunities, etc. If one proposal substantially duplicates another’s plans, priority SHOULD be given to the originator of the plans.
- Major Grants and the MG Slice SHOULD be restricted to furthering the Zcash cryptocurrency and its ecosystem (which is more specific than furthering financial privacy in general) as permitted under Section 501(c)(3).
- Major Grants awards are subject to approval by a five-seat Major Grant Review Committee. The Major Grant Review Committee SHALL be selected by the ZF’s Community Advisory Panel or successor process.
- The Major Grant Review Committee’s funding decisions will be final, requiring no approval from the ZF Board, but are subject to veto if the Foundation judges them to violate U.S. law or the ZF’s reporting requirements and other (current or future) obligations under U.S. IRS 501(c)(3).
- Major Grant Review Committee members SHALL have a one-year term and MAY sit for reelection. The Major Grant Review Committee is subject to the same conflict of interest policy that governs the ZF Board of Directors (i.e. they MUST recuse themselves when voting on proposals where they have a financial interest). At most one person with association with the BP/ECC, and at most one person with association with the ZF, are allowed to sit on the Major Grant Review Committee. “Association” here means: having a financial interest, full-time employment, being an officer, being a director, or having an immediate family relationship with any of the above. The ZF SHALL continue to operate the Community Advisory Panel and SHOULD work toward making it more representative and independent (more on that below).
- The Major Grants Review Committee SHALL receive an allocation from the MG Slice to support the activities of the Major Grants program. These funds MUST be administered by ZF. The Major Grants Review Committee MAY use these funds in its sole discretion as permitted under Section 501(c)(3) for any purpose consistent with its mandate to advance the usability, security, privacy, and adoption of the Zcash cryptocurrency and to support the public good of the Zcash ecosystem, including but not limited to contracting services for administrative and operational assistance, promoting the Major Grants program, attending conferences, hosting networking events and information sessions, ecosystem-related travel expenses, research, or any other reasonable purpose not specified herein. Use of these funds MUST NOT cause an undue administrative, operational, or legal burden to ZF. The total amount allocated to the Major Grants Review Committee SHALL be determined by ZF’s Community Advisory Panel.
ZF SHALL recognize the MG slice of the Dev Fund as a Restricted Fund donation under the above constraints (suitably formalized), and keep separate accounting of its balance and usage under its Transparency and Accountability obligations defined below.
ZF SHALL strive to define target metrics and key performance indicators, and the Major Grant Review Committee SHOULD utilize these in its funding decisions.
12/14 EDIT: I updated the following language in subparagraph 8 of the ZIP amendment:
The total amount allocated to the Major Grants Review Committee SHALL be subject to a monetary cap of $500,000 per year.
The total amount allocated to the Major Grants Review Committee SHALL be determined by ZF’s Community Advisory Panel.