DCG Budget Planning Update

What is the objective of this post?
Many community members have requested that Dash Core Group provide a “heads-up” to the community regarding Dash Core Group’s plans to submit proposals to the Dash network. We agree that there is value in providing this transparency, since Dash Core Group proposals at times constitute a significant share of the Dash treasury. By providing budget forecasts to the community, we can enable the community to better align the timing of their own proposals relative to the requests from Dash Core Group. This would make our entire treasury system more effective.

We believe two specific actions can help address this issue: 1) submit all of our proposals at the latest by budget mid-cycle and 2) provide advanced notice of proposal requests by publishing a medium-term budget plan of proposals we know will be needed in the near future. As the price of Dash and budget projections change, we can update the published plan on a monthly basis. This will enable us to continue requesting funding one month at a time (thereby reducing price risk) while providing the Dash community with transparency into our planned proposals.

What will drive your proposal request strategy over the next 3 months?
Balancing tax avoidance with the need to cover our contractual obligations.

The Core Team’s budget proposals over the next 3 months will be impacted by our strategy to minimize our tax liability. Although Dash Core Group is structured as a corporation, it is not expected to generate much taxable income (i.e., it wasn’t created to generate net income), over the long term the Dash Core Group tax rate should approach zero. This stems from the fact that all Dash on the balances of our accounts will eventually be an expense when those funds are spent on specific initiatives. However, in the short-term there is a necessity to hold a certain amount of Dash permanently in each account since we need a small buffer to account for expense timing and currency fluctuation risk, as well as hold funds meant to pay future liabilities.

Dash Core Group’s fiscal year-end is June 30th and the balances as of that date in the core team’s accounts are subject to both federal and state tax. As a tax minimization strategy, we will be spending down our balances into the end of June, more than we typically would. Although this decreases our balance sheet health in the short-term, it will reduce our tax liability. This strategy will have two side-effects that impact the overall Dash treasury:

1) May 3rd and June 3rd payment dates are relatively light in terms of the number of proposals from Dash Core Team

2) July 3rd will be heavy in terms of the number of proposals from Dash Core Team as we look to replenish our funds in a number of accounts

Finally, as related to taxes, at some point we will need to request funds from the network related to the payment of federal and state taxes for Dash Core Group, Inc. We are working with an accounting firm to confirm the exact timing and amount due.

What are the specific requests you anticipate for the June 3rd and July 3rd budgets? Also, what did you request for May 3rd?
For the budget that paid out on May 3rd, the following proposal requests were posted totaling 2,052 Dash or 33% of the total Dash budget for the May cycle:

1) Core Team Compensation: 1,107 Dash for salaries (excluding benefits) for core team members

2) Marketing: 721 Dash to reimburse losses related to the Feedbands fiat guarantee

3) Marketing: 155 Dash to cover the cost of visual identity design by Tharp & Clark

4) Public Relations: 69 Dash to cover the balance of Q2 liabilities (including a small buffer)

For the budget paying out on June 3rd, the following proposal requests will be posted totaling 1,343 Dash or 22% of the total Dash budget for that month. These are rough estimates and will change as our plans evolve and the price of Dash fluctuates. The forecasts assume USD / Dash rate of $390.997; any fluctuation in the price of Dash will impact both the requested amount as well as the eventual payout:

1) Core Team Compensation: 895 Dash for compensation (including some benefits) for core team members. Certain contractors within Dash Core group will be offered employment through the Professional Employment Organization commencing June 1st, 2018. As more contractors are converted to employees, costs related to benefits will increase. We are also adding staff continuously and are expecting to offer certain contractors and employees salary increases which will also have the impact of increasing our core team compensation expense run-rate. Finally, we have very little buffer in our compensation budget line and will seek to rebuild that starting in July.

2) Conferences & Travel: 128 Dash to cover the cost of conferences and staff-related travel.

3) Research: 320 Dash to partially cover the cost of a certificate offering related to Blockchain through the ASU School of Business.

For the budget paying out on July 3rd, the following proposal requests will be posted totaling 2,202 Dash or 36% of the total Dash budget for the July cycle. The forecasts assume USD / Dash rate of $390.997; any fluctuation in the price of Dash will impact both the requested amount as well as the eventual payout:

1) Conferences & Travel: 512 Dash for all conferences and travel for the second half of 2018 including the cost of the Dash conference

2) Core Team Compensation: 910 Dash for salaries (including benefits) for core team members. Additional amounts may be requested for retention purposes and salary increases as those plans solidify

3) HR Outsourcing: 153 Dash to replenish our HR outsourcing budget as we have spent it down putting in place the senior management team at DCG

4) Public Relations: 115 Dash to cover 1 full quarter of payments related to public relations

5) Legal: 384 Dash to pay for legal services related to:
a. Dash Ventures
b. Due diligence of potential partners
c. Regulatory topics
d. Normal course of business

6) Employee Training: 128 Dash for a new balance sheet item to be used for training of our employees

We hope this post provided some transparency into the Core Team’s budgeting strategy and process. We welcome all constructive feedback and suggestions.

Author: glennaustin
Original link: https://www.dash.org/forum/threads/dcg-budget-planning-update.37884/