# How funds are disbursed

Quadratic funding mechanism is designed to harness the collective wisdom of its community, moving away from the conventional dollar-for-dollar matching system. Instead, the Gitcoin software emphasizes a more democratic distribution of funds as it uses QF algorithm. This approach prioritizes the number of individual contributors rather than the total amount donated, effectively reducing the influence of large-scale donors ("whales") and elevating projects with broader community support.

In terms of funds, Gitcoin does not take custody of any funds. Donations are made directly to grantees through smart contracts. Projects that wish to receive funding set up their pages (applications) and, once approved by round operators, are eligible to receive community donations. These donations are then matched according to the platform's unique formula, which considers the number of donations a project receives. Projects with a higher number of donations are generally matched with larger funds.

Delve deeper into the quadratic funding mechanism [here](https://www.wtfisqf.com/)

After the donations are collected and matched, the matching funds are distributed as a bulk transaction at the end of the funding round. The final payout to the grantees occurs once the round concludes and the results are confirmed. \
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The following key points need to be communicated to the grantees:

1. **Payout Timing:** You'll receive your payout at the end of the round. We'll notify you as soon as the round concludes.
2. **Grant Amount Calculation:** Your final grant amount depends on the donations you recieved. It is based more on the number of contributors than the total donation amount.
3. **Matching Fund Process:** After donations, Gitcoin's software matches these funds democratically. The more support your project has, the higher the potential matching funds.


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