The funds will be within RenVM itself. The way the new fee system will work is that the fees will no longer be placed into an Ethereum smart contract. Instead, they’ll be minted nowhere and placed into a RenVM smart contract (which, tbh, is also awesome that we can do this now with v0.4). So if someone mints 1 BTC on Ethereum, 0.0025 BTC will be placed into a special smart contract within RenVM and minted nowhere.
When governance decides what (and where) it wants to deploy these fees, RenVM can mint the fees wherever it is being instructed to do so by governance. In the same way as normal minting works. This means it is also capable of directly calling smart contracts on other chains!
Interestingly enough, what we will end up with is a decentralised community fund (as in hedge/quant/VC fund, not just lump of money fund) that can do anything a centrally controlled fund can do. It’s more powerful than a “traditional DAO” because it has a private key in its control and can access lots of different chains.