11 Alternative Currencies Update
http://money.cnn.com/galleries/2012/pf/1201/gallery.community-currencies/index.html Community currencies spread…
Small towns and cities across the country are cooking up their own colorful currencies to protect against a national economic collapse and boost local spending.
In the small mountain community of Southern Berkshire, Mass., residents can exchange U.S. greenbacks for colorful bills called “BerkShares” and use them at more than 400 local businesses.
BerkShares come in 1-, 5-, 10-, 20- and 50-unit denominations. The exchange rate is 95 U.S. dollars to 100 BerkShares, making them a deal for residents. In order to keep the BerkShares in circulation, merchants that try to exchange the currency for U.S. dollars at the bank get charged a 5% fee.
More than 3 million BerkShares have been issued since the currency launched in 2006. So far, five community banks (about two-thirds of the local banks) have partnered with BerkShares, with 13 branches now accepting and exchanging the currency. That’s pretty significant for a region with only about 19,000 people, says Susan Witt, a co-founder of the currency.
And the currency will expand to Northern Berkshire later this year. Witt is also working on a Berkshire-funded loan program that would encourage more local production and replace the need for importing items from outside the community.
“In down economic times, people turn to neighbors and community more,” said Witt. “So the current financial situation has raised interest in alternative currencies like ours and is stimulating conversations about whether it’s better to shop locally or to shop as cheap as we can wherever we can — even if there’s no value to the community.”
Pictured on BerkShares are images of Massachusetts heroes: a Mohican, the original inhabitants of the Berkshire area, writer and civil rights activist W.E.B. Du Bois, agricultural movement leader Robyn Van En, as well as author Herman Melville and painter Norman Rockwell.
In the “City of Brotherly Love” there’s actually a currency that is earned by doing favors for friends and volunteering.
Launched in 1996 by a social service non-profit called Resources for Human Development, Equal Dollars are accepted at more than 100 local businesses and can be earned through community service, helping people with odd jobs or selling belongings on the exchange’s online classifieds database.
Most participating businesses accept a combination of Equal Dollars and U.S. dollars and many offer discounts to Equal Dollar users. RHD also holds a food market for members each week, where they can use their Equal Dollars to get discounts on groceries.
“The U.S. dollar is fine to feed the upper 1%, but we are missing something that gets people to work for each other and for the community … this helps regular people exchange goods and services in an economy that is in deep trouble,” said Bob Fishman, the executive director of RHD.
RHD has recently developed a relationship with three Amish farmers from Lancaster County, PA, where the farmers accept 10% of their invoice in Equal Dollars. The farmers use their Equal Dollars for clothes, linens, brown sugar, oatmeal and other items.
Printed in 1-, 5-, 10- and 20-unit denominations, the bills feature images of social activist Maggie Kuhn and philosopher Alain LeRoy Locke.
Because of the currency’s recent success — with 20 to 30 new members signing up each month (nearly twice as many as a couple of years ago) — RHD is offering a $50,000 grant to the first state government that wants to try out this nonprofit-funded community currency.
One of the longest-running community currencies in the United States, Ithaca Hours has been used as a model for many other homegrown currencies.
Paul Glover, who has started 18 community organizations aimed at improving issues like education and housing in cities across the country, launched the currency back in 1991 to help stimulate the local economy. Now, more than 900 participants — including both businesses and individuals — currently accept Ithaca Hours for goods and services, and several employers issue the currency as part of their wages.
“I realized there were many magnificent things that could be done to repair America but that these were frustrated by lack of dollars,” said Glover. “So it occurred to me that if we were going to have enough money, we’d have to print it ourselves.”
Glover denominated the currency in “HOURS” to convey that it is really the time spent helping the community that is being exchanged. At the time, the average hourly wage in Tompkins County, NY was $10 an hour, so he set the exchange rate for one Ithaca Hour to 10 U.S. dollars, and it hasn’t changed since. The currency also comes in 1/4-, 1/2-, 1-, 2-, and 4-hour denominations.
The bills, which state “In Ithaca We Trust,” feature local emblems like Lick Brook and the Cayuga Lake Steamboat.
In 2006, a group of Traverse City residents launched Bay Bucks, hoping to get more people to spend locally.
Bay Bucks are now accepted and circulated by roughly 100 local businesses. A couple of local nonprofit organizations are now even paying part of employees’ salaries in the currency.
“We look at Bay Bucks as our own local stimulus program,” said Mo Charbonneau, the currency’s administrator. “People using Bay Bucks look at the directory of businesses accepting them and shop at stores they wouldn’t have thought to shop at before.”
And some of the people who may not typically receive money for their services have also benefited. Jobs were created for a group of musicians, for example, when local organic food co-op Oryana hired them to play in its café because it was able to pay them in Bay Bucks.
The currency comes in denominations of 1, 5, 10 and 20 units and features images of regional animals and plants, like a white-tailed deer, a barn owl, a cherry blossom and a morel mushroom.
The Cascadia Hour Exchange has been up and running for about 18 years, but momentum has really started to pick up in the past year.
Based in Portland, the exchange recently started issuing currency in Brookings on the Oregon coast and plans to expand to several other nearby neighborhoods later this year.
The currency, called the CHE, is meant to facilitate bartering among locals. Modeled after Ithaca HOURS, CHEs come in 1/4, 1/2, 1, 2, and 4-hour denominations, and each CHE equals 10 U.S. dollars.
With CHEs, members can negotiate prices for goods and services with other people or businesses that accept them. For example, you could offer your neighbor a CHE to walk your dog. Your neighbor could then use the CHE to pay a local landscaper for yard work. The exchange also holds an auction once a month where members can buy and sell items in CHE.
“We call it `better than barter,’” said co-founder John Poling. “With barter, you have to find someone who has what you want and you have to have what they want. With this, you can buy and sell whatever you want.”
Members pay a $50 fee to become a member and they receive 5 CHEs upon joining. But new members can skip the fee by simply selling items at the local auction or by working for members and accepting payments in CHE.
Most participants work out of their homes, make homemade crafts, sell items in flea markets or are independent contractors, said Poling.
The bills feature sketches of Oregon scenery like mountains and ocean, and each bill states “In Each Other We Trust”.
Life Dollars aren’t just meant to act as a supplemental currency for a small community, they’re meant to replace U.S. dollars altogether, said Francis Ayley, who founded the currency in 2004.
In the past year, Life Dollars have grown in popularity. “The economic recession is hitting people hard, so they are more willing to try alternatives that offer hope and possible solutions,” he said.
Membership, which mainly drew from the Bellingham, Wash. area, had remained around 250 to 350 for several years. But in the past couple years, it has doubled to more than 700. The currency is now even used in Seattle, where it has gained 75 new members within the past six months.
Almost all of the transactions occur online. Members have online accounts where they can transfer money directly to other members and businesses. Some paper notes have been introduced, but most of the currency is electronic to prevent forgery.
The Life Dollar is valued at between 10 and 12 U.S. Dollars, fluctuating based on the local hourly living wage in the community.
Overall, users have exchanged more than $1 million worth of goods and services electronically, said Ayley.
When a snowstorm hit the Philadelphia suburb of Ardmore, Pa., on Valentine’s Day 2010 and ruined an important holiday shopping weekend for already-struggling retailers, John Durso decided to take action.
Durso, who heads a nonprofit business association called the Ardmore Initiative, formed a local currency called “Downtown Dollars” that essentially doubled the value of shoppers’ money.
“Consumer spending is key to recovering our economy,” said Durso. “I knew I had to do something to get people off their butts and get them spending, so I said every dollar you spend, we’ll match — and that seemed to work.”
Each community member was able to go to the Ardmore Initiative and exchange $100 of their own money for 200 Downtown Dollars, which retailers would accept as $200 U.S. dollars — essentially providing customers with a 50% discount. The store owner could then simply take the 200 Downtown Dollars to the Ardmore Initiative and exchange them for $200 U.S. dollars.
Of course, someone had to absorb the loss. The Ardmore Initiative, which is funded by a tax assessed on local property owners, fund raising efforts and grants, spent $8,500 to fund the first round of Downtown Dollars. Local community banks funded the second round with a total of about $10,000.
Since March 2010, more than 200 consumers have purchased $35,000 worth of Downtown Dollars and spent them at more than 100 local businesses. As of this March, businesses had redeemed nearly $28,000 worth of the currency, generating around $42,000 in total sales for businesses (based on receipts from participating businesses).
Durso said he is ready to pull the trigger on round three whenever the town needs it, which could be this winter if another blizzard hits or if retailers really start to suffer because of the economy.
Started by a grass roots organization called Ecolocity, which focuses on issues ranging from affordable housing to urban farming in the Washington, D.C.,-area, the Potomac was introduced to strengthen the local economy and help shield it from any fallout from the national economy.
“[W]e wanted to try to localize our economy to make it more self-sustained and self-sufficient by relying on our own resources, and we found that a local currency tends to do all of these things,” said Larry Chang, the director of the Potomac currency.
Potomacs come in 1, 5, 10 and 20 denominations and are decorated with local scenery and icons including D.C. native Marvin Gaye, the Capitol building and a view of the Potomac River.
Each Potomac is worth 95 cents. But when the currency is used at a participating store or at the local farmers market, it exchanges one-for-one. The 5-cent difference is meant as an incentive for the consumer to spend and a disincentive for merchants to exchange their Potomacs for U.S. dollars (since they would only get 95 cents for every Potomac).
Chang admits the currency has a long way to go before it makes a meaningful difference in the community. Only about a dozen businesses currently accept the currency.
Overall, 3,000 Potomacs are currently in circulation, and area residents can order them online or get them as change from participating businesses.
Local Trade Partners, in Fayetteville, Ark., is a hybrid between a local currency and old-fashioned bartering, letting local businesses exchange services for “trade dollars.”
An auto repair man can change the oil in someone’s car, for example, and that person can pay him in trade dollars. The repairman can then use that money at the local Italian restaurant, or even at the orthodontist. And because the aim is to help local businesses, members must be business owners and they are required to live locally — no big corporations are allowed to participate.
“When you go to Home Depot and buy $100 worth of lumber, some of that profit is leaving your town and going to a different part of the world, never to come back,” said Rich Creyer, co-founder of the exchange. “By making trade money, we have created a sealed system. It’s our own little economy and country in a fishbowl.”
Members use personalized checks to make payments and are given membership cards to display at the register to verify their membership and identities. About $800,000 in trade dollars is circulating among more than 500 businesses, and $2.7 million in local sales were made using this “trade money” in 2011, Creyer said.
Since Local Trade Partners is a for-profit company and running the exchange is a full-time job for Creyer, the company charges business owners a 5% fee for each transaction.
To help bring together the diverse cultures of her local Brooklyn communities, Mary Jeys is in the process of launching a currency in the borough’s Greenpoint, Williamsburg and Bushwick neighborhoods.
Jeys is asking for design submissions for the Torch from the public. By doing so, she’s been able to gauge the level of excitement in the community for the currency. So far, she said, the interest has been “inspiring” and she has received anywhere from 50 to 75 design submissions — ranging from collages and crayon drawings to detailed printed designs.
The nearly-finalized five dollar bill features a map of Brooklyn where users can mark where they used the Torch. She also plans to include a QR code on the bills that can be scanned on a smartphone to see where Torches are accepted.
Each Torch will be equivalent to one U.S. dollar to make the math simple. Once in circulation, Jeys will encourage businesses to offer small discounts to Torch-users.
“My motivation is to experiment … to see what will happen if I print bills and support the usage in both bricks-and-mortar locations and between neighbors,” said Jeys. “I have hopes that working toward a smaller regional economy will support our understanding of how we interact with each other, and how we use our money as communication.”
In New Orleans, the rise of debit card use spurred one farmers market to make its own money.
In 2004, a growing number of shoppers wanted to put their purchases on plastic, but the local farmers didn’t have the machines to accept the cards. That’s when the market’s coordinators stepped in and created Crescents.
Customers can buy the wooden coins with checks, debit cards or food stamp benefit cards when they arrive at the market and then shop at the stands. Vendors who get paid in the wooden coins can use the coins somewhere else that accepts them, which in this case would be another vendor in the market. Vendors even pay rent for spaces at the market using wooden coins.
There are three markets per week, all year round, with about 70 vendors at each. About 3,000 shoppers attend the markets per week. Since the aim is to facilitate transactions between locals and farmers, coin use has not yet expanded beyond the farmers market.
The wooden coins, which feature “fallen food heroes,” such as chef Jamie Shannon and farmer James “Billy Corn” Burkett, have been used to make over $1 million in transactions so far, estimates Richard McCarthy, the currency’s co-founder.