How to Start a Community Currency

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<p>

<br />
<em>An Ithaca Hour</em>
</p>
<p>
<em>[Editor’s note: Aside from looking cool, community currencies are a grassroots answer to economic uncertainty and the high concentration of wealth amongst a very few. They encourage local spending and remind us to consider where money goes after it leaves our wallets. If we buy a rake from the local hardware store rather than a franchise
superstore, for instance, we help sustain a neighbor as opposed to an already-rich
business owner several states away. By keeping money circulating amongst community members, local currencies reward businesses invested in the community and encourage a self-sustaining interdependence. Local currencies are not meant to replace the almighty dollar, but they do offer some <a target=”_blank” title=”assurance to small and midsize businesses” href=”http://www.greenbiz.com/blog/2006/06/30/beyond-bills-using-complementary-currencies-diversify-risk-and-create-sustainable-ec”>assurance to small and midsize businesses</a> facing a weak economy. As Joel Stonington noted in an Utne.com piece, “<a target=”_blank” title=”Local Currencies Aren’t Small Change” href=”https://www.utne.com/community/localcurrenciesarentsmallchange.aspx”>Local Currencies Aren’t Small Change</a>,” money can be used to serve people rather than to rule them, creating abundance, stability, and sustainability. The article below </em>
<em>explains how to develop your own community currency </em>
<em>and was originally posted on <a target=”_blank” title=”Shareable ” href=”http://www.shareable.net/blog/how-to-start-a-community-currency”>Shareable</a>
<span>
</span>.]</em>
</p>
<p>
<br />
</p>
<p>

<br />
<em>The Lewes Pound, a local currency in the town of Lewes, England. As Thomas Paine said, “We have it in our power to build the world anew.”</em>
</p>
<p>
<blockquote>
<p>”Banking institutions are more dangerous to our liberties
than standing armies … The issuing power should be taken from the banks
and restored to the people, to whom it properly belongs.” – Thomas
Jefferson</p>
</blockquote>
<blockquote>
<p>”Let me issue and control a nation’s money and I care not who writes the laws.” – Banker Mayer Amschel Rothschild</p>
</blockquote>
<p>The centralized creation of money and credit has a profoundly
negative effect on local economies, sovereignty, and cohesiveness.
Bankers value profit at all costs, while locally-controlled institutions
tend to hold other values – like community, justice and sustainability –
more highly.</p>
<p>Communities can regain control of the flow of money and credit by
issuing their own currency as a complement to conventional money, as
electronic barter networks, debit cards, mobile phone payments,
Timebanks, LETS, or old-fashioned cash.</p>
<p>By altering the flow of resources, community currencies take power
away from multinationals and put it in the hands of more accountable
local entities. While community currencies can’t be too similar to or
compete with national money, most countries allow it and some, like
Venezuela and the E.U., support their development. Mediating
underemployment and poverty are often prime motivators, or specific
purposes like small-business incubation, caregiving for seniors,
community gardens, or providing healthcare for the uninsured, according
to <a href=”http://money.cnn.com/2012/02/21/pf/local_currencies_medical_care/index.htm” target=”_blank”>CNN</a>. </p>
<p>

<br />
<em>The Brixton Pound</em>
</p>
<p>Starting a community currency is not for the faint of heart. It takes
a dedicated team years of effort. Learning from others’ experiences is
essential. Here are some tips I gleaned from the experts and through my
own experience.</p>
<p>
<strong>Find a group of people with common ground that are easy to get along with.</strong>
<br />It’s
important to share goals and values with your core group, otherwise
your project will be pulled in many directions. You may split into
separate projects at some point; that’s often better than trying to duke
it out with people who want to do their own thing. Focus on quality
volunteer recruitment. Don’t get discouraged when people come and go.</p>
<p>
<strong>Define your goals and prioritize them.</strong>
<br />Do you want
to support local business or low income folks? Do you want encourage
ridesharing or reward senior care? You may have many goals – currencies
can have an effect on many problems – but be clear about your priorities
and target audience as this will shape all of your decisions, including
what kind of currency you use.</p>
<p>”A currency is never an end in itself, but has to be seen as a
facilitator of flows within the system of a whole community and
economy,” said John Rogers, who teaches how to start currencies at <a href=”http://www.valueforpeople.co.uk/” target=”_blank”>Value for People</a> in the U.K. “Its essential systemic role is to match underused assets and unmet needs.”</p>
<p>The community meetings I held attracted all kinds of personal agendas
and wingnut plans that had no practical application. Your goals will be
your compass.</p>
<p>
<strong>Pick your tool appropriately and make it easy to use.</strong>
<br />Currencies are not one-size-fits-all. It is crucial that you pick the
right tool, with the option to expand into multiple tools later. It
should be as easy to use as the other kind of money. REAL Dollars of
Lawrence, KS ended because businesses didn’t have an easy way to spend
them. <a href=”http://vbsr.org/” target=”_blank”>Vermont Businesses for Social Responsiblity</a> switched
to open source software for their business to business exchange to
customize their interface and make it as simple to use – a very smart
investment. The books at the end of this article can help you decide
what type of currency might work best.</p>
<p>
<strong>

Know your community.</strong>
<br />If your tool is online, but your community is mostly offline, it won’t get used. <a href=”https://bernalbucks.clearbon.net/” target=”_blank”>Bernal Bucks</a>
of San Francisco chose a swipe debit card with loyalty points. A more
rural area like Corvallis, Oregon is more of an off-line community, so a
paper currency isn’t too slow for this small town.</p>
<p>How does your community use money, what are its assets and what does
it need? Design a plan based on the reality of your community, not just
on your own ideals. Whether you are working with businesses, nonprofits
or community members, survey them or conduct focus groups to test the
new currency before you finish your design.</p>
<p>
<strong>Do your homework and get a mentor.</strong>
<br />Choose a group
that’s done a project similar to yours. Look up case studies that have
worked (there are many mirages of success). <a href=”http://ccmag.net/” target=”_blank”>Community Currency Magazine</a> is a good resource for case studies and interviews and the <a href=”http://www.complementarycurrency.org/ccDatabase/” target=”_blank”>Complementary Currency Database</a>
can help you search for mentors in your area. Many people sail out on a
currency expedition without a map. Learn from others mistakes. Your
membership and partners will trust you more if you’ve done your
homework.</p>
<p>
<strong>Define your governance and organization structure.</strong>
<br />Like any project you need good governance. John Rogers harps on this
point: “Some people tell me off for going on about the importance of
governance in getting community currencies to fly. They say a
well-designed CC ‘should run itself’. That’s a nice theory, but I don’t
know any CC that has stood the test of time without some form of
governance at work, i.e. someone making decisions.”</p>
<p>People will expect responsible and transparent governance for a
resource as valuable as a currency – that trust determines its
value. Encourage diverse community participation and representation in
your governance, especially from your members. If you want to operate as
a volunteer or worker cooperative, see my article on <a href=”http://www.shareable.net/blog/how-to-start-a-worker-co-op” target=”_blank”>worker coops</a>.
Bay Area Community Exchange is a hybrid of a member and a worker coop,
though many currencies are either run as traditional nonprofits or
business bartering exchanges.
</p>
<p>Your decision to be a business or nonprofit will be determined by
your goals, and currency type. Only entities that have charitable or
educational aims can be nonprofits. That’s not to say your business
can’t operate like a nonprofit, but you won’t be eligible for grants and
donations, though you may be able to get small investments, like <a href=”http://sonomacounty.golocal.coop/” target=”_blank”>Sonoma Go Local</a> did from its community and business members.</p>
<p>
<strong>Define your geographic area.</strong>
<br />It may be helpful to
incubate your currency in a smaller community, like Bernal Bucks did in a
small neighborhood of San Francisco. However, a wider geographic area
may provide the diversity of services and goods that makes a currency
useful. Too wide an area though, like the Southwest, may be meaningless
and not effective in building trust and solidarity. Ideally, it would be
an area diverse enough to provide most of the necessities of life, and
small enough to allow direct exchange, community-building and
accountability. Regional currencies, like the <a href=”http://en.wikipedia.org/wiki/Chiemgauer” target=”_blank”>Cheimgauer</a> in Germany and <a href=”http://www.berkshares.org/” target=”_blank”>Berkshares</a>
in Massachusetts have done well partly for this reason. If you don’t
grow food in your community, you may want to expand your reach to
farming areas. If you haven’t lived in your area for long, ask for
advice from long time locals who may have sense of the resources and
their flows.</p>
<p>
<strong>Outreach through events. </strong>
<br />Hosting events to promote
your currency and attending other groups’ events raises consciousness,
develops alliances, recruits members/users and volunteers, and builds
community. Think about your target user audience and meet them where
they are at. Swapmeets and skillshares are useful demos of the currency
that give a more concrete feel. Offer to speak, host a booth, or
organize trading at relevant conferences, festivals, markets and other
events to promote your currency to potential members that are allied in
values.</p>
<p>
<a href=”http://sfbace.org/” target=”_blank”>Bay Area Community Exchange</a>
organized a large sustainable living festival with over 40 workshops
and 300 attendees using member skills and hours. The event increased
trading and registrations by a factor of 10 or more for the month before
the event and a couple weeks after. A similar boost happened around its
Timebank Holiday Fair. <a href=”http://hourexchange.org/” target=”_blank”>Corvallis Hours</a>,
a bastion of homesteading, hosts an annual Harvest Festival where
members have a market for “selling” their homemade goods for Hours.</p>
<p>
<strong>Develop partnerships and take them seriously</strong>. <br />Find
allied organizations to help recruit members/users, develop programmatic
partnerships and raise your status in the community. An ally may serve
also as a fiscal sponsor to bear the burden of organizational tasks
while you focus on organizing. Choosing partnerships should depend both
on your goals (e.g. pick an environmental organization to support
gardening or a social justice organization to reach low income groups)
and their ability to provide support, such as event space, outreach,
trainings or programmatic development. A good way to begin a partnership
is to do a presentation to their staff and then ask them if there is
one small thing they’d like to achieve by using the currency, like a
website upgrade, and help them do that. Partnerships work best as a
two-way street.</p>

<p>
<a href=”http://www.ithacahours.org/” target=”_blank”>Ithaca Hours</a>
gained credibility and usefulness by partnering with local public
transit for bus passes. Berkshares partnered with local banks for
savings accounts and currency distribution. <a href=”http://www.hourexchangeportland.org/” target=”_blank”>Hour Exchange Portland</a>
and other successful timebanks have worked with local healthcare
organizations to accept credits from low-income members – a highly
valued service that increases the value of the currency.</p>
<p>
<strong>Keep the circulation flowing.</strong>
<br />Bernard Leitaer, who
is often considered the godfather of community currencies and helped
design the Euro, says “…this is where a lot of community currencies
have failed. They have neglected to close complete circulation patterns,
and as a result…it tends to pool in particular parts of the system.”
To keep the energy flowing, identify unmet needs and underutilized
resources in your community, especially those not served by the
conventional system. Be a match-maker. If seniors need companionship and
your pet shelter needs socialization for its animals, or you have
unemployed people without job skills and a nonprofit or business startup
that needs volunteers, you may have a match.</p>
<p>One of the biggest mistakes is assuming the currency will do
everything itself. One or more exchange coordinators are vital,
particularly in the beginning. <a href=”http://www.vnsny.org/” target=”_blank”>Visiting Nurse Service of New York’s</a>
Timebank has a bilingual or trilingual coordinator for each targeted
community. Regular communication through email, newsletter and your
website reminds members what’s offered and needed, and the importance of
mutual aid. Otherwise, members forget and default to using money. Many
currencies publish quarterly newsletters with directories of offerings.</p>
<p>

</p>
<p>Working on circulation means creating ways to both earn and spend currency. <a href=”http://www.equaldollars.org/” target=”_blank”>Equal Dollars of Philadelphia</a>
developed a food market, clothing store and bike shop. They partnered
with local nonprofits so members could earn hours by volunteering, paid
their staff partly in Equal Dollars, and made micro-loans in Equal
Dollars. MORE Timebank in St. Louis created a community college, where
people could spend hours by taking classes, and earn hours by teaching.
Another way to increase circulation is to target entities with high
demand goods like beer (<a href=”http://en.wikipedia.org/wiki/Detroit_Community_Scrip” target=”_blank”>Detroit Cheers</a>
currency) or services, but make sure they don’t over-commit themselves.
One popular health food store ended up frustrated with loads of hours
that they couldn’t spend and quit. Set up limits to make it more
sustainable, like using vouchers during slow business hours only or on
over-stocked goods.</p>
<p>
<strong>Use your currency to fund your currency.</strong>
<br />Hey, the government does it, why can’t we? <em>As long as members agree it’s a good use of resources</em>,
don’t be shy about using your currency to pay staff, reward volunteers,
put on events, or do marketing. Ithaca Hours uses its currency as a
reward for attending organizing meetings and swapmeets. Bay Area
Community Exchange supports its volunteers by giving hours for outreach
events, trainings and tech projects related to its key functions. This
is controversial amongst community currency theorists, because the other
side of the coin is corruption and inflation. The Red de Trueque, a
currency used by a third of Argentina’s residents during its economic
crisis, collapsed because of fraud and mismanagement due to a lack of
transparency and accountability.</p>
<p>Currencies are notoriously hard to fund. Relying on external
donations, as did Berkshares, can make the short-term sustainability of
your project slightly more likely, but the long-term more precarious.
Using your currency to fund your project is also good practice in
learning how to use it. Membership or transaction fees are also a good
practice. However, it’s helpful to lower the barrier to entry as much as
possible in the first year or two so you have more members offering
diverse skills and goods to increase your currency’s value (fees may
slow that process). Think about the option to pay member dues with
volunteer work to support your currency project. A sparse directory with
few members is not likely to encourage trading, as the now defunct
Berkeley BREAD discovered. One of its most active members realized the
currency she was earning with her counseling services, would not be
useful for anything she needed and she quit being a provider.
Alternatively, if you have lots of useful stuff in your store, people
will flock to it.</p>
<p>
<strong>Don’t give up but be willing to change directions midstream.</strong>
<br /> Currencies take at least a few years to establish. In the meantime,
you’ll have fun, make friends and get some of your needs met. The Ithaca
Hour project was the result of diehard tenacity and a small Americorps
stipend that kept founder Paul Glover going for 3 years in the
incubation stage. Some made it by adapting their strategy as they went
along, like finding out the type of currency or organizing strategy was
not appropriate for the community context or goals and  changing
directions. <a href=”http://newearthexchange.org/” target=”_blank”>New Earth Exchange</a>
in Santa Cruz went through several incarnations over the last several
years to find the right one instead of being stuck on their first idea.
Now they are pioneers integrating an online business bartering exchange
with a paper currency called Sand Dollars.</p>
<p>Have fun! It’s a lot of work. Have fun doing it and you are sure to grow.</p>
<p>
<strong>Online Resources:</strong>
</p>
<p>
<a href=”http://valueforpeople.co.uk/files/V4PFirstStepsPDF.pdf” target=”_blank”>Community Currency – from Good Idea to Sustainable System</a> by John Rogers</p>
<p>
<a href=”http://www.global-community.org/cgi/gc/scan/fi=news_stories/st=db/sf=code/se=25/sp=stories.html” target=”_blank”>Community Currency Guide</a> by Hallsmith and Leitaer</p>
<p>
<a href=”http://ccmag.net/” target=”_blank”>Community Currency Magazine</a>
</p>
<p>
<a href=”http://www.complementarycurrency.org/ccDatabase/” target=”_blank”>Complementary Currency Database</a>
</p>
<p>
<strong>Books:</strong>
</p>
<p>
<a href=”http://www.triarchypress.com/pages/Regional-Currencies-People-Money.htm” target=”_blank”>People Money: The Promise of Regional Currencies</a> by Kennedy, Lietaer, & Rogers</p>
<p>
<a href=”http://www.transitionbooks.net/local-money-how-to-make-it-happen-in-your-community-by-peter-north/” target=”_blank”>Local Money: How to Make it Happen in Your Community</a> by Peter North</p>
<p>Creating Wealth: Growing Local Economies with Local Currencies by Hallsmith and Lietaer</p>
<p>
<strong>Consultants:</strong>
</p>
<p>John Rogers <a href=”http://www.valueforpeople.co.uk/”>http://www.valueforpeople.co.uk/</a>
</p>
<p>Paul Glover <a href=”http://www.paulglover.org/currencybook.html” target=”_blank”>http://www.paulglover.org/currencybook.html</a>
</p>
<p>Mira Luna mira (at) sfbace.org</p>

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