Local Currencies: The Anti-Amazon Gift Card
Local Currencies: The Anti-Amazon Gift Card
Coronavirus is raising interest in city-specific currencies, which keep money on Main Street.
The Berkshires is a hilly region ideal for electric bikes. The vehicles whiz out the door of Berkshire Bike and Board, a two-store company based in Great Barrington, Massachusetts. Starting at $2,000, they are high-ticket items. But when curbside pickup doesn't restrict him to credit, owner Steffen Root will cheerfully accept payment in BerkShares, the beloved currency of this Western Massachusetts region.
Think of local currency as the anti-Amazon gift card. It is money--typically paper--that is spendable in dozens or hundreds of businesses within a particular city or region. The aim is to keep dollars inside communities. Only a tiny fraction of Root's customers use BerkShares--he takes in maybe $7,000 a year on $2 million in revenue. But he never returns the currency to the bank, preferring to spend it at the local stationery store or to buy ads in the community-shopping flyer.
"Keeping the money in circulation is the real benefit," Root says. "You give me $10. I give it to the next person. They give it to the next person. And everyone is enriched by that one $10 bill."
The Schumacher Center for a New Economics, a nonprofit in Great Barrington that helped establish BerkShares, lists four local currencies in the United States, including BNotes in Baltimore and Bristol Bucks in Bristol, Vermont. Interest in such currencies often surges around disasters, such as September 11 and the 2008 financial crisis, when cities and towns close ranks around their homegrown merchants.
Covid-19, which has shuttered or drastically reduced operations at most small businesses, uniquely spotlights both Main Street's importance and its vulnerability. Since the pandemic started, the Schumacher Center has fielded queries about the program from New Orleans, Miami-Dade County, and elsewhere. A representative of Great Barrington's own government reached out about the potential for accepting local taxes in BerkShares.
The BerkShares program works with three local banks. Users exchange the currency for U.S. dollars at a rate of $95 for 100 BerkShares, which come in 1-, 5-, 10-, 20-, and 50-unit denominations. For tax purposes, businesses treat BerkShares like cash, recording sales in and paying taxes on the equivalent U.S. dollar value.
Roughly 400 local businesses accept BerkShares, including accountants, realtors, and plumbers. "I have more BerkShares in my wallet than federal dollars," says Susan Witt, executive director of the Schumacher Center and co-founder of BerkShares, the nonprofit that administers the currency. "My dentist takes BerkShares. My gardener."
BerkShares have always been more important for what they represent than for their economic impact. Since 2006 residents have used about $10 million, a small portion of the area's economy, to buy the currency. But the new interest elsewhere in the country suggests local currencies could gain wider exposure and help concentrate recovery efforts in communities, benefiting the small businesses there. "Cities can use the local currency to support infrastructure projects, to provide employment, to imagine their futures," Witt says.
Gift cards on steroids
Interest is also rising in community-wide gift certificates. These act similarly to alternative currencies but can be set up more quickly. The idea is to amplify the power of gift cards, which have become popular mechanisms for showing support for local businesses closed by coronavirus. One advantage: A consumer buying a gift card to her favorite bistro in anticipation of its reopening is out of luck if that restaurant doesn't make it. With a community-wide certificate, she can switch to her second-favorite or use the money to buy something else.
For the past two months, Conpoto, a Holland, Michigan-based platform for community-wide certificates, has worked with three to four times as many communities as usual, says founder and CEO Matt Lepard. Close to 50 chambers of commerce and downtown associations now offer their own, branded certificates through the company. Examples include Dune Dollars (for the beach community of Grand Haven, Michigan) and Grow the 360 (for Vancouver, Washington--a nod to the local area code).
The chambers sell them chiefly to employers, who buy certificates in bulk for employee recognition programs. Residents can bring digital versions or printouts--in varying denominations--to participating merchants, who validate them and then redeem them with the chamber.
Corporations employ people at different socioeconomic levels, some of whom may prefer two weeks of groceries over a farm-to-table dinner. The beauty is choice. "You can't buy everything through us that you can through Amazon," Lepard says. "But you can't buy a car wash through Amazon."
The top recipient of West Coast Cash, certificates issued by the Michigan West Coast Chamber of Commerce, is, in fact, Quality Car Wash, in the city of Holland. "So far, they have raked in $10,000 through this program," says Jane Clark, president of the chamber. Automotive repair shops and pizza places also are popular.
With West Coast Cash, Conpoto manages the technology but the chamber holds all the funds in a bank account used just to redeem certificates. In five years, it has sold $1.2 million worth of certificates. More than $360,000 worth are in circulation.
"Some of these smaller businesses don't have robust gift certificate programs or online platforms," says Caroline Monahan, director of marketing and communications at the Michigan West Coast Chamber. "This is the way for very small businesses to maximize the chamber's ability to get traffic through their door."