Maintaining local business vitality isn’t easy in a global marketplace, but one way to keep the focus on your own back yard is local currency, say proponents of the system.
Local currency is a medium of exchange used only in a specific geographic region, and is based on the premise that the more purchasing power you keep in the local business community, the more financially healthy that community becomes.
Local currencies do not replace federal currency, but rather complement it.
Participating businesses set an acceptance policy, such as a certain percentage of each purchase, or a flat limit per purchase.
Employers also may opt to pay part of their employees’ wages with local currency.
Many communities, including Seattle, Bellingham and Portland, have local currencies – including Clark County’s neighbor to the east, the Columbia River Gorge.
Keeping it local
RiverHOURS is paper scrip managed by the Gorge Local Currency Cooperative, which launched in 2004 with 60 participating businesses and $2,700 worth of scrip.
Now about 5 percent of the businesses within the GLCC geographic area – a 35-mile radius of the Hood River Bridge – accept RiverHOURS and about $15,000 worth of RiverHOURS is in circulation.
Local currencies are considered legal as long as they are tied to the federal dollar.
For example, each RiverHOUR has the cash value of $10. A tenth of a RiverHOUR is equivalent to $1. For accounting and tax purposes, participating businesses treat RiverHOURS as they would $10 bills. No special accounting or financial forms are necessary.
While local currency differs from federal money in that it is meant to be spent, not saved, inflation is something that affects both types of currency and is a potential pitfall of local currency.
Bruce Bolme, a founding member of the GLCC steering committee and a licensed civil engineer who lives in White Salmon, said the GLCC monitors how much scrip is in circulation per member to ensure it doesn’t pile up.
Their circulation goal is $200 worth of RiverHOURS per participating business members.
Who’s using it?
Pam Morneault, who owns White Salmon-based Collage of the Gorge, a custom framing business, handles about $400 worth of RiverHOURS annually.
“I have used RiverHOURS to pay for bands for a summer festival, and also for landscaping at my house,” Morneault said. “When my soup business opens, I will use them to buy soup ingredients from the local market.”
Other businesses use RiverHOURS as “health insurance policies” – spending them on medical services at local medical clinics.
But Bolme admits it’s an uphill battle getting business to participate in the program.
“There’s no shortage of people who are afraid of change,” he said. “We’re not just changing minds, we’re changing mind sets.”
The GLCC concentrates its educational efforts on businesses that are likely to participate – locally-owned businesses that use locally produced resources. Distributors of non-local products, such as gas stations, are unlikely to be interested.
To draw in businesses, the GLCC steering committee makes presentations at local chambers of commerce and other business associations.
The Mt. Adams Chamber of Commerce and the Hood River Downtown Association have endorsed RiverHOURS.
“It’s a great concept,” said Marsha Holliston, manager of the Mt. Adams chamber in Whte Salmon. “I’m positive it will build.”
The Mt. Adams chamber has plans to add a marketing professional to its staff in the near future, and helping build the local currency program is part of the published job description.
Once that person is on board, the chamber intends to hold a seminar on local currency for its 200-plus member businesses.
“The opportunity for growth of the program is tremendous,” Holliston said.
One-on-one educational efforts also are important in spreading the word about local currency. Steering committee members work with business owners with whom they do business, and already-participating business owners spread the word to customers and other business owners.
By this sort of networking, the GLCC hopes to soon achieve their goal of 15 percent of local businesses participating in the RiverHOURS program.
But the success rate of local currency programs is similar to that of any start-up business.
According to the Small Business Association, 95 percent of new businesses fail within five years. Similarly, 80 percent of local currency efforts fade out, often because they are run by volunteers, who suffer burn-out after a few years.
An economy boost
Some associate local currencies with “the sky is falling” economics. But used correctly, local currencies are one innovative way to boost the local economy, improving awareness of locally owned businesses and increasing their traffic through “spending loops,” claim local currency proponents.
Suppose one person pays for a sandwich at a local deli with local currency. The deli owner then uses that money to pay part of his or her rent, and the landlord uses the money to pay a landscaper. It comes full circle when the landscaper then buys a cup of coffee and a donut from the deli.
Federal money has the ability to “leak” outside of a community, whereas local currency can’t be used outside of its designated area.
“One thousand dollars spent ten times around a community is as valuable as $10,000 spent once,” Bolme said, referring to the “multiplier effect.”
The multiplier effect is computed by multiplying the amount of local currency in circulation by the number of transactions in which that currency has played a role – resulting in the total value of that local currency to the local business community.
“Any time you can keep dollars local,” it’s a good idea, said Pat Guard, owner of Camas-based Columbia Litho Printing and Imaging. “It’s very important to keep traditional small businesses alive.”
Local currencies have been around for thousands of years, and there have been a few unsuccessful attempts at other start-ups locally.
What is new, perhaps, is the realization that local business communities are priceless repositories of talent and innovation, and should be actively preserved and promoted, Bolme said.
“It would be smart for Clark County to start a local currency,” he said. “Define your economic watershed, and work within it to keep resources local.”
As gas prices rise, people will tend to stay closer to home, offering an opportunity for “small communities to come alive again,” Guard said.
But, he added, getting consumers to consciously shop locally takes planning.
How to start a local currency:
•Start with a group of enthusiastic people
•Contact successful local currency facilitators for input
•Read “Money: Understanding and Creating Alternatives to Legal Tender” by Thomas Greco Jr.
•Advertise your efforts in local newspapers
•Educate businesses through “one-on-one evangelization”
— From Bruce Bolme, a founding member of the Gorge Local Currency Cooperative Steering Committee
Learn more about local currency
There is vast information out there about local currency and how it may help promote local business health. Here are a few particularly helpful sites:
www.mylocalcurrency.org – Identifies and creates technology solutions in support of local currency initiatives; lists local currency programs in the United States, Canada and around the world
www.smallisbeautiful.org – Site for the E.F. Schumacher Society, a nonprofit organization devoted to linking people, land and communities by building local economies
www.livingeconomies.org – Business Alliance for Local Living Economies brings small business leaders together to answer questions about promoting local business economies
www.accessfoundation.org – Alliance of Complementary Currencies Enabling Sustainable Societies
www.sustainableconnections.org (click on the “Think Local First” icon) – shows how the community of Bellingham is promoting their local businesses
