Community Support Cycle

The heart of the matter

A local currency naturally works for the development of community because local money moves only around the community, employing local people and resources to meet local needs. Certainly, not everything that is done with local money will directly benefit the community, but it is almost entirely assured that the overall effects will be positive.

If you think of the way conventional money flows out of the community, you can see it like water spilling off a dome; no matter how hard you try to keep it in town, it just doesn't care, and it's always acceptable elsewhere, so it's gone. If you invert the dome, the water can only swill around.

So people, and business and government alike can throw local money around safe in the knowledge that it's a good thing to do. All the money can do is employ local people to do useful things for each other. However you spend local money you are supporting the community. And you are supporting yourself, as all you spend will come back to you in time.

The CSC is a flywheel and a regulator for the local economy, offering a perfect Keynesian model of how community spending can effectively smooth and balance the oscillations in the larger economy, without government intervention.

Starting the motor

This general flow of money around the community can be formally established by a programme of corporate donations, in local money, to community charities and projects. In fact, getting a formal CSC in place is presently considered the best method of linking all the local players. The process demonstrably generates benefits for them all, costs them nothing in cash, and has virtually no risks.

Initial funding for LETSystem development

At the outset, the application of local currencies to community fundraising will only be attempted by people active in LETSystem development; other agencies will need to be convinced of its security and integrity before they adopt the idea. Thus the first substantial example of major charitable fund raising in local currency can be a specific project of the regional LETSystem development initiative, and an appropriately conservative 10% fee on the funds raised can be charged by the initiative.

Provided this strategy is adopted with clearly defined limits and time scales, it can be a very effective way to generate the initial working capital for the development project. An example of this approach is included in the notes on the LETSgo London project.

Risk avoidance

In the early stages of a LETSystem, when the business community in particular is likely to be uncertain of the benefits, a CSC programme will provide the cautious corporation with a totally secure method of discovering how local currencies will affect their business.

It also establishes the local business community as substantial "underwriters" of the local currency, as they are initially responsible for much of the negative account base, and provides a broad selection of spending options for the users of the system.

Opening local currencies with this strategy is like learning to ride a bicycle on the move; without some momentum, everything is a lot more difficult.

Doing well doing good

The CSC initiates links that benefit both business and community. The basis of the strategy is that businesses make donations, entirely in local money, to community projects and local charities. Businesses, and indeed the general public, can donate generously in a money that they have in plenty, particularly as it will always come back to them as earnings in the course of time.

While local money alone will rarely be enough to fully sustain a project or charity, it will allow conventional money in the budget to be stretched much further.

Typically, projects funded in local money will be able to pay staff, reward volunteers and purchase goods and services from local suppliers also in the network, partly in local and partly in cash.

The local money flow starts with donations from the business sector, like a 'Mexican Wave', passing through the third sector of NGO's, charities and community projects and on to the local people engaged in or trading with those projects.

People trade with each other and buy from the retailers, returning the money to the original donors, for a direct education in the "money-back guarantee" of local currency.

For instance -

LETSgo Manchester proposes to launch local currencies in Manchester through a Community Support Cycle with a target of a total of gm£1 million in local currency donations. We expect that the majority of this funding will be contributed by 10 - 15 major businesses, and the balance by as many as 100 medium and small companies.

In this case it is intended that the funds raised will be applied to projects addressing issues of youth unemployment, training and homelessness. More information will be available as the LETSgo Manchester project evolves.

In smaller communities ..

While the CSC process will eventually take effect in any local economy, it may be more difficult to quickly establish the process of charitable donations in smaller communities, so it may not always be practical to attempt underwriting the first stages of the regional LETSystem Development Initiative through this route. Other methods of introducing the CSC may be more appropriate.

In the Comox Valley, we are developing a project that links business in the community to the schools for the preparation of community www pages. This is the sort of public project that is typically left to local government to fund through the tax base, or to volunteers, or is undertaken as an aside or promotion by self selected commercial interests, all of which options are less than ideal.

Also, in a small community such as this, there are not yet sufficient numbers of businesses directly interested in internet to justify bringing much effort to coordinating community pages. So, we are proposing that a number of businesses jointly support students in the school system in preparing pages for the community in general, and for the non-profit organisations in particular. Obviously, the sponsors will have their own pages prepared in the process.

Payment in conventional money will, as usual, be unavailable. If there is money around, it's already earmarked for something quite different.

So, in this case, the support will be by payment in a local currency, so that no business is required to part with cash, and those that do advance the funds for the benefit of the community, gain benefit for themselves; those that earn the local money will necessarily be customers of the original donors.

There are many possible arrangements, but perhaps the best is that the students and the schools form a small business, perhaps as part of a course in commerce, earn the local money from the sponsors, and then exchange the majority of their local money earnings for cash with parents. Thus the school and the students come out ahead in cash and local funds, and the parents have a reason to patronise local business. And the LETSystems gain from having many new accounts.

This model can obviously be applied in almost any community, and we will be reporting on the progress here in the Comox Valley to assist others in doing the same themselves.

This process may also be an appropriate and effective method of generating a revenue to support the first stages of the LDI, but that will depend greatly on local conditions. It is reasonable that those who co-ordinate the project - largely those in the LDI - gain some fee for the organisation of the process and the maintainance of the local currency aspect. The training and management part of the page production is not the responsibility of the LDI unless it is set up that way, in which case some of the sponsorship fees should apply to that task.

Comments to Michael Linton

Version #003 18-12-94