How to start a community currency

The centralized creation of money and credit has a profoundly negative effect on local economies, sovereignty, and social cohesion. Bankers value profit at all costs, while locally-controlled institutions tend to prioritize other values like community, justice, and sustainability. Communities can regain some control of the flow of money and credit by issuing their own currency as a complement to conventional money. Local currencies can take the form of electronic barter networks, debit cards, mobile phone payments, Timebanks, or old-fashioned cash.

By altering the flow of resources, community currencies (CC) take power away from multinational corporations 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 several countries in the E.U., support their development. According to CNN, mediating underemployment and poverty is often a prime motivator for establishing a local currency, but there are also other specific purposes, such as small-business incubation, propagation of community gardens, and provision of healthcare for the uninsured.

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. Find a group of people with common ground that are easy to get along with. 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.

1. Define your goals and prioritize them

Do you want to support local business or low-income folks? Do you want to encourage ridesharing or reward senior care? You may have many goals — local currencies can help alleviate 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.

"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," says local currency expert and author John Rogers. "Its essential systemic role is to match underused assets and unmet needs." The community meetings I held attracted all kinds of personal agendas and wacky plans that had no practical application. Your goals will be your compass.

2. Pick your tool appropriately and make it easy to use

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, Kansas, ended because businesses didn't have an easy way to spend them. Vermont Businesses for Social Responsibility switched to open-source software for their business-to-business exchange to customize their interface and make it simple to use — a very smart investment.

3. Know your community

If your tool is online, but your community is mostly offline, it won't get used. 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.

4. Do your homework and get a mentor

Choose a group that's done a project similar to yours. Look up case studies that have worked. 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.

5. Define your governance and organizational structure

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."

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 worker co-ops. Bay Area Community Exchange is a hybrid of a member and a worker co-op, though many currencies are either run as traditional nonprofits or business bartering exchanges.

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.

6. Define your geographic area

It may be helpful to incubate your currency in a smaller community. 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 U.S. 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 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 a sense of the resources and their flows.

7. Outreach through events

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 audience and meet them where they are. 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 with aligned values.

8. Develop partnerships and take them seriously

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 (for example, 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.

9. Keep the currency circulating

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 currency flowing, identify unmet needs and underutilized resources in your community, especially those not served by the conventional system. Be a matchmaker. 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.

One of the biggest mistakes is assuming the currency will do everything itself. One or more exchange coordinators are vital, particularly in the beginning. Visiting Nurse Service of New York's timebank has a bilingual or trilingual coordinator for each targeted community. Regular communication through email, newsletters, and your website reminds members what's offered and needed, and the importance of mutual aid. Otherwise, members forget and default to using conventional money. Many currencies publish quarterly newsletters with directories of offerings.

Working on circulation means creating ways to both earn and spend currency. One way to increase circulation is to target entities with high-demand goods or services, but make sure they don't over-commit themselves. One popular health food store ended up frustrated with loads of hours (the local currency) that they couldn't spend, so they quit accepting it. Set up limits to make it more sustainable, like using vouchers during slow business hours only or on overstocked goods.

10. Use your currency to fund your currency

Hey, the government does it, why can't we? As long as members agree it's a good use of resources, don't be shy about using your currency to pay staff, reward volunteers, put on events, or do marketing. Currencies are notoriously hard to fund. Relying on external donations 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, so she stopped accepting BREAD. Alternatively, if you have lots of useful stuff in your store, people will flock to it.

11. Don't give up but be willing to change direction midstream

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. New Earth Exchange in Santa Cruz, California, went through several incarnations over the last several years to find better ideas 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. It's a lot of work. Have fun doing it, and you are sure to grow.

This article was originally published in 2012 and was updated in 2018. This article is part of a series of action-oriented guides that align with Post Carbon Institute's Think Resilience online course. The Think Resilience course prepares participants with the systems-level knowledge needed to take meaningful actions as suggested in this and other "How to Share" guides in the series.

Header image by Jonny McKenna via Unsplash

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