The LETSystem Design Manual

5.2 Regional Development

Summary

This section explores the Regional Development Project and takes a closer look at its source of funding. Business entry donations/fees, in the form of a "Contribution to Community", can establish local social investment funds and, in addition, support LETSystem development activity.

Regional Development Projects

People active in the design, implementation and development of LETSystems clearly contribute to the growth of LETSfunds for local investment and/or charity purposes. Thus it is appropriate to consider the LETSystem development community in the same way as other fundraisers for local benefits.

The proposition is thus that LETSystem stewardship encourages that

Registries offer full account recording services ONLY to those commercial accounts that have demonstrated their support for local issues by contributing a donation (say 50 sterling plus 50 local) to LETSfunds or local charities. This donation is termed Contribution to Community (CtC).

Those funds and local charities, in recognition of the source of the funds, return a commission or fee between 10% and 20% of funds received to properly incorporated regional LETSystem development organisations.

This arrangement has considerable flexibility, and needs little organisational structure.

The percentage fee should to be around 10% in high population regions where the revenues are going to be substantial and there is a need to exercise restraint - for instance, in London the total revenues may reach 150 M, and 10% is enough to finance 1000 people-years of development work. In smaller communities, 10% is likely to be too small a fee to provide a proper level of local development support, and a higher percentage should be considered - up to 20.

The revenue likely to result from such arrangements, over the next several years, can reasonably be estimated from:

    *the regional population

    * the number of businesses

    * the amount of the contribution to LETSfunds

    * a guess at how many local systems a business will likely join over the years, and

    * the appropriate percentage.

A regional development funds flow model is shown in Section 5.4.

The model indicates that it is of diminishing value to establish regional development for population groups under 50,000, as the funds available might only be around 200,000: enough for perhaps 10 person-years of paid work. 20,000 people could pay for perhaps 2 person-years, and 10,000 for maybe 1. It is generally going to be better to group in larger numbers, for greater regional interaction and coordination, and less reinvention of wheels locality by locality.

We think the most immediately available and productive scales will be those between 100,000 people for about 20 person-years, and 500,000 for about 90. The bigger cities - with millions of people - will be somewhat larger undertakings, and will probably, at these early stages, be more difficult to organise.

If we project the revenue over several years, a first year could realistically be aimed at expending 10% of the total anticipated. 3 month, 6 month and 1 year budgets can then be outlined.

Initial funding

People interested in applying their time and other resources to LETSystem development within the region should incorporate and seek investment support to cover initial expenses.

A regional development group should be incorporated in itself, or its accounts should be managed through an existing and appropriate incorporation, as the funds flow will be substantial, and there is every reason to set up so as to be able to borrow working capital to get up and away.

One approach recommended is that the development group incorporate in a form that would allow borrowing from banks, credit unions and the like, and apply for a line of credit or overdraft, with guarantees provided by a group of local social investors. Interest is paid to the lender, and some appropriate compensation, related to actual exposure to risk, negotiated with the guarantors.

The development group should look on itself simply as an accounting framework for coordinating and rewarding the efforts of all involved, and should not accrue any but the most minimal assets. Hardware, premises and the like should be leased rather than purchased.

Such support might be arranged as a parallel investment by local social investors - an "electronic cottage" for the community, offering services to a wide variety of local organisations and individuals, but largely supported by LETSystem and LETSystem development activities. Government funds are often available for such installations.

Participants of the development group should use a LETShare model for accrual of contributions. Each person or organisation active in LETSystem development should regularly file a record of their time and expense - a submission for acknowledgement. All involved can participate in a group review of such submissions, a process whereby the group becomes responsible for the direction of its efforts and an analysis of its results.

If there is a basic agreement on the principle and the process, the consequence should naturally be co-operative, consensual and powerfully interactive. And fun.

A generative project

It is extremely important that the development group base their operational style on the clear assumption that they are - under arrangements such as those above - financially viable, and not in need of grant funding. All involved should be aware of the scale of the opportunity, and the potential for a return, and operate on that basis.

Thus, it is not a question of how can we scrape together the resources to address this task, but rather what means need be adopted to ethically manage revenues which are potentially excessive.

Those that do not appreciate this distinction should expect to be quickly overtaken by others that do - quite possibly, by people who see the opportunity for personal profit on a grand scale, and have little or no concern for ethics or community. While such profiteering is likely to lead to its own end, and appropriate systems will eventually assume the territory, the level of confusion generated in the interim will not be useful.

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Landsman Community Services Ltd Paper No. 5.2 Version No 1.3 17 August 94
Written by Michael Linton of Landsman Community Services Ltd. and Angus Soutar of Robert Soutar Ltd.
Compiled 10-01-95 by Andy Blunt and Adrian Steele of LETSgo Manchester