Contribution to Community
An earlier page pointed to the need for financial organisation to assure effective systems development - and showed the risk that a simplistic approach to covering initial costs could easily lead to serious problems.
There is very little cost in providing local currency services, particularly as numbers grow. When it becomes clear that accounts can be opened and serviced for pennies, the bottom will fall out of any charge strategy that tries to cover development costs from high charges to small numbers of accounts. This makes it difficult to raise funding to initiate development, as future revenues are not readily assured.
We recommend an oblique response to this predicament, that protects the longer term revenues from attack, and thus supports borrowing against revenues from low entry fees.
We propose that it be established, simply by convention, that participation by any business in any mainstream community currency system be conditional on the business making a small but significant contribution to the well-being of the community in which they will be trading.
We suggest that each participating business should contribute to the community the sum of £100 - £50 in conventional money and £50 in the currency of the system that they are joining. For North America, a $200 donation is recommended.
The Contribution to Community - CtC - must be donor directed. The applicant business chooses, from a list prepared by the organisers of that system, a local charity, community project or community banking fund to receive its donation.
The regional LETSystem Development Initiative will manage this programme and distribute the funds raised to the charities and projects, and may therefore deduct a commision for the service. The commision should be limited to a maximum of 10% in large population areas - such as major city regions - where it can be predicted that most businesses will in time open accounts in ten or more systems. In rural or widely distributed regions, there is justification for raising the commision to an upper limit of 20%
While these figures are arbitrary, they are also quite reasonable, and place an appropriate cap on the total funds and funds flow rate that can be applied to the development of local currencies in any region.
This strategy has several advantages that make setting such standards extremely worthwhile :
by allocating the greater part of the income to community interests, it effectively prempts competitive intrusion by interests attracted simply to the apparent profit potential, and thereby diminishes the possibility of the unnecessary confusion of services that would undoubtedly emerge from such interests competing for control of a market.
it positions the "ownership" of community money in the community itself.
it establishes the ground from which an effective community banking system can be developed.
Details of applications are given in the design manual and in the project outlined for London.
Written by Michael Linton of Landsman Community Services Ltd.
Version #003 27-7-96