As the new decade gathers steam, entrepreneurs in small communities nationwide face a business environment where the recession is still very much in evidence - even as big box stores and the Internet threaten to take bigger bites out of the small business revenue pie.
But ever-resourceful business owners in some communities are exploring a novel solution to encourage local sales.
The idea (which may seem odd at first glance) is local currency - where communities or groups agree to print their own money and accept it as legal tender.
Local currency is lawful and spendable, just like federally issued "real money."
The reason why local currency can be a boon for small business is that it’s accepted for goods and services solely at participating businesses within a given geographical area.
That makes it the ultimate in shopping locally - and supporters say it works.
Astoria creates the Clam Dollar
While some local currency experiments in communities nationwide have been going on for years, the Astoria Warrenton Chamber of Commerce dipped its toe in the water for the first time last fall with a small local currency program they refer to as "Clam Dollars" or "Clam Bucks."
The inspiration for the program was the Great Columbia Crossing, the annual run/walk race across the Astoria Megler Bridge that spans the Columbia River.
The Crossing is one of Astoria’s biggest events all year, and thousands of participants come from far and wide to complete the 10K course on foot.
In past years, the chamber sponsored a huge clam chowder feed after the race. Then officials got to thinking that with all those visitors in town, there might be a better way to make the most of the opportunity.
"The whole idea was to bring people in and get them to go to our restaurants, our retail stores, and bring in new business," said Chamber Assistant Director and Event Manager Rose Alsbury. "Why were we hauling them out to the high school to feed them?"
So the chamber did away with the traditional chowder feed, and instead gave each race participant five $1 Clam Dollar tokens, good at any participating Astoria business, but useless elsewhere.
"It was a monumental success - we were stunned," Alsbury said. "The person would take their $5 in and spend it dollar for dollar. The storeowner then turns them back in, and the chamber gives them 50 cents [for each $1 token]."
The money to partially reimburse shop owners came from the registration fees collected for the bridge walk. The chamber printed 1,500 tokens.
"It was an opportunity to impress our businesses with how much money goes through their businesses from these types of events," she said. "The Silver Salmon Restaurant [in Astoria] had the best Sunday ever since they’ve been in business."
Alsbury said the $5 threshold was an important motivator for customers.
"If we had given them one or two dollars they would have just gone home with it," she said. "With $5 they are going to want to spend it."
Columbia Crossing organizers gave each racer a list of participating businesses, and businesses themselves displayed signs indicating that they accepted the tokens. Some stores gained new customers.
Alsbury said the bridge crossing event draws visitors from all 50 states.
"I think it’s a very unique program. We were not prepared for the success of it," she said. "We’re so excited about it that we are researching a program that can be used year round."
Portland group circulates CHE
The Portland-based Cascadia Hour Exchange (CHE) formed about 15 years ago. The group has about 125 members total.
"We are small businesses that need a little shot in the arm," said CHE’s John Poling. "We also have people who joined because they have a backyard garden and want to sell their plants."
Poling said the word "hour" in the group’s name comes from the granddaddy of local currencies, the "Ithaca Hour" organization based in Ithaca, N.Y.
Originally the term hour was used to equate an hour of a person’s labor with a unit of currency. While that no longer applies to current local currencies, the individual bills of paper money are still referred to as hours instead of dollars.
Poling said transacting business in CHE currency keeps commerce circulating in the community.
"You can only exchange it with other people in the system," he said. "The fact that I have to meet you face to face keeps it local. That’s really our goal."
Ithaca Hours
The community of Ithaca in upstate New York is home to Ithaca Hours, a nonprofit organization that has been issuing local currency since 1991. Steve Burke is president of the board.
He said the impetus for creating Ithaca Hours currency was simple.
"Because we don’t have enough money," he said flatly. "People are living paycheck to paycheck, and their money is already spent. That’s the reality for many Americans."
When Ithaca Hours organizers took a look around their community, they also saw people who had goods and services to offer.
"So we thought, ‘We’ll just make more money," he said.
While it may sound fanciful to just "make more money," Burke said the philosophy behind local currency is no different than the federally-issued currency we call money. He said the gold and silver standards that once backed the dollar went by the wayside long ago.
"The U.S. dollar isn’t backed by anything except people’s agreement to treat it as currency," he said. "There have always been local currencies because they have always been useful for local communities."
Burke said Ithaca has a thriving downtown business community that accepts Ithaca Hours for goods and services, often for a percentage of a given transaction.
"The economic things it does are important. If I accept it in my business it gives me an advantage," he said. "It’s money that stays in the community, so it helps small business at a time when that’s really crucial. It’s also important for merchants in helping them to compete with chains."