Community Currency for Another Loop of Economy

by Ikuma Saga, Researcher*
The Japan Research Institute, Limited
Saga.Ikuma@jri.co.jp

* Ikuma Saga visited Toronto recently to meet with Toronto Dollar representatives

Private Business AND Community Currency

“Community Way,” which Michael Linton developed, is a model that enables both a) the support of social projects by the circulation of community currencies among corporations, NPOs, and individuals, as well as b) a marketing tool for profit-aiming corporations.

When talking about community currencies, most people in Japan would associate it with just C2C (Community to Community) transactions only. However, the real possibilities of community currencies never end at that level, but will reach to all the aspects of societies and economies.

We want to look at how CCs can become an important tool for corporations to create additional value and a means to develop deeper communication with customers. When corporations participate in community currencies, the flow of CCs will be much stronger. Many businesses in Japan, including distribution, retail and service industries, are struggling severely against the "deflation" economy at this moment. They are coming to notice and are experience that traditional strategies of differentiation such as "Good Products for Cheap Price" or "Frequent Shoppers Programs" like point certificates will never make advantages over their competitors. It can be said that the time has come when corporations should look at community currencies as brand new marketing strategies.

In this article, we discuss the possibilities of community currencies, especially focusing on the viewpoint of "How can corporations participate and make use of community currencies for their business activities? "

Money for Contribution

The most fundamental feature of community currencies is that CCs are given as rewards for contributions to the community. And these contributions have not been sufficiently evaluated by national currency such as yen. In other
words, CCs are more related to public interest.

Contributions here can be defined as:

1) Providing labor - i.e. participation in cleaning and reforestation activities.
2) Providing information - i.e. giving advice or submitting comments.
3) Providing money - i.e. donation to wildlife fund or supports for refugees.

Community currencies will be given to those who provide these contributions. In a way, community currencies can be regarded as letters of appreciation toward contributions to communities and the cost against contributions as well. We must note that contributions by money should also be considered as "contributions to communities," and people should be rewarded by CCs for contributing to local communities. So when someone donates 10,000 yen to a certain NPO, the person will receive 10,000 yen in CC. And NPOs can collect money to support their activities. In this way, community currencies can be an innovative tool for NPOs' fundraising.

Social Contribution AND Sales Promotion

The most common ways of social contributions by corporations are;

1) donating money and products
2) making employees take part in programs

However, in most corporations, these activities are only executed within a very limited budget, a limited amount of time, and a limited number of employees; and therefore, we should respect them. On the other hand, the biggest objective of corporations is to make profits, and these contributions are practiced with a different attitude. Although the various contribution programs carried out by private corporations should be highly honoured, we should give another try to step beyond the existing limits. We should explore how to breakthrough the current common sense that says "Social contribution is one thing and marketing is another."

Now look at restaurants and shops around you. Many of them are issuing coupons and having mark down sales. How could the alternative of directing that money to contributions to communities and societies become realized?
Though this question might not sound business-oriented since such cost are now spent for marketing, this question might lead to new thinking. Conclusively, corporations will gain enough profit just by receiving CCs by a certain percentage of the price of goods and services from CC holders, i.e. those who made contributions to the communities. And corporations can start a new way of marketing just by accepting CCs, which is targeting those who hold CCs at the same time. And at that very time, CCs will be a tool to realize contributions to societies and marketing for corporations at the same time.

Additional values, CRM, B2B transactions

There are two ways of thinking about how corporations might deal with CCs.

1) regarding them as sales promotion costs like coupons.
2) regarding them as currencies and spend them for other purposes.

Some corporations might think CC has enough power as a marketing tool to attract customers and keep them as their asset. That's one way of thinking. And another way is to spend CC in order to enhance their additional values
to customers, or to make transaction between other businesses. Even now, some web communities have point programs, which reward members posting on their BBS or answering questionnaires, etc. This means that collecting
customers' opinions or increasing interaction between customers are regarded as a value for those communities.
Proposals about new goods and services, advice for better services, or even claims and complaints from customers may be seen as values for corporations in the near future. Listening to customers' voices is the key to grasping
customers’ needs in the earliest stage, and this kind of information will become critically important for corporations to develop
differentiated products and services. At this stage, CCs becomes a great tool for corporations to make additional value or to have deeper communication with customers.

Also, we should explore the possibilities for corporations to pay bonuses to employees in CC, or to make B2B transaction with CCs. The system might work as we see in WIR in Switzerland and with "Ohmi" in Kusatsu city, Shiga, Japan.

A Case of Sightseeing and a CC Example

Here is a good example.

In Vancouver Island, there is a town called Tofino.

This is a place with untouched nature, and you can see whales in the nearby ocean. Here in Tofino, cc is used in the purposes of connecting local business to travelers and to NPOs of environmental preservation. Those who visit Tofino will exchange “Coast Dollars” with national Canadian Dollars. Canadian Dollars are used as a fund for protecting the ecological system of the whales. On the other hand, local hotels and restaurants can, consequently, enjoy the benefits of cc through travelers who received cc and spent them to protect local tourist resources. Local corporations can also trade between each other with cc. In this
process, travelers are not just consumers who spend money but contributors to preserve and nurture the local environment. In Tofino, those travelers are called "ethical travelers."

Nowadays in Japan, much attention is paid to "green tourism." People living in the urban areas come to the rural area and help planting rice seedlings in dead fields and cutting weeds, which is a great contribution to the local community. cc will be handed as a reward to this kind of contribution, and people can spend cc at restaurants and shops in the local community. This
should be quite a realistic model in Japan as well.

Shibuya Model

Now, we have a place where we can explore the greatest potential of community currencies in Japan.

The place is called Shibuya, at the very centre of Tokyo. This illustration is a prototype explaining the process that is waiting to
be born. And as the project grows, it might evolve in a way we could never have imagined. What we can say at this moment is limited but we will show you more details of this project in the next issue of Kohkoku.

Blueprint of Earthday Money

Community currencies, and especially the community way model will be applicable as solutions to various kinds of social needs and problems. Now let's think about “Earthday Money”. This is a strategy to the issues of protecting the environment, reviving the environment, making an economic flow considering the environment and an answer to the question of how we can make CCs useful.

Community Currency Forum 2001

This "Community Currency Forum" will provide a chance to publicize community currency to corporations of various sizes and to self-governing bodies. It gives us the opportunity to propose and discuss strategies of systemic solutions of social problems and of social contributions within business activities, and the reconstructions of towns & cities led by self-governing
bodies. In the Forum, we will look at several specific areas and communities as samples, and support the use of CCs. And we will widely publicize information concerning these issues. The purpose of the Forum is not to dominate the movements using CCs being adopted in Japan , and not to sell hardware and computer systems. Rather, it is for exploring the wider
possibilities of CCs -- assuring CCs having no conflict with laws and accounting practices; proposing a new business scheme which might not be very lucrative but will be sustainable; and not letting CCs end up just as a boom that fades away, but to make it a movement that lasts into the future. Community Currency Forum 2001 will host a memorial seminar in early July. No
admission fee.