BerkShares Local Currency

Local currencies are elegant tools for providing community financing of
businesses, for educating consumers about the local economy, and for
fostering regional economic self-determination.

About You

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Location

Project Street Address

Project City

Project Province/State

Project Postal/Zip Code

Project Country

n/a

Your idea

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Year initiative/program began:

2006

Field of work

Banking/Financial Services

If Field of Work is "Other" please define in 1-2 words below (and explain in detail in the entry form):

Service / Activity focus (If "other" please explain in entry form)

Please select one

Year organization founded (yyyy)

1980

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Positioning of your initiative on the Mosaic of Solutions™ diagram:

Which of these barriers is the primary focus of your work?

Please select one

Which of the principles is the primary focus of your work?

Prove that social return doesn’t preclude financial gain

If you believe some other barrier or principle should be included in the mosaic, please describe it and how it would affect the positioning of your initiative in the mosaic

The E.F. Schumacher Society feels that its solution to helping the disadvantaged participate in the formal economy does not fit into any of the design principles listed. What is needed is a more radical instrument of change in the form of an alternate economic system under community control. In face of the powerful impact of the global economy on all local economies, BerkShares offers a positive example of how citizens can take responsibility for keeping their own economies vibrant, jobs local, and economic relationships face to face.

This alternate system in turn does not just concentrate on a sole barrier, but rather tackles all of them to some extent. The BerkShares Program serves low-and moderate-income populations because local currencies build strong regional economies. Local businesses that accept the currency are distinguished from chain stores that do not, building greater affinity between citizens of the region and their local merchants. By encouraging small local businesses and diversifying wealth and ownership, the BerkShares program helps create local employment opportunities.

Name Your Project

BerkShares Local Currency

Describe Your Idea

Local currencies are elegant tools for providing community financing of
businesses, for educating consumers about the local economy, and for
fostering regional economic self-determination.

Innovation

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What is your signature innovation, your new idea, in one sentence?

Local currencies are elegant tools for providing community financing of
businesses, for educating consumers about the local economy, and for
fostering regional economic self-determination.

Describe what makes your idea unique—different from all others in the field.

Currencies circulating only in a defined region encourage import-replacing businesses, which in turn create new jobs, foster technological innovation, retain manufacturing skills, and further regional capital. In September of 2006, the E.F. Schumacher Society in collaboration with other organizations launched BerkShares, a local currency for the southern Berkshire region of Massachusetts. With over 1.8 million BerkShares having been issued from twelve bank branches, 300 local businesses using them and steady growth, BerkShares are a successful project that is already an engine for local sustainable development. A vibrant local currency in the Berkshires creates a model for other communities to emulate.

How do you implement your innovation and apply it to the challenge/problem you are addressing?

By fostering collaboration among producers, retail businesses, non-profit organizations, service providers and consumers, BerkShares strengthen an economy of place that has been lost in the continued growth of the global economy. BerkShares provide an opportunity for the general public to consider the importance of local economies and, more importantly, the possibility of gaining economic self-sufficiency. Through the use of BerkShares, citizens are supporting the growth of local businesses necessary for strengthening local communities. Vibrant local businesses are an important first step to sustainable communities.

Do you have any existing partnerships, and if so, how did you create them?

BerkShares are used by over 300 participating businesses and are distributed by twelve branches of five local banks. In addition to the sponsoring businesses and banks, the BerkShares program is also supported by donations from foundations. The ties to local businesses and to the local community in general have been build by the many programs that the E.F. Schumacher Society has implemented over the years.

In which sector do these partners work? (Check all that apply)

Citizen sector (nonprofits, NGOs) .

Impact

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Provide one sentence describing your impact/intended impact.

By fostering collaboration among producers, retail businesses, non-profit organizations, service providers and consumers, BerkShares strengthen an economy of place that has been lost in the continued growth of the global economy.

Please list any other measures of the impact of your innovation.

A number of measurable goals will be available to gauge the success of the BerkShares Program.

o Increased number of BerkShares in circulation as determined by checking deposit account totals at participating banks

o Increased in the number and geographical distribution of participating businesses as determined by the BerkShares list directory

o Increased trading between businesses as determined by business survey

o Increased velocity of trade in BerkShares before redemption as determined by monthly reports from participating banks

o Increased liquidity of BerkShares, measured by comments being reported by business owners and customers

o Development of a plan for moving the BerkShares program to the entire county

o Continued media attention (The New York Times, The London Times, ABC World News, CBS, BBC, Reuters, French TV1, NTV (of Moscow), Finnish TV, and Yahoo News have all carried prominent stories on BerkShares) and contact with other communities demonstrate that BerkShares are initiating discussion on the role of local economies

Does your innovation address and/or change banking regulations?

The BerkShares program of the E.F. Schumacher Society highlights the role small banks can play in a vibrant local community. The flexibility of the small banks allows them to adapt to the needs of the community better than large banks ever could.

How many people does your innovation serve or plan to serve? Exactly who will benefit from your innovation?

The E. F. Schumacher Society has implemented programs in Southern Berkshire County. Through these programs we have created models that can be used worldwide. The Society has also created a number of published works that are used internationally for reference.
Number of people served directly by this project at the moment: 3,000. Percent of low/medium income: 65%

This Entry is about (Issues)

Sustainability

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Financing source

How is your initiative financed (or how do you expect your initiative will be financed)?

The BerkShares program is financed both by donations from foundations like the Rudolph Steiner Social Finance Fund for Complementary Currencies and by donations from individuals. Roughly fifty percent of donations come from foundations, the other half from individuals.

If known, provide information on your finances and organization:

The E.F. Schumacher Society has a budget of $446,000 and is able to finance itself through donations, lecture income, and literature sales. The Society has three Full-Time Staff members including the Executive Director and usually hosts one ore more interns. Six volunteers also regularly help the E.F. Schumacher Society with tasks.

What are the main financial barriers and how do you plan to address them?

A significant financial barrier was addressed by the Fund for Complementary Currencies support of the program's development. Start-up funding allowed BerkShares, Inc. to pursue the professional design and printing of the currency and also to aggressively target their initial outreach to the southern Berkshire community. Moving toward a self-sufficient program requires that BerkShares no longer relies on grant support, but instead is supported from within the community. The most pressing financial task of the E. F. Schumacher Society is developing a vibrant program that is integrated into the community to the point where community members and local businesses are willing to further the program.

Aside from financial sustainability, how do you plan to grow the initiative?

The BerkShares program is an ideal model program. Interested communities (including the Mayor’s office in Newark, the Martha’s Vineyard Commission, and nonprofit groups in Baltimore, Rhode Island, Houston, Utah, and several California towns) have turned to the Schumacher Society for information on how to issue a currency in their regions. The Schumacher Society plays a unique and responsible role to foster the public interest in the model. Just recently, inhabitants of Totnes, UK launched their own complementary currency, the Totnes pound, which to a large part is based on the BerkShares program. Furthermore, we have been approached about the possibility of expanding the BerkShares program county-wide allowing for the opportunity to incorporate more challenging economic conditions.

The Story

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Please select one

What was the motivation or defining moment that led to the creation of this innovation? Tell us the story.

The Community Investment Fund was started in 1978 in Cambridge. It was the
first investment fund with positive criteria -- not just "no" to fire arms
and alcohol but "yes" to housing co-ops, renewable energy technology,
worker-owned businesses. It drew young idealistic investors looking to "do
good" with their investments. I was its office staff person.

Potential investors would come in and ask me to describe the investment
portfolio and I might begin with a housing co-op in California. "But I'm
from Maine." they might say, "Do you have anything in Maine that I could
visit."

What became clear to me is that these investors were anxious to have a
direct connection with the businesses in which they were placing their
monies. The projected 7% return was only an abstraction, they were seeking
the story behind their investment. And for that story they were willing to
take more risk and less financial return.

When we moved to the Berkshires in 1980, I was haunted by the idea of
connecting producers, consumers, and investors more directly in face-to-face
transactions in building a local economy. A local currency is a tool for
keeping purchasing local, philanthropy local, investment local, and banking
local. It encourages the "multiple sidewalk transactions" that Jane Jacobs
noted were the core of vibrant communities.

So began a twenty-five year process that built to the launch of BerkShares
in September of 2006 working with five local banks and participating local
businesses.nvestors more directly in face-to-face
transactions in building a local economy.

Please provide a personal bio of the social innovator behind this initiative.

Susan Witt has served as Executive Director of the E. F. Schumacher Society
since 1980, leading its national educational programs while committed to
applying Schumacher’s economic ideas in her home region of the Berkshires.
She is Administrator of the Community Land Trust in the Southern Berkshires
and founder of both the BerkShares local currency program and its
predecessor SHARE micro-credit program. A literature major by training, she
tells the stories of linking people, land, and community through building of
sustainable local economies.

a) Please identify the individuals that your innovation benefits (Please check all that apply)

Producers , Consumers .

b) Do you help the people you serve to buy goods or services using financial innovation? If so, how?

Residents purchase BerkShares at ninety cents on the dollar from one of the exchange banks. Participating businesses accept BerkShares at full dollar value, offering a ten percent discount incentive to consumers for trading locally.

c) Do you help the people you serve to sell goods or services using financial innovation? If so, how?

An estimated 3,000 people have been using BerkShares on a regular basis for food, movie tickets, clothing, books, music, and a variety of services from house cleaning to landscaping, from car repair to carpentry. In doing so, they have shifted a percentage of their purchasing toward local businesses. Those businesses, in turn, have shifted some of their own purchasing toward other local businesses, thus keeping BerkShares in circulation.

AttachmentSize
Images of BerkShares Currency.pdf123.44 KB
Reuters Article about BerkShares.pdf57.83 KB
Slow Money-an article on the value of BerkShares.pdf54.62 KB
313 weeks ago Kaylena Bray said: Dear Susan, Thank you for submitting your entry! The Changemakers team is excited about your idea of using local currency to ... about this Competition Entry. - read more >