OurNexChange
Community Currency Trading for the Rogue Valley
COMPREHENSIVE SUMMARY (in progress)
Contents
1. Ready for the Next Change
2. The General Concept
3. The Currency
3.1 Mutual Credit
3.2 Trade Dollars
3.3 The Value of Time
3.4 US Dollars
4. Types of Participation
4.1 Focal Community Organization
4.2 Community Marketplace Proprietor
4.3 Basic Trading Membership
5. How to Get Involved
5.1 Learning
5.2 Volunteering
5.3 Offering
5.4 Dipping into Mutual Credit
6. To Tax or Not to Tax
6.1 What exactly is taxable?
6.2 What activities are tax exempt?
6.3 Tracking
7. Cost Recovery Mechanisms
8. Entity Structure
8.1 Community Cooperative
8.2 OurOurNexChange, LLC
8.3 How WebSpirit Intersects
8.4 Local Governance Wisdom Circles
As WebSpirit Community developed over the last five years, it became clear that this region would greatly benefit from a form of locally valued exchange. The WebSpirit announcement system has been used to advertise goods for sale and skills being offered, but some of our avenues of exchange are unnecessarily limited by the scarcity of the US dollar. The Rogue Valley is a cornucopia of abundance, and our community has a wealth of skills that could support a local and self-sufficient economy. By adopting a currency complementary to the dollar, our region could decrease its reliance on outside influences in this complex and volatile age.
New technologies are making it easier to create new forms of complementary currency and track their movement through countless exchanges. On-line user accounts can facilitate exchanges between community members, businesses and organizations. An on-line account system can be used track the currency acquired by each individual, make transactions with any other user, and track business income for tax purposes.
An automated exchange system is a natural extension of an on-line community that wants to barter, and an internet marketplace full of businesses who want to make online sales. A complementary currency trading system would just be a new way for those groups to interact. The entire process could be tracked, regulated, and facilitated through an online, multi-denominational, complementary currency model. We’re calling it OurNexChange.
This new on-line system will allow the Rogue Valley to establish a self-sufficient economy based around complementary currency. The conversion to complementary currency will not be immediate, but will be regulated, with low risk to the business sector, through sales made in the WebSpirit Community Marketplace. Local businesses will be able to make on-line sales transactions in a combination of complementary currency units and US dollars. Individuals will also have community currency accounts, from which they can make purchases and neighborly trades. This means that the units someone earns by trading their apples can be spent to hire a baby sitter, or purchase from local businesses.
It is vitally important that our new community economy be based on trust, rather than isolation and suspicion. Therefore, OurNexChange account balances and trading history transparent to the community. The exchange technology has a built in rating system that allows members to congratulate each other and offer their compliments for successful trades. Administrative oversight can restrict transactions when an individual or business does not adhere to the rules of fair trading. We hope that increased information will help our local economy to be self regulating, providing natural benefits for honorable dealing, generosity and dynamic participation.
We have built OurNexChange with many inherent symmetries and circularities. Throughout the system, there are feedback loops that encourage a new community mindset, and reward the personal qualities of generosity, volunteerism, fairness, and support.
The OurNexChange System will have many benefits for individuals as well as the community as a whole. Personal trades and offers of neighborly help will greatly increase as individuals can trade with each other through a virtual Swap Meet. The exchange system facilitates giving, because volunteer work and generosity can be rewarded easily through unit exchange. Community Organizations can become a source of units, using a reward system to harness volunteers and simultaneously stimulating the local economy. Giving and thanking become much easier throughout the community, as favors can be rewarded by a quick on-line unit gift. The system also allows us to take up a collection for people in need, or reward community heroes. Finally, a conversion to complementary currency will encourage the sustainable self-sufficiency by harnessing underutilized resources for our unmet needs. We believe that this new system will increase the abundance in our community, while also encouraging each of us to truly value what we have to give.
We have decided upon a model that makes use of two types of currency: the US dollar and a community currency unit we call Trade Dollars. It only takes our pocket change to make Trade Dollars, because business transactions can take place in as little as 10% alternative currency. A percentage of each commercial transaction can take place in US dollars. The US Dollar is a trusted component of our system, and the community must also understand the new community currency, its sources and its value.
Our local currency system is distinct from the national system, in that Trade Dollars is not “created” by a central bank. Instead, currency is activated by members at the time of the transaction, and the resulting balances are tracked by the system. All the currency will be backed by trust, and the service we promise to owe each other. This form of economy is called a mutual credit system, and can be thought of as mutual credit and debit trading.
In this system, trading possibilities are not limited by scarce currency. Instead, our trust and willingness to trade, create a wealth of community value in countless transactions.
Individuals, businesses, and organizations, can trade between themselves without relying on an outside source of funds. Even if both trading accounts are at zero, a mutually valuable transaction can still be initiated. When an exchange agreement is reached, the payee drops into the negative while the receiving account becomes positive, activating currency for future trading. At any time, the sum of all the user accounts, both negative and positive, will always balance at zero.
When any account dips below zero, currency is “activated”, or brought into circulation, via the recipient’s account. Currency units that are activated in this way are backed by the trustworthiness and stability of each community member.
Negative account balances are not charged interest and are not seen in a disparaging light. Instead, they represent an agreement to repay the community through some later service. Negative balances will be capped at a preset lower limit based on your membership type and level of participation. The OurNexChange system is carefully monitored and managed, and those users whose accounts remain at the lower limit will be automatically prompted to return to balance by offering something back to the community.
No matter how much our community trades, the system-wide account balances will always total to zero, proving that no currency has actually been created from a single source. The currency supply expands and contracts as needed to supply our unmet needs and make the most of our underutilized resources.
Trade Dollars can be thought of as a time-dollar unit. This means that each unit has a real value in terms of hours spent in service to the community. All activities being compensated at a time-dollar will be paid an egalitarian rate of 16 units for one hour of effort. Four units of Trade Dollars are equivalent to 15 minutes of work. This valuation is rather like setting a minimum wage for neighborly help and volunteer rewards.
Trade Dollars begins to circulate when any individual, organization, or business account dips below the zero point, activating mutual credit. When Trade Dollars is activated, it is freely exchangeable and is backed by community respect and trust. Focal Organizations are the most vital source of currency activation. They are pre-qualified to have a very sizeable lower limit cap, and can reward their volunteers through mutual credit. These organizations remain in a sustainable flow of trading when they offer their services back to the community. We anticipate that Focal Organizations will carry large negative account balances, and will, through their credit and trust, empower and energize the rest of the economy.
Once the currency moves into circulation, it can be spent in several ways. It can be used to purchase products or services from on-line sellers in the Community Marketplace. In these sales, Trade Dollars will represent a portion of a for-profit transaction for goods and services. Trade Dollars can also be used in the on-line Swap Meet to compensate neighborly help at time dollar, or to purchase items for less than their original market value. Swap Meet transactions occur entirely in units, and because they are not for profit, they are not taxable.
Many people have raised the question, “Isn’t an hour of skilled labor worth more than time-dollar?” Certainly a lawyer should be able to charge more for her hour than a delivery person. The time dollar equivalency doesn’t restrict people from charging more than 16 units per hour if they choose. Skilled business people are provided with two ways to offer their services: either at standard market value in the commercial realm of the system, or at 16 units per hour in the egalitarian Swap Meet.
Work that is offered in the Community Marketplace can be charged at a higher market rate representative of a person’s professional training. Marketplace transactions are considered to be profit-oriented. On the other hand, a business can also offer pro bono work at 16 units per hour through the Swap Meet. This flexibility allows people to profit from their talents in one realm of the system, while increasing visibility and serving their community in the other.
It should be pointed out that no one’s effort is valued at less than time dollar. Because our goal is to uplift the community, everyone’s contribution is valued equally in the Swap Meet. We hope that many skilled workers will generously offer their talents in the egalitarian realm of the system. Alternately, unskilled laborers can offer their work at time dollar, which will help them meet their vital needs.
We do not expect our local economy to run on Trade Dollars alone. The economy will be strengthened by the trust and flexibility of the US dollar. For now, the dollar is the most widely accepted form of currency, while Trade Dollars requires a paradigm shift and community trust. As we launch the new system, US dollars will offer security for businesses which might initially hesitate to offer their products in community currency alone.
That is why we are lending stability to our model by allowing transactions to occur in a combination of community currency and US dollars. Businesses transactions are only required to occur in a minimum of 10% Trade Dollars. The other 90% of the transaction may occur in dollars, so a business takes very little risk in joining. The minimum ratio of units to dollars can be slowly increased until such time that the community feels ready to convert entirely to complementary currency.
Often, community-oriented organizations, need help to continue their work, and OurNexChange will offer them a way to mobilize a volunteer workforce. Focal Organizations may choose to purchase the highest level of exchange system participation, and they are vital to the local economy. They are an important source of Trade Dollars, dipping in to mutual credit and producing positive account balances throughout the system as they reward their volunteers. These organizations can become certified by demonstrating their long-term stability and a desirable service which they provide to the community. They are then granted a credit line of units out of which they can compensate their volunteers at time-dollar.
In the new community economy, no one is asked to give without receiving something back, but the form of compensation is not expected to be in dollars. Instead, volunteers are rewarded for their work in Trade Dollars which boosts the economy and encourages community sustainability. Therefore, a person who volunteers contributes to the community twice, once when they give of their time, and again when they spend their community currency in the system. We feel it’s time to change our terms: “volunteers” are really “reciprocal givers” who practice “full-circle giving” through these Focal Organizations.
WebSpirit will provide a directory of Focal Organizations, and a mechanism to put them in touch with willing volunteers. Anyone offer their service or find help through a searchable database of volunteers and organizations. Using the new exchange system, non-profits and worthy causes will access a community which is simply more mobilized to help.
It is expected that these Focal Organizations offer their work back to the community. Once they’ve rewarded volunteers up to their credit limit, they must find a way to earn currency back at a rate which can continue to support them. If their work is valuable to the community, than an organization’s endeavors will help it sustain itself. If necessary, these Organizations may to reapply for a deeper credit limit, but it is unwise for OurNexChange to continually enable them as a “source” without ensuring that they are also receiving units and completing the cycle.
As an example of this cycle, let’s examine the Bellview Grange. The Grange uses devoted volunteers to put on monthly Pancake Breakfasts. These breakfasts bring the community closer together, and they require a significant amount of volunteer labor. The Grange could dip into mutual credit in order to harness more volunteer help, and they could also charge for their breakfasts in complementary currency, creating a stable circularity. We hope that the Grange could recoup enough units through their breakfasts to sustain their yearly volunteer pool. Such sustainable organizations will pay less for their Focal Organization Status than those that require an additional credit line every year.
Local businesses and trades people, some of whom are already part of the WebSpirit Community Marketplace, can participate in OurNexChange in a dynamic way. This level of participation gives the ability to make online sales in a combination of traditional dollars and complementary currency units. Proprietors buy their business account in OurNexChange as well as an internet WebBooth in our Community Marketplace.
The Community Marketplace functions like a directory of conscious and artistic businesses with links to WebBooths. WebBooths are the first step toward increasing a customer base and sales to the WebSpirit Community. WebBooths are designed with a Word Press program for user-maintained web pages and regularly updated blogs. Users can build as many pages as they want by uploading images, design features, and internet widgets. Most importantly, our new WebBooths are e-commerce store fronts where business owners can interact with customers and make on-line sales. From these booths, our Marketplace businesses can make sales in US dollars via PayPal and sales in complementary currency through OurNexChange. Their yearly fee allows them to offer their products to a wider audience, sell online, and make two kinds of profit, covering their US Dollar costs safely while participating in the local economy.
In addition to the WebSpirit Community Marketplace, businesses are also automatically promoted through the exchange system. Every new business member can list their products and services in the exchange system categories. It is easy to add multiple categories making a business very searchable. Users can browse the categories of every offering being made through the system and then initiate a communication with any business. Businesses can also post advertisements for specific products or special offers. These advertisements are highly visible, and can include detailed descriptions, photographs, and logos.
In addition, the WebSpirit announcement system can be used to promote newly joined businesses. We will make every effort to connect new businesses with new members, so that they can support each other.
To participate in OurNexChange, all you need is a basic trading account, and these accounts are free for all. Community members, who want to trade, must simply apply for an account and register through the on-line system. A basic membership allows a person to earn Spirit Change by participating in the neighborly Swap Meet. Every individual trader can earn units by making personal sales, offering neighborly help, or volunteering. We suggest that ongoing volunteerism with a Focal Organization is one of the best ways to earn a stable stream of currency.
Additionally, a basic trading membership allows you to make purchases from any other OurNexChange member. All traders can make purchases from businesses in the Community Marketplace, and they can also buy and sell products via our Swap Meet.
To get an account in the exchange system, you need only fill out an on-line application and pay a small entrance fee. We believe that it should be easy and inexpensive to set up a complementary currency account. The application process is necessary to help us gather information about each trader making taxable or non-taxable transactions.
When an application is approved, the user will be given an online account in our OurNexChange system. This account has no initial unit balance. The individual trader can begin transacting in one of four ways: Learning, Volunteering, Offering, or dipping into Mutual Credit.
Our new community system will offer regular training sessions to orient all new members. We deeply recommend that all members participate in these trainings. When a member takes the time to learn the system, the education organization will pay unit compensation into their account. These units can help people get “on the board” and begin making purchases.
To earn community currency and spending power a new user can volunteer with a registered Focal Organization. Focal Organizations are non-profits or community organizations which need volunteer help to do their good work. These organizations will be empowered to reward their volunteers with time-dollar currency. For every hour a person volunteers with a registered organization, they will be compensated with 16 units of currency.
If a user doesn’t have the ability or inclination to volunteer, they could also acquire currency indirectly by offering personal belongings or neighborly help in the Swap Meet. Any community member who has something to sell or assistance to offer, can begin trading immediately.
Finally, individuals can begin transacting, even when they are low on units. There is no prohibition on “going negative” in the system because this creates Mutual Credit and frees up value even in times of scarcity
OurNexChange is a powerful and empowering idea for the next phase of life on planet earth. As such, it needs to be revolutionary, without completely violating the current legal and political system. We hope that Ashland will be a model for other communities who may apply these techniques without the constant fear of government interference. It is vitally important that our exchange system stay on the right side of the tax law.
Sharon Miranda has been a professional accountant and is familiar with IRS regulations. We have also researched relevant tax code rulings, and collaborated with other currency system developers. There is no simple tax exemption for complementary currency systems, but we believe that we can obtain a special ruling in our case. For the good of the community, and the sustainability of the system, we must all abide by those requirements.
Barter transactions that convey profit, as well as services done for profit, must be reported to the IRS as income. Some of the transactions occurring in the exchange system are taxable, while some exchanges and community volunteering won’t need to be reported. Our on-line system has the power to differentiate between transactions because taxable transactions will have originated in the commercial marketplace and non-taxable transactions take place in the swap meet.
All taxable transactions will be recorded in a user account database, and will be reported to the IRS en masse. We will also be responsible for reporting taxable income to each individual exchange system member. If we have to tell the IRS about some of your trades, we’ll also inform you of exactly what we’re telling them. (When tax time comes around, we’re probably going to need the community’s help to process all that data.)
Content in Development
Content in Development
For our system to track transactions correctly, we need the community to understand these rules and use the system accordingly.
Taxable transactions must occur through the Community Marketplace or the commercial realm of the system. For profit transactions include sales for more than original cost and services offered at more than the time dollar rate of 16 units per hour. Registered Businesses members may make these offers through the commercial marketplace. Transactions that begin in the commercial marketplace, can be tracked and reported.
Tax exempt transactions can occur in the SwapMeet realm of the system and will not need to be tracked. Transactions that can bypass the Marketplace tracking system include: gifts, volunteerism, neighborly help for time-dollar compensation, and sales of personal items for less than their original cost. WebSpirit announcements may advertise Swap Meet offers to the community.
Through extensive education, we hope to train new members to use these taxable and non-taxable realms appropriately. The rules will be posted, and users can inquire if they aren’t sure where to post their offerings. We must all do our best to follow the rules agreed to by the IRS. As administrators, our due-diligence requires that we oversee the exchange system in good faith. Transactions occurring outside of the Marketplace might not be tracked, but they won’t go unobserved. We may sometimes flag or investigate traders who appear to be profiting from frequent, high volume transactions. We may need the help of the whole community to police the system.
OurNexChange itself has to recoup costs in order to lease the accounting technology, and support those who develop and run it. We have been advised that most alternative currency systems have failed because they did not build in a constant source of funds to support the system. OurNexChange was developed to support the community, but it cannot succeed without strong cost recovery mechanisms.
To make OurNexChange self sustaining, transaction fees should be added to every trade or purchase. Transaction fees will accrue in Trade Dollars and US Dollars that are added to the top of every transaction. The seller and the buyer both contribute to support the service that gives them the ability to transact. The exact fee rates will be linked to membership type and the expected trading frequency in order to stabilize the OurNexChange cash projection.
As the system itself begins to acquire units from these fees, it can then begin to support itself. The technology must be leased for a monthly fee in US Dollars. Those who share their wisdom through local governance or advisory role deserve at least time dollar compensation for their contributions. Some transaction fees will be allocated to a community fund, for projects and community services.
WebSpirit Systems would also earn Trade Dollars and US Dollars for its historical and ongoing investment. We want to build into the system a way for WebSpirit Systems to be reimbursed for the work Sharon has done designing the technology, building community and business trust, establishing a membership base, and creating the Community Marketplace business platform. WebSpirit’s community connections will be vital in increasing participation and ensuring the diversity and economic balance of the system. Any organization that offers a membership base into the system deserves to receive a commission from OurNexChange. WebSpirit simply offers the first and largest pool of members, enabling the system to get off to a stable start.
In order to keep the spiritual symmetry of the system intact, OurNexChange cannot be, of itself, a mechanism to increase the wealth of its founders. OurNexChange has been designed to increase community vitality and wealth.
Content in Development
Content in Development
WebSpirit has built the foundation of community trust that will be the ground work for OurNexChange. WebSpirit will continue to function in the way it always has, because its primary contribution is facilitation and communication. OurNexChange is a way to trade, aid, and pay outside of all existing systems. The OurNexChange system is a separate entity from WebSpirit, but the two organizations can be fully integrated in a way that ensures the success of both.
WebSpirit is the perfect venue to facilitate exchange, because it already has functions that connect the public with local businesses, and it has an announcement system that allows the community to offer and barter. WebSpirit will also provide the valuable resources of its membership lists and long-standing community trust.
Similarly, we hope that community members will find WebSpirit an increasingly valuable tool for their exchange system participation. The WebSpirit communication structure will provide a advertisement mechanism and grease the tracks for easy exchanges. Paying WebSpirit members will be able to use a newly developed announcement category, “OurNexChange Swap Meet”, for offers and sales occurring entirely through complementary currency.
Also, we highly encourage local businesses who are interested in the exchange system to purchase WebSpirit WebBooths for their on-line sales. Our WebBooths are all set to become E-commerce shop fronts, with the ability to sell products online, in a combination of dollars and exchange units. We expect that local businesses will be excited to purchase WebBooths from WebSpirit.
It is painfully obvious that such a far reaching model cannot be orchestrated by two women hunched over their laptops. We believe that all aspects of the new society should be overseen by committees of trusted, local community members. Already, several people in town have begun to organize themselves in this direction forming the first economic “Wisdom Circle”.
Decision making bodies and advisors will help to iron out the details of this plan. The economic Wisdom Circle, for example, might make decisions related to credit limits, business participation, and transaction fee allocation. We hope to harness the wisdom of committees to assist in economic formulations, as well as the value of units against US Dollar entry fees. Although we have a community-fueled plan for promoting the system, we also hope that a committee will help the commercial marketplace attain the appropriate balance of businesses and offerings.
We can already foresee many other issues that should be trusted into the hands of others. These include: the stewardship of a community fund, the certification of Focal
Volunteer Organizations, ensuring the diversity of products and services offered in the Marketplace, the acquisition and allocation of funds to pay programmers and project developers, widespread education about the community model, and the need to address other institutions and communities with a unified voice.
We hope that several wise and concerned individuals will be willing to assist with our self-governance. These people need not be politically minded, rather they should only be driven to brainstorm all the foreseen and unforeseen consequences of our community evolution. If you see yourself in this role, or another we have not described, please come forward and help us create a council of wisdom.
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