Buy Local with Local Credit

Common Good member Daniel Ritchie buys ice cream at Bart’s in Northampton. Members deposit and withdraw money, and they get a Common Good charge card they can use to pay at participating local businesses. CONTRIBUTED PHOTO

By columnist Jim Oldham; Amherst Bulletin, February 15, 2019

This week something new happened at Equity Trust, the organization where I work. Our revolving loan fund, which for 27 years has enabled lenders and donors interested in economic justice to make investments with positive social impacts, received its first loan through the Common Good payment system. We now join a growing network of businesses and individuals in the Pioneer Valley that are strengthening our local economy through a form of mutual credit.

The benefits of buying from local businesses are well documented, if still not embraced broadly enough or supported by our political system. Compared to corporate chains, a larger portion of the money spent at local businesses recycles through the community, with multiplying benefits, due to the purchases made by those businesses.

The Common Good system also embraces this idea of an economy of mutual benefit, but goes well beyond simply encouraging people to take their business to local merchants. It provides systems that make it possible to create community wealth and to collectively guide local investment through democratic processes.

At its core, what Common Good offers is an electronic payment system allowing participants to use cards or phones to make purchases. Members purchase Common Good credit with dollars, and then use that credit at participating businesses. The most immediate and direct benefit for merchants accepting the credit is the opportunity to save thousands of dollars a year in credit card fees. Participation can also build customer loyalty and attract new patrons.

That’s just the beginning, however. In addition to offering an alternative to corporate-owned credit and debit card payment systems that continuously extract wealth from our community, the Common Good system allows the funds that back the credit — the dollars that each member has paid to purchase credit — to be invested back into the community. While credit circulates — from customer to

business, business to supplier, supplier to employee to another business that employee frequents — the dollars that back that credit are held in a central, community-controlled fund. Those dollars can be judiciously invested in the community to build more community wealth, for example in a community solar project, or in a community owned business addressing an unmet need.

Meanwhile, as members make regular use of their Common Good credit, accepting it in payment and using it in purchases, the system is strengthened and the value of that credit is assured. This allows participants to benefit from a zero-interest line of credit based on historic use of the system, and backed by all the members, which in turn causes more wealth to circulate in the community.

The system is designed to function well at different scales. With compatible technology and credit easily redeemed for dollars, it integrates well into the mainstream economy. And it offers opportunities for other socially beneficial innovations. In North Amherst, Simple Gifts Farm has a pilot project to lower the prices of local foods for low-income shoppers. Customers who sign up as Common Good members, may, if they wish to donate to lower price barriers, or if they need to use the fund from time to time, do so right at the point of sale.

The Common Good system is managed by a nonprofit, with five employees, operating out of Ashfield, Mass. It was first launched in Greenfield in 2012, and has steadily grown, with over two million dollars in transactions to date. Currently some 65 businesses and over 300 individuals there participate in the system, and the community fund holds over $100,000. Last year, Common Good members approved $19,000 in grants, loans and investments to 14 projects in Franklin County, nearly doubling the $10,000 that was invested the previous year in the first round of Common Good funding. Common Good systems have also been operating in Ann Arbor, Michigan, since 2015, and in Goshen, Indiana, since 2016.

Here in Amherst, a handful of businesses including Barts Ice Cream Company and Amherst Copy and Designworks, as well as Simple Gifts, have signed up, as have about 50 individuals so far. A similar number of businesses and about 100 individual members are in Northampton. Common Good aims to reach a level of participation in Hampshire County that can generate a circular flow of credit suffcient to have a meaningful impact in these communities.

There is much more to Common Good than can fit in this column. Its systems have been designed not just to manage purchases and payments securely and reliably, but to offer a transparent way to share and analyze data about the local economy and explore economic innovations. There is a complex, but carefully thought out, system for community oversight and decision making regarding investments and funds management.

Readers who are intrigued should visit to learn more. I particularly encourage local business owners to check it out and consider joining.

Jim Oldham is Executive Director of Equity Trust, Inc., an Amherstbased nonproit that works nationally for land reform and economic justice. He was an Amherst Town Meeting member from 2002-2018 and he has served on the Community Preservation Act Committee since 2013.

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