Executive Summary

New Currency System Adds Economic-And Social-Value

David L. Andreas
Chairman & CEO of National City Bancorporation

June 1994

There is a new economic development game in town. It's called the Currency Exchange Network, and it's the brainchild of Joel Hodroff and Minnesota-based Commonweal, Inc. One reason this new model looks so promising is that it requires neither tax nor charitable subsidies. It is entirely market driven.

Here is how works: Citizens perform community service in exchange for service credits. They then redeem their service credits as discounts at participating businesses. All transactions are managed with the use of a simple plastic buying card (like a credit or debit card) that provides access to the Currency Exchange Network.

Imagine the following scenario: Jack Harris is an unemployed carpenter. He finds a new job through the Currency Exchange Network with Project for Pride in Living, restoring rundown housing in the Phillips neighborhood of central Minneapolis. Instead of earning cash only, Jack earns a combination of cash and service credits. The service credits stretch Jack's buying power when he redeems them at participating businesses. The community benefits both from Jack's work and from his increased buying power.

The Currency Exchange Network is a win-win proposition for all participants. Businesses gain new customers and enhance their profitability. Citizens find productive work and increase their buying power. Sponsoring organizations (schools, churches and synagogues, labor unions, etc.) earn referral fees every time one of their members makes a purchase with the card. And, most importantly, communities address economic and social problems through better use of currently underutilized human and industrial resources.

The Currency Exchange Network modifies several standard business tools and practices. A strategic business alliance, like those in which consumers earn and spend frequent-flier miles, is modified to include labor, community and government organizations. A buying club is modified to offer discounts based upon economic need for those who perform community service. Cause-related marketing, like buying Girl Scout cookies, encourages consumers to make purchases within the network to benefit the community. Debit cards are used to access accounts that hold both service credits and cash.

Through the innovative combination of these existing business tools and practices, the Currency Exchange Network leverages excess productive capacity--seen everywhere today from hospitals and airlines to colleges and restaurants--to produce needed goods and services at affordable prices, while adding an incremental cash profit for participating businesses.

Commonweal, Inc. is currently enrolling endorsers and business sponsors for the first Currency Exchange Network, to be piloted in the Twin Cities later this year. They have growing support for their initiative and seek the participation of Minnesota's leading socially responsible corporations. I believe this exciting new economic development model deserves our attention and support.

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