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Building a New Economy with Volunteer Credits - Page 2

- Time Dollars
- should volunteers be allowed to spend their credits?
- should clients earn credits?
- some agency worries about spendable credits
- difference between barter and volunteer credits


Time Dollars, also known as service credits, are used to account for
volunteer hours in a number of seniors' programs around the country. A Time Dollar is earned for one hour of volunteer work, and can be spent on one hour of volunteer service. While most volunteers say they would work without them, the Time Dollars have some remarkable dynamics in creating peer networks and building community. And the volunteer dropout rate has been cut dramatically.

Time Dollars are a perennial good news story and are detailed in the
book TIME DOLLARS by Edgar Cahn and Jonathan Rowe (Rodale Press 1992). The book describes the success of a three-year experiment in Miami, Boston, Brooklyn and San Francisco, paid for by a $1.2 million grant from the Robert Wood Johnson Foundation. With this startup help, the experiment continues, because participants hope to spend their Time Dollars when they need help someday.

The book ends with how-to instructions for starting a Time Dollars
project, and offers materials for under $100 that include a Time Dollars
accounting program for IBM-type computers.

The idea is for seniors to volunteer while they are able, and provide
home help, companionship and transportation to those less able. They earn
Time Dollars which they can spend on volunteer services when they need them. The principle is mutual aid, though in practice volunteers rarely spend any of their credits.

"...the new money functions a little like the pat on the back that
people used to get in stable neighborhood settings, where their good deeds became part of a collective memory that would one day return in the form of kindness to themselves. Strange as it may sound, the computer records are a part of this effect; matching givers and recipients and recording the hours spent and earned, the records serve to replicate that social memory in a modern urban setting..." p.12, TIME DOLLARS.

Time Dollars systems do not replace existing volunteer programs, which
may feel threatened. Time Dollars are introduced to meet specific needs,
usually home care of the elderly, and start with a limited range of services
that can be adequately covered. They are usually sponsored by a non-profit
agency but could be run by businesses by and for their employees.

There is a feeling of pioneering a new economy, one that has tremendous potential for advance. And those involved are self-selected to have such moral qualities as caring, trustworthiness and idealism. They form a culture and a community that ends the fear and isolation of the urban jungle.


The Time Dollars system was designed for seniors for mutual aid.
Volunteers provide elder care and accumulate credits as a kind of insurance against the time when they might be sick or incapacitated. The idea is to spend the credits as needed on volunteer services.

That idea doesn't hold water. Service is given on the basis of need,
not on the ability to pay. The value of the credits is purely psychological.
Time Dollars members can feel they've earned their care when they need it. The ability to pay from their Time Dollars account gives them pride that they don't have to beg for charity.

Meanwhile, they're spending only about 1% of the credits they earn. A
more common transaction is to give their Time Dollars to someone who's
receiving care. This again is purely symbolic, since the recipient would
receive care anyway.

In fact, the whole Time Dollars economy is symbolic. Yet it transforms
volunteer attitudes and dedication. It produces more hours worked and a
lower dropout rate. Volunteers value their credits with values they provide
themselves. They have been given ownership of their credits and as a result these credits have acquired new value.

Some lessons emerge from the experience of Time Dollars:

1. The value of the currency is driven by psychology, not economics.

2. Ownership in itself adds value to volunteer credits.

3. Spending is not what it seems.


The Time Dollars experiment is rich in lessons, and one of them is the
value of giving those receiving care the opportunity to earn volunteer hours.They may not be able to do much, but talking to people on the phone is valuable. So is helping themselves in small ways, since this may save volunteer hours or professional care.

Those receiving care wish to reciprocate, and in the Time Dollars system
they do, getting involved in the service network. They have a right to work
in the Time Dollars economy, and plenty of time on their hands. They cease to be passive recipients, and this has good effects on their health,
insurance companies have noticed. One HMO accepts 25% of its insurance premium in Time Dollars.

This is a remarkable discovery, containing not one but several lessons.
First, everybody's time is valuable in the volunteer economy, even those we would normally write off as incapacitated. Their work can be productive even in money terms, reducing the drain in taxes and insurance premiums on everybody.

Second, it took a new currency system to uncover the value of this work,
where the money economy does not reach.

Third, the volunteer hour appears to be a universal standard, the same
for everybody regardless of ability, in marked contrast to the way the money economy values people's time.

Fourth, if everybody is equal in the volunteer economy, this agrees with
the spiritual, ethical and populist beliefs in equality as an essential
principle of any future for our world.

And there's a practical result of having clients earn credits. They
spend them. At last we have some spending in the volunteer economy. And we have established a new role, a new population in the volunteer economy who earn and spend credits without accumulating any. This is the model for the proposed community service credits which are turned in for government support and services.


Organizations which issue Time Dollars have expressed concern about the balances that build up in volunteers' accounts. Will the agencies have to make good on these credits and provide service some day? Are the credits liabilities to the organization? And if Time Dollars are issued by a network of agencies, must each organization be prepared to make good on Time Dollars issued by all the other agencies?

These concerns come from win-lose thinking and accounting, where if Time Dollars are an asset to the volunteers, they must be a liability or debt for the agency. However, we will find that volunteer hours are a genuine win-win currency, an asset or credit to both sides.

Another concern is that volunteers should not work for reward, and
spendable credits are a type of reward. In practice the volunteers answer
this concern by choosing to save most of their Time Dollars rather than spend them. And that answers the other worry, that agencies might have to make good on all these credits. In practice, Time Dollars produce an increase in volunteering with very little increase in demand for services, so the agencies come out ahead.

Even when an issuer of Time Dollars goes out of existence, the Time
Dollars persist, and the records are easily passed on to another group. The value of the credits is not backed by any institutional guarantee, but by the network of trust and obligation built up by the program. The Time Dollars remain valid as a reflection of the real economy of service that members have created.

However, there is a valid concern about some groups issuing Time Dollars to excess, which other groups have to make good on. The Time Dollars system, when it is expanded beyond a single organization, tends to lose organizational control of its credits. Organizations are no longer
responsible for the Time Dollars they issue.

When we come to network volunteer hours, we will distinguish the VH
system from the Time Dollars system by retaining organizational
responsibility and control.

The last big concern about spendable credits is, are they taxable? So
far the IRS has ruled service credits tax-exempt because they are not
"commercial in nature." We should be vigilant about maintaining this status, and not let VH or Time Dollars be confused with barter credits, which are taxable. Barter follows different principles than volunteering, and it is worth examining the similarities and differences.


Barter is the first thing people think of as an alternative to money,
but it turns out to be a close relative -- so close in fact that the IRS
claims it's taxable. And they're right.

Barter in its primitive form is an equal exchange where we give
something to get something, following the win-lose model. In its modern form barter credits are created, measured in dollars, and used as a medium of exchange in a business network, just like money.

Barter does have its win-win aspects. Members of the barter network do
create currency or mutual credit in limited amounts to start things off.
However, in this they are copying what goes on in the higher reaches of the financial system, where money and credit are created by the powers that be.

Behind the mutual credit of the barter network we may find an informal
network of win-win relationships -- friendship credit or trust. In this way
you could say that win-win relationships are an essential component of
barter. Yet again we find such informal networks are common in normal
business relationships and serve to facilitate trade.

Barter makes more demands on our informal win-win economy than dealing in cash, and it also dramatizes the issues involved in currency creation. We can learn a lot from barter.

But the barter credits themselves work a lot like commercial credit, and
are treated the same for tax purposes. They are not a win-win currency.
They cannot accumulate indefinitely. They are debts that have to be paid,
and follow the win-lose accounting model.

In the great divide between the things of God and Caesar, barter belongs
to Caesar's world, volunteer credits to God. We live in both worlds, and
just as volunteers use money, they can engage in barter also. As we've
noted, we can learn a lot from barter.

One thing we can learn from barter is that it's not easy to create our
own currency. It takes a lot of trust, industry, integrity and stability.
As individuals, we usually lack the credibility to issue a currency.

That's why we look to institutions we can trust to issue volunteer
credits. Institutions have more credibility. There is a moral attitude
involved, that individuals don't deserve to create credits for their private
purposes, and this privilege should belong only to worthy organizations
performing a public service.

- volunteer hours as investments
- setting volunteer hours free
- volunteer credit transfers
- accepting credit transfers
- who owns volunteer credits?


We've looked at ways to enhance the value of volunteer hours by letting
them accumulate in volunteers' accounts, sending regular statements, and encouraging volunteers to look at their VH totals as something valuable that they have earned. We can encourage a sense of ownership even without offering spending options. In Time Dollars systems, volunteers tend to accumulate their credits anyway. So we shall look at VH primarily as capital, a kind of win-win capital which measures the lifetime contributions of both volunteers and agencies.

This capital can bring benefits to volunteers in the form of awards,
status or promotion. In a democratic group, it becomes voting power. And agencies can present their VH totals as fundraising statistics and a measure of their status in the community.

Even though we just created this capital as a first stage in developing
volunteer hours, it is real. Volunteers and agencies have over the years
built up trust and goodwill, knowledge and connections, buildings and
infrastructure. If we want to create a volunteer economy based on VH, we can start from the comfortable position of having substantial capital and no debts.

Who owns this capital? We've been busy encouraging volunteers to feel
they've earned their VH and that the totals in their accounts belong to them. However, normally they can't take their VH out. They have to leave them invested in the agency that keeps the accounts. In win-win capital, the win for the volunteers is the VH they own, the win for the agency is the VH that volunteers have invested in it.

It is also the nature of win-win capital that it requires both parties
to exist. VH do not exist unless they are on some agency's books.
Volunteers cannot carry them away like cash, and this defines VH as a win-win currency that cannot be reduced to a win-lose trading currency.


The major innovation that turns volunteer hours into currency is to
allow volunteers to transfer their VH from one agency to another.

This requires two separate policy decisions for organizations. First,
whether to allow volunteers to take VH out of their accounts. Second,
whether to accept VH earned by volunteers elsewhere.

Let's look at the first question, whether to set volunteer hours free.
If volunteers are to truly own their credits they are entitled to move them.
Otherwise their VH are investments in a frozen bank account.

Setting volunteer hours free is easiest to do in the early stages of VH
development, since volunteers have few choices of what to do with their VH, and will normally keep them where they earned them. From the agency's viewpoint, the value of VH is still undeveloped, so why not let the
volunteers transfer them?


To transfer VH, the volunteer needs the cooperation of the two agencies
involved, rather like transferring academic credits from one school to
another. If the issuing agency has set its VH free, there is no problem on
that side. The second agency must agree to receive these credits, which it is not bound to do. But suppose it does. The transfer procedure is as

First agency: Transfer VH from the volunteer's account to an account
opened for the second agency.

Second agency: Issue the same number of VH to an account opened for the volunteer.

This procedure does not require new accounting techniques or computers. Each agency still controls all its VH, which remain on its books and never actually move off the premises. All that happened was opening or adding to two accounts, which sounds like another win-win. It can be done with a phone call or a note from the receiving agency.


An agency does not have to accept all VH transfers. In doing so it
accepts the incoming credits as equivalent to its own, and it may refuse if
the issuer of the credits is unknown or in bad repute. Each group will
develop its own list of acceptable credits, and this determines whose credits are good and how far they can travel, in a manner of speaking. The credits never actually leave home, but how far away will they find investors?

After accepting some credits and issuing the volunteer its own VH in
exchange, an agency is now recorded as the owner of the VH formerly belonging to the volunteer. Thus agencies will build up a portfolio of VH investments in different agencies, just as volunteers can. Both volunteers and organizations can choose where to invest their VH, and move them to those groups and projects they wish to support. An agency is free to reinvest the VH it just received from a volunteer in some other organization it likes better. But if many agencies are trying to get rid of the same issuer's VH they may not find anyone to accept them, and those VH are in danger of becoming non-convertible.

In that case the issuer can make them good by converting them directly,
accepting its VH back in exchange for good credits that it may own. If it
runs out of acceptable credits then its VH are no longer convertible.

These voluntary exchanges determine whose credits are good in the
volunteer economy. They are good if they are accepted. Some may be accepted more widely than others. Apart from that, all volunteer hours are worth the same.


The volunteer works the hours. But they aren't credits until the agency
records them. They are recorded in the agency's accounts under the
volunteer's name, but it is the agency's name that makes the VH acceptable in the volunteer economy.

The volunteer owns the credits, and the agency is a bank, holding the
VH on deposit. The volunteer may in some cases have additional ownership privileges such as voting rights.

If the VH are convertible, acceptable for exchange with those of other
organizations, volunteers may reinvest them in those other organizations.
Agencies will also come to own VH from these exchanges, and they too may reinvest them. Thus organizations may own and transfer VH as well as volunteers.

There is something artificial about agency-owned credits.
Volunteer-owned VH always add up to the total hours worked, whereas
agency-owned credits are additional VH created to facilitate transfers, which may be uncreated if they are turned back in to the issuers for redemption. Every credit owned by an agency is a liability for another agency, so in sum they own nothing. They can only play win-lose banking games with their VH.

Convertibility adds to the value of ownership, and volunteers will
prefer to work for agencies that provide convertible VH. Agencies in turn
will work hard to establish and maintain convertibility for their VH. The
convertibility test is a stiff one, a form of quality control exercised by
the volunteers themselves. And a stiff test is just what we need to create a
new currency.

Building a New Economy with Volunteer Credits - continued





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