Building a New Economy
with Volunteer Credits - Page 2
SPENDING CREDITS: TIME DOLLARS
volunteers be allowed to spend their credits?
should clients earn credits?
- some agency
worries about spendable credits
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
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
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
that can be adequately covered. They are usually sponsored by a
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
and a community that ends the fear and isolation of the urban jungle.
VOLUNTEERS BE ALLOWED TO SPEND THEIR CREDITS?
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
Time Dollars members can feel they've earned their care when they need
The ability to pay from their Time Dollars account gives them pride that
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
themselves. They have been given ownership of their credits and as a
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.
SHOULD CLIENTS EARN CREDITS?
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
in the Time Dollars economy, and plenty of time on their hands. They
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
would normally write off as incapacitated. Their work can be productive
even in money terms, reducing the drain in taxes and insurance premiums
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
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.
WORRIES ABOUT SPENDABLE CREDITS
Organizations which issue Time Dollars have expressed concern about the
balances that build up in volunteers' accounts. Will the agencies have
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
the agency. However, we will find that volunteer hours are a genuine
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
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.
value of the credits is not backed by any institutional guarantee, but
network of trust and obligation built up by the program. The Time
remain valid as a reflection of the real economy of service that members
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
and not let VH or Time Dollars be confused with barter credits, which
taxable. Barter follows different principles than volunteering, and it
worth examining the similarities and differences.
BETWEEN BARTER AND VOLUNTEER CREDITS
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
financial system, where money and credit are created by the powers that
Behind the mutual credit of the barter network we may find an informal
network of win-win relationships -- friendship credit or trust. In this
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
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
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
purposes, and this privilege should belong only to worthy organizations
performing a public service.
SC4 INVESTING CREDITS IN ORGANIZATIONS
volunteer hours as investments
- setting volunteer hours free
volunteer credit transfers
- accepting credit transfers
owns volunteer credits?
VOLUNTEER HOURS AS INVESTMENTS
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
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
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
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
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
for the volunteers is the VH they own, the win for the agency is the VH
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.
SETTING VOLUNTEER HOURS FREE
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
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
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?
VOLUNTEER CREDIT TRANSFERS
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
that side. The second agency must agree to receive these credits, which
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
This procedure does not require new accounting techniques or computers.
Each agency still controls all its VH, which remain on its books and
actually move off the premises. All that happened was opening or adding
two accounts, which sounds like another win-win. It can be done with a
phone call or a note from the receiving agency.
ACCEPTING CREDIT TRANSFERS
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
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
are good and how far they can travel, in a manner of speaking. The
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
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
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.
WHO OWNS VOLUNTEER CREDITS?
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
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
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
will work hard to establish and maintain convertibility for their VH.
convertibility test is a stiff one, a form of quality control exercised
the volunteers themselves. And a stiff test is just what we need to
Building a New
Economy with Volunteer Credits - continued