Local Gift Cards Boost Economy, Help Protect & Create Jobs

by Francis P. Koster, Ed.D.

With the economy in the dump, and faith in national decision makers at an all-time low, is it time to take local action to create jobs and protect local employers — can a community do well, by doing good?

Some communities think they can, and are proving it. In these communities, entrepreneurs and local small businesses, in partnership with a small local or regional bank or credit union, have created local gift cards.

These cards are branded, and are used to buy goods and services from locally-owned businesses only — not the big-box stores and other businesses that ship money out of the community.

Case in point: In Dane County, Wis., a group of local businesspeople started the Dane County Buy Local gift card program. They got a group of locally owned businesses to agree to both sell and accept the cards, and then got the local bank to create and process them.

The cards are basically just like any other debit card — but they have a “Buy Local Dane County” logo. It took only two months from initial agreement on the plan to get the first cards into customers' hands.

Today, the cards are now available at, and accepted by, 538 member businesses. You can learn more about the program at www.danebuylocal.com.

In Chattanooga, Tenn., the Buy It Downtown program started in 2007 by Buy it Local, LLC, in cooperation with the local downtown partnership. A group of 16 businesses agreed to participate by selling and redeeming the Buy It Downtown cards.

Now, the local gift card has more than 90 participating merchants and has created a multimillion-dollar impact on the local economy, directing hundreds of thousands of dollars each to individual merchants.

In its first year, the cards facilitated more than $100,000 in business to local business but then has experienced double- and triple-digit growth, even throughout the economic recession. Business owners realized that the customers often used the cards to pay for only a portion of a purchase, resulting in leveraging an additional 40 percent in business beyond the face value of the cards to the local business, not to mention the impact on the community resulting from "recycling" their dollars locally.

Since its initial card program development, Buy it Local has created Buy it*Cards, a program and system it provides to other local areas to create their own local gift card program and track the results, as well on its unique web-based system. You can learn more about Chattanooga’s program at www.buyitdowntown.com and Buy it*Cards at www.buyitcards.com.  

This kind of program has a significant impact on the local economy, because each dollar that is spent in a local community is more likely to stay within that community — to keep changing hands in a way that boosts the economy within that community. A local landscape company buys a new mower from a locally-owned company; the mower seller buys printing from the locally-owned print shop; the print shop owner buys locally-grown flowers for his wife from the local florist — and they all have a bit more to put into the church collection basket, or to hire their unemployed neighbor.

Let’s use Mr. Jones as an example. If Santa flew over Mr. Jones’ town in the midst of high unemployment and scattered money all around, and every one of the unemployed (including Mr. Jones) put that cash under their beds, they might feel richer — but Mr. Jones would still be unemployed.

If they took their money and bought products from a foreign land or a big-box store, they may have changed that wealth to a different form — but Mr. Jones would still be unemployed. 

But, if Santa dropped off branded gift cards, to be spent at locally-owned and operated businesses, not only would they have their products, but their friends and neighbors would have jobs — and a snowball would have begun to roll downhill, because those folks would, in turn, create local economic demand, which could result in Mr. Jones becoming employed.

And these “buy local” gift cards are actually more useful than those issued by a single store because they can be used at many different kinds of stores, ranging from locally-owned dry cleaners to locally-owned art galleries, pharmacies, tax preparers and so forth. With the “buy local” community, these cards can be used anywhere a Visa card is accepted.

One of the measures of the health of a local economy is how many times a dollar changes hands before it leaves the area — the more money shipped out, the poorer the local economy. Buying locally raises the number of times a dollar is spent locally — and local gift cards help that happen.

Our future is more under our control than many think. There are lots of ways towns and communities can take control of their futures again.

Copyright 2012. All rights reserved.