'Local currency' considered by Ann Arbor DDA to fuel local shopping

The Ann Arbor Downtown Development Authority is studying the possibility of creating a local currency to promote shopping at locally owned and operated businesses.Â

DDA Executive Director Susan Pollay has authorized a $6,000 grant to research the idea. Think Local First, a Washtenaw County-based association of more than 200 independent businesses, will conduct the study and report to the DDA board early next year.

Pollay said the idea is to look at other similar programs around the country -- one groupÂ listsÂ 12 such initiatives, including two in Michigan -- to see whether they actually boost business for local, independent companies.

"Otherwise, why do it?" she said.

The DDA board will hear a report on the status of the study at its meeting on Wednesday. Pollay said no decisions will be made on the idea at the meeting.

A recent USA Today article documented the growing number of local currency programs in the country.

Pollay said the program would be completely unrelated to the Ann Arbor Gold gift card program formerly operated by the Ann Arbor Area Chamber of Commerce, which ended when the vendor went into bankruptcy earlier this year.

That program was a gift card that customers would use at businesses, which would then redeem them for cash. Local currencies are actual printed money, known as scrip, that circulate within a community.

Pollay said the decision to look into a local currency had nothing to do with the demise of the Ann Arbor Gold program.

Pollay listed some of the main questions the study is meant to answer:

How strong is the demand for a local currency program?
How would a local currency program be different than gift certificate programs to local businesses (such as the former Ann Arbor Gold program run by the Ann Arbor Area Chamber of Commerce) and how are those differences articulated?
If a local currency program were created in Ann Arbor, would it involve coordination with a local bank? If so, how would that bank be selected?
Can a local currency program be managed by an existing organization (e.g. Think Local First) or is a separate agency needed?
What kind of longevity are other local currency programs experiencing?
Is it anticipated that local businesses would see revenue increases as a result of a local currency program? Are there other benefits one might see from such a program?

Pollay said she expects the report from Think Local First to be completed in early 2010.

Discussion: What should the money be called?

Freelance reporter Dan Meisler can be reached at danmeisler@gmail.com.