Is Seedstock legal? I thought that only the government could print money.
Community currencies like Seedstock are absolutely legal in Canada, as long as they are created in a way that does not risk confusing them with the Canadian Dollar – which can only be issued by the Bank of Canada.
Although Seedstock is just as much a form of money as is the Canadian Dollar (albeit recognized in a much smaller area), one difference is that only the Canadian Dollar has the status of legal tender in Canada. This means that whereas people have a legal obligation to accept the Canadian Dollar as repayment for debt, there is no such obligation for anyone to honour Seedstock except for the businesses and sole proprietors who issue it.
The Canada Revenue Agency treats community currencies just like any other cash for tax purposes. Income earned in Seedstock must be declared together with all other sources of income on your tax return. See Canada Revenue Agency – IT490 for more detail. Similarly, charitable donations made in Seedstock are just as eligible for tax deductions as donations made in Canadian Dollars.
Please note that while it is perfectly legal (and a great idea!) to offer bonuses or salary top-ups in Seedstock, it is NOT legal to pay staff the wages they are due in Seedstock instead of Canadian Dollars. Please also remember that bonuses and top-ups in Seedstock increase the tax liabilities of staff (payable in $Cdn only), so please always provide staff with enough $Cdn to pay for these additional tax liabilities.
Is Seedstock like bartering?
No, Seedstock is a form of currency, not a barter system. The experience of using Seedstock is much more similar to that of using any other form of money than to barter.
When we barter, I give you a fish and you give me a sack of grain. This may be a good trade, but it certainly has its complications. For the first thing, it means that we need to have a coincidence of wants, i.e. I have to have a fish and want grain and you need to have grain and want a fish. Not only that, but we need to both have and want these things at the exact same time in order for the trade to happen!
The reason money is such a useful invention is that if I want your grain but you don't want my fish, I can still sell my fish to someone else and then buy your grain with the money. Moreover, I don't have to buy your grain immediately, but can save the money I got from the fish until I need the grain.
On an interesting side note, most economic textbooks (and people) work on the assumption that in the beginning was bartering, and that it was only later that money was invented to get around some of the aforementioned difficulties inherent in barter. However, as David Graeber, author of Debt: The First 5000 Years points out, there is no evidence that barter was ever a dominant mode of exchange in human societies, but that various forms of money and gift economies have existed for as long as humans have had anything like an economy.
Is Seedstock a form of local fiat currency?
Seedstock is not a fiat currency. A fiat currency is money that is money simply because somebody (usually the government) says that it is. Fiat currencies are usually backed by the law (declared legal tender by the authorities) and are the only currency accepted by the authority for payment of taxes, which is usually enough to give everyone a strong incentive to accept and use the fiat currency as money.
Some local currencies, such as the Ithaca Hour, use something like a fiat model (also known as "print and pray") to issue and circulate money, but Seedstock is not backed by faith alone. All Seedstock that comes into circulation is backed the commitments of local businesses to accept Seedstock as payment. Think of Seedstock as joint promissory notes issued by many participating businesses.
Where can I spend Seedstock?
You will be able to spend Seedstock at many businesses in the Lower Mainland, primarily related to food (restaurants, farmers, grocery stores, etc), arts (all kinds) and crafts, and health and wellness (healers, yoga classes, counselors, etc). Other local businesses may become involved as well, the primary criteria being that there is a strong local value-added component to their business.
We are signing up our first participating businesses now and will make a complete list available on our website prior to Seedstock’s launch.
Will I be able to use Seedstock instead of cash?
The portion of your purchase that can be paid for using Seedstock will depend on each business’ terms of acceptance, which in turn depends on their business realities. All businesses have costs for overhead, stock, etc. that need to be met in $Cdn, and so they must ensure that their $Cdn needs are being met while they accept Seedstock.
The extent to which a business will be able to accept payment in Seedstock reflects how much “value-added” it produces locally. For now at least, grocery stores typically must import their wares from elsewhere, using $Cdn, and so may only be able to accept 20-30% payment in Seedstock. Restaurants, meanwhile, can accept at least 50% payment in Seedstock because there is a higher local service component to what they do. Some businesses selling pure services may accept up to 100% payment in Seedstock, or a negotiable rate. The terms of acceptance of each business will be published on this website.
Where can I get Seedstock?
You can exchange $Cdn for Seedstock with participating non-profits that have received contributions in Seedstock from local businesses. A list of non-profits that you can support by giving $Cdn and getting the same amount of Seedstock in return is at change.seedstock.ca. Buying Seedstock from agorabora is a great way to support the Seedstock project and its further development.
We will be seeking out community businesses, organizations and individuals to act as “Change Agents” – places where $Cdn can be exchanged for Seedstock on behalf of non-profits. Please stay tuned to this website to find out where these Change Agents will be located. If you think that your place of business would be well-suited to serve as a Change Agent location, please contact us! In addition to doing something great for the community, serving as a Change Agent can be a great way to attract new customers into your business!
Is Seedstock at risk for inflation?
Although the answer to this question is complex, in short, Seedstock is likely less at risk for inflation than most national currencies, including the Canadian Dollar. To find out why, please read on.
In order to assess a currency’s risk if inflation, let us first quickly review what inflation is and what causes it. The simplest definition of inflation is that it is what happens when “there is too much money chasing too few goods”. When the money supply increases faster than the increase of real economic output, those with more money will tend to bid up the prices of existing goods and services, eventually causing the price level to increase in proportion to the increase in the money supply. So, for example, if after waking up this morning we find that each of us suddenly has twice as much money as we had before, but the things available to buy with that money have not increased, prices will rise until we find that, although our money may have doubled in quantity, each dollar can only buy half as much as it used to.
What causes the money supply to increase faster than economic output? In the current monetary paradigm, in countries like Canada, money is primarily created by the banking system whenever a loan is issued. This means that in boom times, and times characterized by speculative bubbles (such as the housing bubble that Vancouver currently finds itself in), the money supply tends to grow very rapidly as many people take out mortgages, business loans, consumer debt and loans simply to engage in speculation on the market. Although real output tends to increase during boom times as well, it does not do so nearly as quickly as the money supply, and so we soon find ourselves with inflation.
Canada’s official inflation rate over the past couple of decades has averaged approximately 2%/year, but significantly, the consumer price index used to calculate our official inflation rate does not include significant expenditures such as housing and gasoline, whose prices have increased markedly in the same period. If these expenditures were included in the official inflation calculations, Canada’s rate of inflation would be closer to 8%.
In some countries, severe inflation results when governments print large amounts of money as an alternative to taxation, or in order to pay its debts. An extreme example of this was Zimbabwe in the mid-2000’s, whose Zim Dollar inflated by millions of percent as the government printing presses worked overtime to print money.
How, then, is Seedstock different from these currencies?
The most significant difference is that every Seedstock in circulation is backed by the commitment of a local business to accept it as payment for their goods and services, and every business is limited to issuing an amount of Seedstock that it can safely commit to honouring based on its capacity. Therefore, unlike with national currencies, there is no central authority that can issue Seedstock at will, without any backing from local businesses, nor is there a banking system that can create Seedstock based on speculative lending. Because every Seedstock is a backed by a business, the only events that could debase the value of Seedstock would be if (a) a significant portion of the participating businesses go bankrupt and are unable to honour their commitments, or (b) if a large number of participating businesses renege on their contractual (and moral) obligations to honour the Seedstock that they have issued.
Seedstock thus has a more solid “backing” than the Canadian Dollar, which can be created without real value or expected real value to back it up, and from that standpoint Seedstock is less susceptible to inflation than the Canadian Dollar.
However, the answer is more complex than that, because as you may have remarked, the value of Seedstock is in a sense pegged to the Canadian Dollar: 1 Seedstock = 1 Dollar. Therefore, in normal circumstances, for as long as Seedstock is pegged to the Canadian Dollar, it will be subject to the same rate of inflation as the Canadian Dollar.
What would happen, though, if the Canadian Dollar were suddenly to undergo hyperinflation for the first time in its history, such as happened in countries like Zimbabwe and Weimar Germany? We won’t know for certain until such a time comes, but we believe that since the cause of the hyperinflation would be due to a debasement of the value of the Canadian Dollar, and not of Seedstock, there is a strong likelihood that the value of Seedstock would be “decoupled” from the Canadian Dollar, and would come to be regarded as the more solid and valuable of the two currencies, retaining its original purchasing power even as the value of the Canadian Dollar is eroded.
How will you stop people from counterfeiting Seedstock?
There will be several measures in place to discourage counterfeiting:
Who is behind Seedstock?
Seedstock is a project of agorabora Collaborative Community Co-operative, a non-profit community services co-operative whose mission is to empower people and communities to break down the barriers between making a living and living in a community. agorabora was founded by Andrew Perry, Jordan Bober and Kajin Goh in 2012. Paola Qualizza joined the core team in Fall 2012 just before Seedstock's launch, and Jennifer McRae is the newest addition as a Director. Seedstock is agorabora's first project. agorabora also hosted the second annual Living the New Economy in Vancouver 2013.
How is agorabora kept accountable in its management of Seedstock?
agorabora is set up as a non-profit community services co-operative precisely to ensure the highest standards of transparency and democratic accountability. Each Seedstock-issuing business has the opportunity to become a member of the co-operative, thereby giving them the democratic right to vote at General Meetings, request information on agorabora’s finances and other aspects of its operations, to call for an audit, and in every other way hold the directorship and management of agorabora to account. agorabora will be proactively transparent by publishing as much information as possible about the status of Seedstock, including the amounts issued and in circulation, the issuance by participating businesses and the receipt of Seedstock by non-profits.
How will the program be paid for?
When businesses sign up to issue and accept Seedstock and thereby become official participants in the Seedstock network, they will pay a one-time implementation and training fee – using the same Seedstock that they are creating – that will be used to support the development and propagation of Seedstock and other open money projects in the Lower Mainland. To meet its cash needs, agorabora will then exchange some of this Seedstock for $Cdn with members of the public, just as any other non-profit beneficiary of Seedstock donations can do.
Aside from the initial one-time fee (in Seedstock), agorabora will assess its members (participating businesses) a recurring quarterly maintenance fee on a cost-of-service basis, which shall be set and ratified by the membership each year at the Annual General Meeting of the co-operative. Again, all fees from members will be payable in Seedstock.
How will Seedstock fit into my books? What should my accountant know?
Accounting with Seedstock is really quite simple. Deal with them, in accounting and otherwise, the way you would deal with Canadian Dollars. The Canadian Revenue Agency recognizes community currencies as cash, and so should your books.
- In the till, it’s cash of a different size and colour, but it’s still cash.
- Your online account is just another “bank” and should be so recorded in your books.
- For accounting and taxation purposes, Seedstock must be accounted and declared in the same way as Canadian Dollars. Remember, 1 Seedstock = 1 $Cdn. No math required!
- Expenditures in Seedstock are the just like any other expenditure, with the same tax implications. In fact, donations of Seedstock to registered charities (even the Seedstock that you as a business issued yourself) are eligible for tax receipts just as cash donations are.
- Any accountants or bookkeepers having troubles managing Seedstock transactions can contact us via e-mail at: firstname.lastname@example.org. We will do our best to work through your issue with you.
- Any accountants or bookkeepers wanting to share their experience or suggestions for incorporating Seedstock into a business are welcome to do the same.
How do taxes work with Seedstock?
For those hoping they could use Seedstock as a tax dodge – sorry to disappoint! The Canadian Revenue Agency has clarified its position on barter systems and community currencies here. Taxes apply to Seedstock just as they do on federal money.
- Income earned in Seedstock is taxable
- Donations in Seedstock to a registered charity are just as eligible for a tax receipt as $Cdn donations
- Sales tax applies just as much to sales in Seedstock as it does to sales in $Cdn
- The exact same rules for business expenses apply to both Seedstock and $Cdn expenditures
- Wages and bonuses paid in Seedstock are subject to the usual payroll taxes
In summary: for all tax and accounting purposes, it's best (and certainly safest) to think of Seedstock as just the same as $Cdn. All of the same rules apply. Of course, the government will not allow you to pay your taxes in Seedstock – at least not yet!
How will people know they can spend Seedstock at my business?
If your business operates at a location that your customers visit, we will provide you with decals that you can place on your door, window and/or cash register to let customers know that you accept Seedstock. We can also provide you with a special Seedstock badge that you can add to your website if you like!
In addition, your business will appear on our online listings of participating businesses, which we aim to make available via a mobile website or app as soon as possible as well. We will also regularly feature participating businesses like yours in our newsletter. And don’t forget about the media exposure that will be enjoyed particularly by the first businesses to participate in Vancouver’s first community currency! You will receive plenty of free advertising simply by belonging to the Seedstock network.
What can I do with the Seedstock my business earns?
Almost anything you can do with $Cdn, including:
- Spending Seedstock at other participating businesses, giving your business more local flair! For example, restaurants or grocery stores can start sourcing fresh produce from local farmers
- Rewarding staff by offering them bonuses in Seedstock
- Contracting local talent to provide valuable services to your business, be that a new paint job, a professional website, good advice or a snazzy new logo
- Withdrawing Seedstock as part of your owner’s draw, to use for personal expenditures ranging from restaurant meals to yoga classes to works by local artists
- Making additional donations of surplus Seedstock to non-profits
How is being part of the Seedstock network different from being part of a commercial barter exchange?
Many businesses have some experience with commercial barter exchanges; after all, billions of dollars worth of goods and services are transacted via commercial barter exchanges worldwide each year. However, being a part of the Seedstock network has distinct differences from (and advantages over) belonging to a commercial barter network. Here are a few of them:
- Not just a businesses-to-business network: While you will be able to use Seedstock to trade with other businesses, being part of the Seedstock network will also attract members of the public with Seedstock to spend to become your customers. There will also be a much greater variety of things that you can spend Seedstock on, as many local freelancers who likely would never have participated (or been eligible to participate) in a commercial barter exchange will accept Seedstock as payment for their work.
- Low cost: In addition to an enrollment fee, transactional fees as high as 15%, and other recurring fees, commercial barter networks charge their fees in good ol' Canadian Dollars. Seedstock, on the other hand, makes a point of making all fees payable in Seedstock itself - the money that you as a business get to issue! These fees in themselves are low: a one-time set-up and training fee of 100 Seedstock per full-time employee, and low recurring cost-of-service fees, also payable in Seedstock.
- Support great causes! While commercial barter networks exist to help businesses save a few dollars by trading with other businesses, Seedstock enables you to trade with other businesses while supporting great non-profit projects building a better present and future for our city and the planet!
- Democratic management: Commercial barter networks are for-profit businesses that act as middlemen between businesses that wish to trade with one another; the entire process remains under their control. Seedstock, on the other hand, is stewarded by agorabora Collaborative Community Co-operative, a non-profit co-operative that each issuing business has the opportunity to become a member of! As a co-operative project, Seedstock exists to serve the businesses and communities that use it, and our members have a democratic say in how the program is run! agorabora's role is to propagate Seedstock and keep it running smoothly, but we do not act as a middleman. You are free to transact with whomever you like using your Seedstock, without having to go through us first! Think of us as a sort of scorekeeper and referee.
To sum up, Seedstock is YOUR money; you issue it, you honour it, you spend it, and you help decide how it is run so that it has the best possible impact on your business and the community around you!
How can my non-profit organisation or project become a beneficiary of Seedstock donations?
If you represent a non-profit, please contact us to see determine whether your non-profit is eligible to become an official Seedstock beneficiary. Seedstock beneficiaries should be active in promoting the causes of local food and food security, health and wellness, a vibrant artistic and creative community or a more collaborative culture overall.
Of course, becoming an official Seedstock beneficiary does not automatically means that you will receive Seedstock donations; it is up to the businesses that issue Seedstock to decide which non-profits they would like to contribute their Seedstock to.
Does it cost anything to become an official Seedstock beneficiary?
No, non-profits participate in Seedstock free of charge!
Are there any conditions on the participation of non-profits?
In order to become an official Seedstock beneficiary, your non-profit must simply agree to honour the Seedstock donations it receives by either spending or exchanging it with the public within 6 months of receiving the donation. If you are unable to use or exchange the Seedstock within that time, your organisation may be asked to return any outstanding Seedstock so that it can be re-allocated to another non-profit, and/or you will be temporarily ineligible to receive any additional Seedstock donations until you have been able to use the donations already obtained. Honouring Seedstock also means maintaining its value equivalence to the Canadian Dollar (you may not exchange or spend Seedstock at a rate that in any way discounts its value).
Can non-profits get any help with exchanging Seedstock for $Cdn?
Yes, agorabora will be operating an exchange service whereby Seedstock can be exchanged with the public in exchange for $Cdn on the non-profits’ behalf, online and eventually at physical exchange locations as well.
How can non-profits use the Seedstock they receive?
There are just about as many ways to use Seedstock as conventional cash. Here are just a few ideas:
- Supplementing the $Cdn being spent by buying from local business that accept partial payment in Seedstock.
- Directors/staff/volunteers may accept Seedstock for reimbursements of expenses.
- Exchange them for $Cdn with members of the public. We call this “making change.
Have a Seedstock jar at your table when you attend events. Visitors to your booth can put in an amount in $Cdn and retrieve that amount in Seedstock.
- Paying for jobs that nobody wants to do or has time to do. Having trouble getting volunteers to do certain jobs? Offer them a full or part Seedstock honorarium, wage or salary.
- Supporting local businesses who in return support your organisation.
- Use Seedstock as matching funds for grant applications.
- Develop or expand upon a business relationship.
Start a pledge program and encourage members, volunteers, staff and the general public to buy a certain amount of Seedstock every month based on how much they can spend. It is not hard to spend 50 Seedstock a month, and if you have 50 people buying 20 Seedstock/month that’s a monthly income of $1000.
Encourage vendors at events you are attending to accept Seedstock, and then sell Seedstock at that event. This way people can spend their money right away, getting first-hand experience in spending their money twice.
My organisation is a registered charity? Can we issue tax receipts for Seedstock donations that we receive?
Yes, you both can and should! The Canadian Revenue Agency considers community currencies like Seedstock to be notional currencies subject to all of the same tax rules as $Cdn, including those governing charitable donations (see CRA-IT490).