An Introduction to Time-Banking

In this guest post, Loretta B. describes a unique way to build social capital and to save money.

Two weeks ago my boyfriend and I enjoyed a rare night out on the town. We dressed up in our best clothes, had dinner at a special restaurant, and headed off to the symphony. This was my first time at a symphony, and we had a fantastic time. Our tickets were worth $75 a piece.

Make no mistake, I am very frugal. In fact, I fall into the “make your own laundry detergent” category of frugality. How on earth could $75 tickets fit into such a person's budget? I do something called time-banking. Some refer to it an alternative currency system, a form of volunteerism, a way to build communities, and an international movement for social change. I think it's all that and more. I encourage you to watch the introductory video on the national timebank website.

Where did those symphony tickets come from? The symphony is a member of our timebank. Members of the timebank do bulk mailings for the symphony, and the symphony makes tickets available for each performance. The symphony was two hours long. So I spent two time dollars for each ticket. We could have volunteered to be ushers; but the ushers wore uniforms and were not allowed to sit down, a far cry from our romantic date.

What is time-banking?
Time-banking is built around the basic concept of earning and spending hours. Everyone's skills, whether they are a medical professional or a house painter, are worth one “time dollar” per hour. The hours that you earn are stored in a “timebank” and can then be redeemed for any service of your choice from any member of the timebank. That is the thing that I like the most about time-banking — it is a great equalizer.

My local timebank is called Community Exchange (CE.) I think that is a perfect name, because the people I have met though the timebank have become my friends and neighbors.

How is this different from bartering?
With bartering you need to find two people who each have something that the other wants or needs. You may have to haggle or compromise about the value of your item, or compensate in some way, if the exchange of goods or services is perceived as being unequal. With time-banking, everyone's skills are equally valuable, and you can make your exchange with anyone you want.

Everyone has a skill — some might surprise you. An elderly shut-in who doesn't drive can make beautiful wedding cakes. A woman in a wheelchair who needs her house painted used to train police dogs and now provides puppy training. The retired school-teacher who needs her leaves raked has a kiln and is teaching ceramics. A common question when we meet each other is, “What do you do?” “What do you need?” or “What can I do for you?”

I have provided house painting, taught basic computer skills, and helped people job search and post resumes online. It felt great to make such a difference to someone on such a personal level, not an anonymous contribution of money.

I house-sat for a woman who was a certified yoga instructor, and then I spent my first hour — on yoga. I had always wanted to take yoga, but the expense had stopped me. It was a disaster — I promptly fell on my rear! But I had paid with time dollars, so I tried again, and now I love it. Time-banking allows you to do things that you might not normally be able to afford.

Weaving community
There's a serious side to time-banking, too. The biggest needs are transportation and companionship. That seems so simple — take a bus, join a club! In reality, getting a ride to a medical procedure is more complicated than simply taking a bus, and a daily phone call to check up on the elderly who have no family is extremely important. Time-banking allows the elderly or handicapped to stay in their homes and live independently an average of three years longer than an isolated individual.

There are doctors that participate in our timebank. Other members will provide babysitting in the office lobby while parents are being examined, and these members can in return attend medical workshops and receive certain medical care, (there are some restrictions for legal and liability reasons).

I recently took several months of family leave to take care of my Dad. There were complications. A century ago, family and neighbors would have stepped in and helped. My boyfriend was my emotional rock, but his job was not flexible enough that he was able to help me on a daily basis. So for much of the time I was alone, and I felt like I had no-one to turn to. I found a lovely woman through my local time-bank who does respite care. She came over and stayed with my Dad, allowing me to run necessary errands. And, having gone through this herself, she had lots of useful advice. The hospital's physical therapist wanted grab bars put in the shower, and a timebank member who provides handyman services installed them for me.

When my Dad died, my yoga teacher from the timebank came and stayed at the house during the funeral. She removed all the medical equipment, restoring the house to normal. Others served food and cleared up at the luncheon after my Dad's funeral. I cannot tell you the relief I felt having people I could trust take care of that for me, and financially, I would not have been able to afford the luncheon any other way. When people around me complain that they don't even know their neighbors anymore, I want to tell them — become a good “neighbor” and you will have good “neighbors”!

Time is money
What if going to the symphony isn't your thing, and what you really want is an Xbox 360? Can you buy one with time dollars? Not in my timebank. But what if you had money in your home repair account to have your house repainted this summer, and instead you spent only time dollars and the cost of paint? Or had your car's oil changed or your hair cut and paid in time dollars instead of cash? Maybe in an indirect way, you can buy that Xbox with time dollars — with the money you saved!

Read more about time-banking at the official Time Banks web site.

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Ben @ Trees Full of Money
Ben @ Trees Full of Money
12 years ago

This is a very interesting concept. When I was growing up my parents owned an educational toy store and through the local “chamber of commerce” program called the freedom exchange (not exactly sure of the name) but the idea was, merchants could exchange goods and services with each other without cash transactions, etc..

That was 20 years ago, and I haven’t heard much about it since.

I suppose this service would work well until new people come in with the intent to take advantage of the situation.

InvestEveryMonth.com
InvestEveryMonth.com
12 years ago

Time-banking is great. I have been doing it for years. Just beware that it is better to do it within the structure of a community organization so the expectations and standards are understood by the participants. I once tried to do a time-banking arrangement with a friend, but he just couldn’t let go of his need to pay me an hourly rate for helping him. To each their own, but I definately recommend looking for a time-banking organization in your local area. Also, I don’t want to think about cash payments from friends and neighbors when I’m doing my taxes… Read more »

Leslie
Leslie
12 years ago

This is a fascinating idea. I just spent a little time looking at the Time Bank website. I need to find out if we have one here. Chances are excellent that we don’t. However, I am intrigued enough by this idea that I might even look in to getting one started…

Traciatim
Traciatim
12 years ago

I really like this idea. So does Communist China, Communist Korea, Communist Cuba, the now defunct Communist Russia . . . you can see where this is going. Like any system, eventually someone in power will want control, greed will kick in, and the people at the top will ruin everything. With the flick of a database entry now suddenly I get all sorts of free stuff. Systems like this can only exist if everyone involved agrees that their time is no more valuable than another persons time. I’m not so sure that’s true. What happens when you trade your… Read more »

Maria
Maria
12 years ago

What an awesome idea! I have to see if there is such a program in my area. I think this is fantastic and as the recession worsens, and the dollar falls, this type of exchange and bartering will become even more popular.

It is a very good idea for local communities to set up alternate forms of trade now.

Becky@FamilyandFinances
12 years ago

This sounds great – I’m definitely going to check the website out and see if there’s something in my neighborhood.

Traciatim’s comment seems kind of negative. Comparing it with communism? Also, the whole point seems to be for it to work in small scales in communities. This system doesn’t seem like it’s meant to “go global”, except in that little communities all over the globe could do it.
🙂

No Debt Plan
No Debt Plan
12 years ago

Another great guest post… I’ve never even heard of this concept. Checking out the Time Bank website now.

Traciatim
Traciatim
12 years ago

Hey Becky, could you explain how this is different from communisms philosophy that everyone is equal and we should all pitch in together for the greater good, rather than individual gain?

Greg
Greg
12 years ago

@Traciatim, I agree with you about the fact that this kind of system would not work on a large scale level, however I have another argument as to why not. It’s supply and demand. What if there is a huge supply of house sitters that all want to go to the opera? House sitting will have to be devalued in time dollar since there are so many of them while people will fight through their teeth just to get some tickets to the opera willing to pay more than one time dollar per ticket. As to this working on a… Read more »

Josh
Josh
12 years ago

Cool idea. It could work at a small scall but I agree with the Ayn Randian style poster Traciatim. At some point someone’s hour is more valuable then someone else’s and all hell breaks lose. But it should work on a small scale very well. I think as long as someone goes in focused on the volunteer type aspects instead of what-can-I-get-out-of-this aspect, things should be fun.
Again, cool post and well written Loretta.
-Josh

icup
icup
12 years ago

@Traciatum, I’m having a hard time wrapping my head around your criticism. You are saying time-banking is bad basically because Communism doesn’t scale well? I think that is largely irrelevant because unlike Communism, time-banking is completely voluntary. In your example, the CEO who time-banks 40 hours would indeed be perfectly happy with 20 symphony tickets because he *chose* to time-bank 40 hours. If he didn’t think his time was worth 20 symphony tickets, he wouldn’t have done it. Also, there is absolutely nothing wrong with Communism/Socialism in theory. In fact its a damn good idea. The problem with Communism is… Read more »

klynslis
klynslis
12 years ago

This is a fantastic concept! I think that the reason Traciatim holds reservations about it is that he/she thinks of it as an involuntary replacement for our monetary system, rather than a voluntary organization to which people choose to belong. If I understand correctly, everybody who participates in this organization does so with the understanding that they are “paying in” at an even hourly exchange as many hours as they wish, just as they would volunteer for their church or school as many hours has they wish, doing whatever they choose. If a doctor does not want to pay his/her… Read more »

Andy
Andy
12 years ago

I don’t know if I understand. It just seems like an alternative form of money. Instead of doing something and getting a time bank dollar, why would the person just do it for real dollars, and then spend the real dollars however they wanted? Also, I think of the problems with communism/socialism is that there is no incentive to do well if there is no reward or no negative effects for failure. I agree that it does address well the needs that don’t have an immediate benefit for people, but ideally (and here is maybe a failing of capitalism) people… Read more »

Jc
Jc
7 years ago
Reply to  Andy

Hey I think you are confused. With time banking you do work for someone and earn an “hour” you can then take and spend that hour on someone by having them do something for you.

FreeBy50
FreeBy50
12 years ago

Seems like a nice way to get involved in the community and for individuals to help one another by sharing services.

I think some people commenting here are making too much of this. Its not a global economy or anything close to it and its not meant as a way to maximize your individual gain from effort. If you don’t think trading 1 hour of time for 1 hour of time is a good idea then don’t participate, simple as that.

Jim R
http://freeby50.blogspot.com/

No One Important
No One Important
12 years ago

I grew up in a small town in the hill country of the South. A local storekeeper and a high school math teacher jointly kept what was called “The Ledger”. The Ledger was an accounting of the time individuals in the community had devoted “doing favors” for others. “Favors” could be anything from providing rides, housekeeping & cooking, childcare, farm work, to tutoring and (in one horrible case) flood cleanup. The Ledger was kept at the general store and several times daily different people would come in to see if there was anyone who could help with some task. The… Read more »

FourPillars
FourPillars
12 years ago

Great post and I love the idea.

However, isn’t this still bartering which has to be declared with the IRS?

Mike

escapee
escapee
12 years ago

This is a great idea- thanks for sharing!

My only question- is the time traded subject to tax like bartering is?

http://www.irs.gov/taxtopics/tc420.html

Traciatim
Traciatim
12 years ago

@Greg See, I trade carpooling the kids to school with my neighbours. I shoveled their driveway out of about two and a half feet of snow when they were away on vacation so they could get their kids in to the house and not half to park on the street and climb over a huge (probably 4.5′, it was almost as big as me and I’m 5′ 5″) snowbank left by the plow over a few days. That’s called being a good person, you don’t need to bank time for it. I don’t expect repayment, and I don’t expect to… Read more »

ChristianPF
ChristianPF
12 years ago

@Fourpillars and Escapee

I would think that it is – not being a tax-expert, I am not 100% sure – I would love to hear from some expert tax accountants about this issue…

icup
icup
12 years ago

“Although I would argue that public works and education are not necessarily part of the failings of capitalism, while I agree that taking care of the poor is.” What I meant by that was these are examples of things that might not get done at all if there isn’t an immediate profit motive. If a job takes an enormous amount of input to do, with delayed benefits for a very long time, you might have trouble finding a corporation to do it in the free market. Same goes for public education. If left up to the free market, we would… Read more »

Joshua
Joshua
12 years ago

In early America in small towns social sharing and socialistic ideas were put into practice. The people of Jamestown, Plymouth and other early settlers had a common food supply and such. But even in small towns socialism does not work as the early settlers found out. To those of you who say timesharing is a good idea let me tell you, it isn’t. Now don’t get me wrong, generosity, sharing with others, charity, helping people anonymously, and other good works are great, and I am all for them. But many socialistic ideas have been tried in the past and history… Read more »

Kate
Kate
12 years ago

This is bartering. The element being bartered is the time unit rather than the service or product, but it’s still barter. I think it’s a lovely idea in theory but I’d rather pay people for their work, in part because I believe that the monetary system is a centralized barter system that everyone participates in, and in part because I like having the concrete reality that I paid you to paint my house, and you did a poor job. In a system like this, there’s little social consequence to incompetence and it’s likely that the court system would be less… Read more »

Ed McCartan
Ed McCartan
12 years ago

Simply put, this is not a good idea. Whoever wants to participate in it, go ahead – I for one, would rather excercise moderate self control when spending, and not have to preoccupy myself on anal-retentive time-charting.

Just enjoy life responsibly! There’s a difference between being smart with your money and being the penny-pinching drag that can think of nothing else besides trivial ways to save 5 cents.

Making your own detergent – please.

snow_drops
snow_drops
12 years ago

For tax question, here’s from Time Bank website FAQ:
http://www.timebanks.org/faqs.htm#taxexempt

Are Time Dollar exchanges tax-exempt?

Yes, and this is another reason why Time Banking is different than bartering: it is not taxable. In normal bartering, you have to declare the value of the good and services you receive to the IRS. We have an IRS private letter ruling that Time Dollar exchanges are tax-exempt.

snow_drops
snow_drops
12 years ago

For those who asked about tax, here’s from Time Bank website FAQ:
http://www.timebanks.org/faqs.htm#taxexempt

Are Time Dollar exchanges tax-exempt?

Yes, and this is another reason why Time Banking is different than bartering: it is not taxable. In normal bartering, you have to declare the value of the good and services you receive to the IRS. We have an IRS private letter ruling that Time Dollar exchanges are tax-exempt.

icup
icup
12 years ago

Give me a break. Why are so many people being all OH NOES COMMUNISM IS TEH EVAL AND SO THEREFORE IS TIME-BANKING!!!!1!!!! If you don’t like time-banking, don’t do it. Its as simple as that. Its a method of frugality, not a system of freaking government! And I would argue that quite obviously, it can work. Hence the article. And whether you like it or not, there are many many successful socialist programs in effect in this country right now, that if they did not exist, many many people would be completely screwed. Capitalism’s biggest failing is that its not… Read more »

Jeffeb3
Jeffeb3
12 years ago

OMG, OMG, Communism. Communism is evil! OMG! The worst parts of communism are not present in this time sharing. Anyone who thinks so should go research communism. Communism involves _Taking_ away the wealth of the wealthy, and _Giving_ it to everyone equally. Communism favors the whole over an individual. Time sharing favors the individual. Early communist leaders starved their own people to increase collusion. Time sharing gives people with desired, but less monetarily valued, time an opportunity to pay for other people’s time. Communism’s final stage involves converting the entire world into communism. It’s fundamental idea of communism, Time sharing… Read more »

Missy
Missy
12 years ago

I want to address the issue of communism/socialism vs. time banking, and also to respond to Andy’s charge of alternative money. Time banking is different from communism because: 1. It is voluntary. 2. There is a negative effect if you don’t do the work. If you don’t do the time, you don’t get the dollars to exchange. 3. The downfalls you describe are downfalls of capitalism, not communism. What you’re saying is a downfall of communism, i.e, that “what happens when you trade your 2 hours for your symphony tickets worth $75, but then someone else trades two hours for… Read more »

Loretta B
Loretta B
12 years ago

I had no idea that my guest post would be in any way controversial… Let me clear up any misunderstandings… There are no tax repercussions because there is absolutely no monetary value assigned to any service. The link provided by Traciatim refers to bartering – where you assign a value to a service and find someone who is willing to barter with you. A house painter in that scenario may barter 100 hours of painting for one 15 minute doctors visit. In timebanking, one hour is equal to one hour, and it is tracked by the timebank. There is no… Read more »

vicki
vicki
12 years ago

I really enjoyed this post. But how is there not a time bank organization already in Los Angeles?!!

Traciatim
Traciatim
12 years ago

“At first glance, it seems crazy that someone is paid the same for web design and pulling weeds, but this turns out to be the core of what makes Time Dollars really work. In the Yin, or caring economy, everyone’s time is valued equally — just like it is inside a [communist country]. You wouldn’t ask your cousin to give you two hours of dog walking for every hour you spend fixing his computer.” (P.S., I changed a word in there, but it’s clearly marked just as a ‘real journalist’ would mark it . . . see if you can… Read more »

Traciatim
Traciatim
12 years ago

Also note, this article broke one of the rules to keep the time dollar system tax exempt: “The important thing to remember, however, is that in order to maintain the Time Dollar tax exempt status, you can never make an equivalency between a Time Dollar and regular dollar.” (FAQ contents) “Our tickets were worth $75 a piece.” . . . “So I spent two time dollars for each ticket.” . . . making each time dollar worth $37.50. You’ll now need to include the $150 on your income tax this year. I’ll be sure to let the IRS know to… Read more »

plonkee
plonkee
12 years ago

No, the tickets were worth $75 apiece, but the symphony was 2 hours long. That’s why it costed 2 time dollars.

Loretta B
Loretta B
12 years ago

Traciatim, as plonkee said, the symphony was 2 hours long, so it was 2 time dollars.

Perhaps if I explain it more, it will help you understand it more. The symphony makes a certain number of tickets avaiable for CE members for unused seats to their subscription series. These are seats that would not be sold at a ticket window, because it is to a subscription only performance. The tickets have no value. The tickets are given to members moments before the show, and the ushers take you to your seat.

Traciatim
Traciatim
12 years ago

If the tickets have no value, how are they ” . . . worth $75 a piece.”? That’s like saying “I didn’t pay her for the sex, I paid her to leave” . . . the actual act is the same. You spend 4 hours of time on tickets worth $75 thus if you hadn’t of worked for it you would have nothing, valuing your time at $37.50 per hour. The tickets would only have no value if they gave away all the empty seats for free to anyone who was walking by to fill the seats and you happed… Read more »

J.D.
J.D.
12 years ago

Okay, to clear something up, I am responsible for part of the nit-picking here. My editing mangled things, apparently. Loretta submitted the following two sentences:

“This was my first time at a symphony, and we had a fantastic time. The ticket price would have been $75 a piece.”

I changed that to:

“This was my first time at a symphony, and we had a fantastic time. Our tickets were worth $75 a piece.”

Maybe that doesn’t change anything in this discussion, but let’s be clear that I’m the one who used that phraseology, not Loretta.

Traciatim
Traciatim
12 years ago

It’s still the same thing, she received something that not anyone could receive based on work done that was traded for something of value = taxable.

Will Emigh
Will Emigh
12 years ago

“You can never make an equivalency between a Time Dollar and regular dollar” means that you can’t set up an exchange rate between Time Dollars and US dollars. That hasn’t been done here. This time, 2 Time Dollars got something worth $75. Next time, it might get them something worth $10 (your example of a kid mowing a lawn who would otherwise be paid $5/hr). That means that Time Dollars aren’t just another currency.

Loretta B
Loretta B
12 years ago

For anyone interested in timebanking, but are genuinely concerned about the tax implications, please do not let Traciatim scare you away with the bogeyman that you would be doing anything illeagal. I strongly suggest that you contact your local or national time-bank. They are all fully trained in this complex issue, and strictly adhere to all rules and regulations, approving of only transactions that will not have tax issues. This is also another reason why transactions are tracked so closely, to monitor their legality.

Stephen
Stephen
12 years ago

Intriguing! I’ll check this out! Thanks for posting this.

Tab
Tab
12 years ago

@ Traciatim :
If you would stop trying to be a “know it all” mayby you would understand how this really works. I think this is a neat concept Lorreta,and if it works for you that is all that matters, you probably just wanted to share you’re story with others and did not think you would be “attacked”.Also, any more posts from you Traciatim will not be read from me and hopefully no one else, so if I were you I would just calm down and don’t bother responding back anymore!!

Traciatim
Traciatim
12 years ago

If I were any more calm, I’d be comatose. Exchanging hours for hours is fine, as both hours have the same value if you are providing similar services. Here is the trouble, if I’m a consultant and I make 100 bucks an hour to program web pages, and decide to exchange that service with someone who bakes for about 10 bucks an hour then rules would state that I have given away 90 dollars and someone else received it. If you convert that to hours, the same thing happens. The link above showing the IRS’s tax free letter very specifically… Read more »

No One Important
No One Important
12 years ago

Ed McCartan: “[A]nal-retentive time-charting” was surely less time consuming than the making change, check writing and card swiping/signing you are more used to performing. Traciatim: You seem to think that wage differences are based on skill differences. Under Capitalism that is hardly the case; a simple counter-example: Paris Hilton gets more for giggling and flashing her panties at a club for a few hours than an astrophysicist gets for a year’s research and/or teaching. Perhaps wage differences can be better seen as based on the outcome of supply and demand functions. I know it is an affront to self-esteem to… Read more »

Nigel
Nigel
12 years ago

I really don’t understand the negative comments here. I think this is an amazing idea where people can trade time and talents which may not be of an monetary value, but are still very necessary to a close community. The people bashing this idea are not the ones who have used it and found it to be unsuccessful, they are the ones who haven’t even taken the time to look at the website and have made incorrect judgments with very little information. Personally I wouldn’t value anyones opinion who thinks they know everything about a program simply because they took… Read more »

Jenn
Jenn
12 years ago

I love the idea of timebanks. We have one like that in Seattle (http://timebucks.org/), but I couldn’t find the listing for any timebanks for Seattle or nearby- anyone know of one?

Also, my other issue with the timebucks is that you can buy in to it, which somewhat defeats the purpose of escaping the economy, no?

Jennifer
Jennifer
12 years ago

To address the tax question, the time-bank webpage refers to an IRS ruling that addresses the tax consequences of the time-bank organization, not the members themselves. The IRS ruling states: “Specifically, no opinion is expressed concerning whether a member earns income as a result of the member’s participation in the program.”

Having said that, I think time-banking sounds like a nice idea.

Traciatim
Traciatim
12 years ago

“Paris Hilton gets more for giggling and flashing her panties at a club for a few hours than an astrophysicist gets for a year’s research and/or teaching.” Yet if Rosie O’Donnell did the exact same thing she would probably not make the same amount of money. Therefor if Paris and Rosie both were trading ‘hours of panties’ for ‘hours of bush trimming’ then the . . . [yard work people . . . pun most surely intended] Paris ‘hours’ are worth more to the population, that’s capitalism at it’s finest. Thanks for the point. Peoples willingness to pay, income, and… Read more »

Tax Guy
Tax Guy
12 years ago

Jennifer pointed out a very important detail. First, an IRS private letter ruling is not law, it is merely how the IRS interprets the law. What the law is what Congress has written and intended. That said, I.R.C. 6045 requires the broker to send transaction information to the IRS and the customer for tax purposes, it does not state that this type of bartering is not to be included in gross income. The applicable rule is I.R.C. 61(a)(1) – “…[G]ross income means all income from whatever source derived, including … compensation for services…” 26 C.F.R. 1.61-2(d)(1) provides that if services… Read more »

Tab
Tab
12 years ago

Ok…… I did read bits and pieces of your’e “philosophy” on this subject Traciatim, I lied… Only because I want to tell you to go do some situps..that will at least benefit you !!

Ariella
Ariella
12 years ago

This sounds like an excellent, innovative idea. I must point out, however, that if you are exchanging professional services — let’s say, wisdom tooth extraction for two weeks in a condo in the caribbean — then you are committing tax fraud.

To be completely honest with the IRS, you MUST report all professional services rendered for which you received ANY type of remuneration — including goods or other services.

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