In the short term, the Common Good system acts purely as a payment system — you put money into your account, you spend it, and the business either spends it or takes the money out. You get an ever-growing zero-interest credit line. Money comes in and goes out, just like any payment system.
But in the longer term, when your community has enough participation, you may decide together to issue additional Common Good Credits as investments, grants, or strategic incentives. Where does this money come from? Here's how it works:
When you transfer money from your bank account to your Common Good Account, you're actually buying Common Good Credits — and buying into the vision of a Common Good Economy. Your Dollars go into a Community Fund "Dollar Pool" — an ordinary bank account owned by your Common Good Community as a whole — and the Common Good system gives you that same amount of Common Good Credits instead.
When you spend Common Good Credits at a participating business, the system subtracts that amount from your Common Good Account and adds it to the business's account.
The business then uses those credits to pay its employees and suppliers, those suppliers pay their employees and suppliers, then all those employees become customers again and the credits go in circles. Meanwhile your Dollars remain in the Community Fund. The amount in the Community Fund represents the float — the amount of credits going in circles, being actively used every week or two for transactions.
Cashing out. Sometimes a business or individual gets more Common Good Credits than they can spend in the near future, so they cash them out by moving them to their bank account. What actually happens is the system requests a transfer from the Community Fund bank account to the member's bank account and subtracts that amount from the member's balance.
As the system grows and more individuals and businesses sign up, everyone has more places to spend their Common Good Credits — there are more "economic circles" — so more Common Good Credits are moving around and there is less need to cash out. The amount of US Dollars in the Community Fund gets bigger and bigger.
Savings. In our first pilot community, with 200 members and 30 participating businesses, the Community Fund grew to about $50,000. So when we have 20,000 members, there will be about $5 million in the Community Fund! People are wary of new systems, so almost no one has kept any savings in their Common Good Account in the pilot stage. But as the system becomes more widely used, members are beginning to keep some savings in their account. Average savings of just $1,000 among 20,000 members would means $20 million extra in the Community Fund.
Community Funding. The money in the Community Fund account is what would need to be given back to participants if the system fails and has to be shut down for good. But once your community is sure that isn't going to happen, you can use that money for whatever you wish: perhaps just investments and loans at first, hedging against an ever-more-unlikely shutdown. Investments are particularly important early on, to provide the community with a steady stream of income to cover administrative costs.
Community Grants and Strategic Incentives can be used to improve quality of life for community members and to encourage specific behaviors such as buying local organic produce or renewable energy. Paradoxically, such improvements also tend to bring more money into the community.
Circles. Consider a community project that brings more money into the Community Fund Dollar Pool. For example, suppose the community buys solar panels for everyone's roof, saving participants thousands of dollars a year beyond project costs, resulting in Common Good members increasing the amount of savings in their Common Good Accounts. With careful planning, the community can fund such a project without drawing down the Community Fund at all. Such funding is effectively free money.