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8:08AM

Thinking about reconstruction post-Irene

Some background: I've been advising another technology start-up that goes by the acronym EASE, which stands for Environmental Accountability for a Sustainable Earth. The Founder and CEO Susan Mills, long of the telecom industry, sought me out after being told that what she's put together (basically, an online marketplace platform that seeks to flow financial resources back to groups and communities - rather than see them gobbled up by outside market makers) was really an operating system for my idea of the System Administrator function in a post-whatever recovery/reconstruction. So, just like any market maker sets up the transaction space and then skims a bit off the top for itself, the various EASE Initiatives (Resilient Cities, Resilient Universities, etc.) set up similar spaces, capture a bit of the action as a social enterprise, and then make those funds available to whatever community or communities are being targeted for development. To me, it's the same stuff that the City Fathers did way back when to make sure the community was to grow as a result of some new economic activity, so what EASE offers as a technology platform is really a way to make that happen in the networked, 21st-century environment.

What follows below is a think piece I worked up with Susan regarding a possible application in New England post-Irene. Naturally, we're looking for any advice/leads on how to make this happen.

 

Can States and Communities Fill Their Coffers Using Silicon Valley Techniques?

 How e-coupons could stimulate business, help neighbors and build resilience

by Susan Mills and Thomas P.M. Barnett

The daily deal e-coupon juggernaut, Groupon, has changed the game when it comes to marketing and selling. Their e-coupon buyers get both a price discount and a group experience that generate excitement and connections.

And market-maker Groupon rakes in cash: an estimated $2 billion last year. 

We think there is something to learn from Groupon’s approach that could help our financially struggling schools, businesses, cities and states get back on their feet: an innovative idea that connects discount buying and group fun with the added benefit of helping others. This new type of e-coupon helps the retailer attract customers and the coupon buyer to get a deal - as well as a group activity. Plus, they both get to dosomething ‘extra’ to help their state, a community or a person.  

“Get a good deal, have a good time, AND do a good deed” is a patent-pending idea by HiWay Couponing, an initiative proposed by EASE. Right now, it is an untested concept looking for its first trial, but we see it as a private-enterprise approach that can help American communities and states become less dependent upon the federal government to maintain services and infrastructure in these fiscally constrained times. Purchasing ‘for a purpose’ can also offset tax cuts to programs and causes, stimulate the economy, and make self-reliance more feasible for hard-pressed communities. 

Here’s how it works: with a HiWay™ e-coupon, the seller offers a ‘deal,' sets the price, determines the deal’s specific third-party beneficiary, and defines how much of the deal price goes to that designated cause. The seller also specifies the characteristics of the coupon’s intended buyer, meaning attributes such as age, location, or area of interest.

Then, using its exclusive technology capabilities, HiWay precisely matches the deal with the people who have the pre-specified characteristics, or those buyers whom the seller hopes to attract to this offer. HiWay distributes the coupon to the target buyer’s laptop, smart phone or tablet. The person is alerted of the deal and can purchase it at any time using a simple ‘buy here’ button on the screen.

Funding flows quickly - almost immediately after purchase - to the retailer and to the cause. Think about how much money typically gets wasted in fundraising. Well, this direct and immediate matching method revolutionizes all that.

Yes, the social enterprise known as HiWay also receives its fee for managing the coupon service. But for the coupon’s beneficiary, funding comes to them with no fuss, no bureaucracy, and no ‘qualifying conditions.’ The money they receive is an expression of neighbors (the retailer and the coupon buyer) helping other neighbors (the beneficiary) at a time of need. Simply put, it's the "buy local" impulse that we all want to engage in, with the charitable flow hard-wired into the transaction.

In large-scale upheavals, having such immediate access to funds can be crucial to survival and recovery - a huge difference maker for non-governmental and private-voluntary organizations (NGOs/PVOs). Once established, this e-coupon program can start generating funds for a purpose almost instantly. 

In addition, HiWay tracks the money flow to ensure that the coupon’s intended target actually receives the funds as promised - a huge dose of transparency in an industry that can always use more. The HiWay system is really different from most donation flows. Usually, charities acknowledge the receipt of a donation, but they don’t specify how that donation is used. The HiWay approach puts money directly into a specific purpose or task, with transparency and trustworthiness.

Let’s apply HiWay to the current challenges facing Vermont as it responds to Hurricane Irene’s devastation. Vermont seems to embody the self-reliant spirit of neighbor helping neighbor. In one hard hit area, towns that have working electricity, phones, and roads are hosting potlucks and inviting anyone to join them. That's a wonderfully traditional response. At these dinners, friends and strangers exchange food, invitations to take a hot shower, offers of a place to stay and other kinds of help - sort of an oral couponing approach. They also sing a lot, tell stories and have fun in spite of the hardships caused by the hurricane. A positive attitude and a community spirit are stronger than the destruction caused by the storm.

Well, why not take that instinctive community response to another level?

The HiWay e-coupon idea is an extension of Vermont’s neighbor-to-neighbor generosity, support, and caring. In addition, the e-coupons stimulate business revenues and give coupon buyers a deal on something the buyer values - all necessary activity if the long-term recovery is going to unfold. 

So we're thinking: what if Vermont’s spirit of community self-reliance were tapped by statewide e-couponing? Could it raise millions to rebuild from Hurricane Irene? States definitely need a new approach that delivers care to their people and programs. Federal aid is not going to be the complete answer in these tough fiscal times. Federal legislators are proposing that states impacted by Hurricane Irene must trade the costs of near-term federal emergency relief for guarantees of budget cuts later - sort of a deny-me-now-or-cut-me-later approach that does little to prime the recovery pump. This demand is made at a time when state budgets are already cut to the bone and the hurricane has put people in additional - and profound - distress. 

Why can’t the disaster recovery be financed by the large and small businesses across a state or within a region issuing e-coupons? Vermont citizens could purchase coupons that appeal to their immediate wants and needs (like a dinner out) and to their broader community interests - perhaps helping rebuild a covered bridge. Everyone benefits.    

More to the point of those of us outside the disaster area who might want to help: the coupons don’t need to be issued solely in Vermont. Anyone, anywhere could participate by creating a Vermont HiWay coupon. 

How fast and how well would Vermont recover if:    

  • Interested businesses each issued a Vermont HiWay e-coupon that gave a discount on an item and also raised money for a state fund such as rebuilding Vermont’s infrastructure, or for a local fund such a town’s police, fire and library services?
  • Individuals, like veterinarians, offered a coupon for an extra free service and designate that the coupon’s revenue go to a fund for animals or to repair of the fairgrounds?

The point is that almost everyone has something to offer and lots of people and locations have needs. And we all spend money on things and we all like to get extra value from our purchases. States already do this sort of thing with lotteries, which come with a lot of negative externalities. HiWay Couponing would deliver the same sort of flows with much lower costs, charging a discounted service fee of 2% on any coupon that aids disaster relief causes.

Everyone gets a good deal in this model. The HiWay e-coupon approach brings attention to, and personalizes, a business. The coupon buyer feels directly involved in helping address a problem. And the process showcases the needs that we, as a community and wider society, would like to help. Together, e-coupon sellers and buyers can help build a healthy community, region, and state, rather than see all that savings/profit go to the market-maker - like Groupon.

We're thinking that HiWay Couponing’s type of private enterprise approach might empower citizens in ways that create less dependence on government financing. It also would stimulate more participation, flexibility, and creativity in the ways we repair and grow the communities we love.   

References (3)

References allow you to track sources for this article, as well as articles that were written in response to this article.

Reader Comments (2)

As you describe the application, the driving motivation is to recover from a disaster/event. All well and good. Is it reasonable to find a way to employ the technology to benefit a community foundation whose mission is to promote philanthropy in a given community? How critical in your judgement is the presence of a "negative event" to make the juices flow?

September 8, 2011 | Unregistered CommenterTony Kendzior

Great point Tony! the approach can be used by foundations of course - no negative event required. As an approach that blends both commerce with philanthropy, HiWay delivers benefits to businesses as well as charities.

Note that the coupon seller (a business or a foundation) decides what part of the coupon sale it keeps for itself and what part goes to a targeted third-party beneficiary. Thus, the foundation might offer some item or activity on the coupon, then keep some part of the coupon's revenue for its own operations and give the other part of the revenue to one of the foundation's programs.

September 10, 2011 | Unregistered CommenterSusan Mills

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