Buy, bank, and give local. There is power in those five words. The scale of that power might not be immediately obvious though without diving deeper into the economic principles that explain the natural results from more of us embracing the idea of buying, banking, and giving local. Let’s break down all three parts.
The numbers are pretty simple, and so is the underlying logic of those numbers. When you spend $1 through the internet about $0.02 stays in your local economy. And that $0.02 only happens assuming that someone from your community is delivering the item you purchased. When you spend a $1 at a national chain, about $0.20 stays in your local economy. They employ local people for some of their jobs and are paying rent or perhaps have bought their physical building, but most of their profits go elsewhere and many employees are located somewhere else. Now, when you spend a $1 at locally owned and independently operated businesses, more than $0.50 stays in your local community.
Why does this matter? Well, it matters because the amount of money that stays in your community directly impacts you. This is how public services such as schools, infrastructure, police, parks, etc. are funded. Typically, the more funding, the higher quality. This is also how more jobs and wealth are created in your community. This is also how your community creates, maintains, and evolves its own unique personality that makes your community your home.
Banks have long held a powerful position in any economy because they control a significant portion of capital that can be loaned to businesses to help them start and grow, not to mention helping consumers do the same in their personal lives. Locally-owned and independently operated banks and credit unions, by and large, hold the deposits of local citizenry and loan those deposits into locally-owned and operated businesses. The more local deposits they have, the more local businesses can start and grow.
They also loan almost all of their money to local consumers that then spend that money that they loaned out in their local community. A national or super-regional bank is far less likely to re-invest local deposits into the exact community that those dollars come from. Therefore, they siphon out the money from the local economy and put into other economies. Also, by and large, the big banks use deposits to fund their investment activities and to make huge corporate loans.
Who does that benefit? I’ll give you a hint, it isn’t you and your local community. It used to be that over 70% of deposits were held by local community banks and credit unions, now they barely hold 30% of deposits nationwide. Even with that, local financial institutions make up about 50% of small business loans. Imagine if they had more deposits. A super successful community bank CEO out in Oklahoma, Jill Castilla, said it best when she said, "Community banks (and I would include local credit unions) are like crowdfunding for your local, community businesses."
No one understands local needs and specific situations than those living there. This has been proven time and again in many disciplines. When you support local non-profits, you are supporting the very people that you live with every day and are improving the communities that you are living in. Also, it easier for local non-profits to use more of the money that is given to them to the specific cause rather than in overhead and executive salaries.
It's not a Religion, but Think Twice
Now, I am not against national chains, internet commerce, megabanks, or nation-wide or even world-wide charities. There are certain needs that can be filled better by these institutions than locally owned and independently operated ones. However, I am for all of us, as consumers, to think twice when we have an option to go local or to a large corporation. You will be pleasantly surprised by the breadth of variety, quality of products, and excellent service.
At Towny, we have dedicated our entire company to make buying, banking, and giving local easier, more convenient, and rewarding. In the end, though, it is only possible because we are partnering with and featuring some of the best people and certified local businesses in those areas.
We are excited to start bringing our mission to life in our first five markets; Lubbock and Waco in Texas, Northwest Arkansas (Fayetteville, Bentonville, Rogers, etc.), Acadiana in Louisiana (Lafayette and the surrounding parishes), and the Evansville Indiana area.
Pop the Towny app in your phone if you live in those places or if you're curious about how it works! If you are interested in us coming to your area, let us know. Until we make it there though, don’t forget to think twice before you decide where to buy, bank, and give.