Start a Bartering Co-op

Barter co-ops let friends on the block (and citizens of the world) trade talents, goods, and services. Money is so last year; ancient bartering is so now.

Bartering co-ops allow neighbors to help one another--for example, you may babysit a neighbor's kids for an afternoon in exchange for them painting a room for you. Image: Radius Images/Getty Images

Your barter co-op needn’t use money, but it should have structure. “I’ll cut your lawn, if you paint my trim” is a line item that neighbors should formally track, so individual barter accounts don’t grow unfairly fat or lean. Your barter co-op can focus on one service—babysitting is popular—or on a wide range of goods and services. Keep the barter co-op between neighbors, or spread it across state lines.

Track barter co-op hours and jobs

The first thing your barter co-op will need is a system to keep track of trades among members. Your options:

  • Paper “money”
  • Electronic spreadsheets 

It’s easier to track everyone’s neighborhood “dollars” electronically than to print and issue barter co-op money.

If you go with an electronic system, the neighbors involved in the transaction email a designated person, often a treasurer, with the cost and the transaction to be recorded.

If your barter co-op has no more than a couple dozen members, you can get by with a spreadsheet and email members about their balance. Or, a tech savvy member of your new barter co-op can modify an online database program, so members can use it to report and track their activities.

Set rates

Your group can decide that every hour of work is worth the same, regardless of the task, or let everyone negotiate their rates. Weeding a garden for an hour might be worth one neighborhood dollar, while a plumber might ask for three for the hour it would take to fix a leak.

For some insights into bartering, Timebanks USA, a social justice network, offers a start-up kit that includes a skills checklist. The site also offers videos and a time bank directory.

It takes a team to run a barter co-op

To start and run a barter co-op you’ll need a core team of three to five leaders. They’ll spend about 150 hours getting the barter co-op going. Annual expenses will likely run $100 to $400, depending on how large your barter co-op is. There are four key issues your barter co-op has to tackle:

1. Do we have to report our activities to the IRS? The IRS considers bartering with unofficial money a taxable transaction. You probably don’t have to worry about this if you’re trading babysitting and car washes among a group of neighbors. But, when business services are exchanged, that’s a taxable transaction. The co-op and the member offering the business service have to report the transaction to the IRS.

2. Will we issue barter dollars to new members? When people have a few hours in their account, they’re more likely to use them and keep the system moving. You can issue each new member of your barter co-op two or three barter dollars when they join. Reward co-op volunteers with barter dollars, too, like when they bring a dish to share during the quarterly meeting or write the co-op newsletter.

3. How will we keep members comfortable? Providing or receiving services from someone you’ve never met can be daunting. Remind your barter co-op members that every transaction is voluntary and terms are negotiable. You shouldn’t feel obligated to take a job or buy a good or service you don’t really want. Set up a three-person committee to hear disputes among members.

4. Who’s going to do the work to start your barter co-op? Although it might take up to 150 hours to get a barter co-op running, it doesn’t require that much time to maintain its progress. Try to pick up members who can handle professional tasks, like an editor to do your newsletter, an attorney to advise on disclaimers, waivers, and liability, and an accountant to clarify confusing IRS rules on barter income.

To keep the wheels in motion, send out a regular newsletter—email or printed—that lets everyone know what services are available from members, builds a sense of community, and keeps your co-op visible.