Local businesses offer discounts to holders of HullCoins
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Volunteers and community workers may soon be able to obtain discounts at local retailers and even reductions in their council tax, thanks to technology that puts a value on socially-useful tasks.

The scheme, which is being pioneered in Hull, an English port city in east Yorkshire, is an application of the blockchain technology used in digital currencies such as bitcoin, and has won £240,000 in government and charitable funding.

If it is successful, the scheme could be rolled out nationally. It is also attracting interest from continental Europe, the US and Africa.

A number of places in the UK, including Lewes and Bristol, have experimented with their own currencies to boost local business. Unlike these local coins, however, HullCoins are digital and can only be earned by “good works”, rather than bought or sold with hard cash. A description of the work done is permanently attached to the “coin”.

They are like a corporate loyalty card but for community loyalty, says David Shepherdson, co-founder and chief executive of Kaini Industries, a not-for-profit company set up to develop the technology.

The idea originated in 2014 when Mr Shepherdson, then financial inclusion officer at Hull county council, was asked by Lisa Bovill, head of welfare rights, to research local currencies. The pair then left to found Kaini Industries.

Local businesses offer discounts — usually between 10 and 50 per cent — to holders of HullCoins. Mr Shepherdson says companies like the concept because it attracts customers and boosts corporate social responsibility credentials at the same time.

“Businesses love discounts because they create footfall,” he says. “But this is discounting without devaluing the brand. Every discount they give for a HullCoin links them to something supporting the local community.”

The coins are given out as QR codes on mobile phones. People can earn them by helping children to read, running youth clubs and arranging activities for pensioners. Even achievements such as giving up smoking count, because they reduce the burden on health services.

Community groups, charities, schools, public health bodies, jobcentres and prisons will be able to issue the coins once approved by HullCoin.

“Using blockchain technology, we embed time-stamped evidence of the positive social outcome of whatever activity has been undertaken into the coin itself,” says Mr Shepherdson.

“This creates a distributed ledger of all the socially good things happening in the community and gives people a social CV they can show to a prospective employer.”

Bob Clark, who is currently unemployed and volunteering in a Hull community centre, says: “Some of my volunteering experience has been quite hard to reference. HullCoin provides an easy way of providing evidence of what I’ve done.”

Another advantage, Mr Clark says, is that his unemployment benefit is unaffected by earning HullCoins. “Not being penalised financially is a massive attraction. It provides an incentive to volunteer between jobs.”

HullCoins retain their value indefinitely, unlike customer loyalty points. They can be passed between people and reused by businesses.

The coins have no specific value — the amount of discount is decided by the retailer. Matt Cunnah, managing director of The Hull Pie, a chain of pie shops, wants to link the value to the action that earned them.

“If the good thing was quitting smoking or taking someone’s dog for a walk, I might offer 10 per cent or 15 per cent off,” he says. “Whereas if someone has given blood or pulled a person from a burning car, I might give a 100 per cent discount.”

There are rules on what retailers can offer discounts on. HullCoins cannot be used for cigarettes or alcohol. Takeaway food has been a tricky area as it can be seen as bad for health and unhelpful for those on a tight budget. HullCoin has an independent volunteer-run ethics committee to adjudicate on such cases.

HullCoin is in beta testing and has 800 volunteer users, 73 issuing organisations and 140 retailers offering discounts. The plan is to launch the currency in January 2018.

Copyright The Financial Times Limited 2017. All rights reserved.