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Trade Exchange Canada enables charities to save their hard-earned cash

March 1, 2012

Trade Exchange Canada (TEC) relies on the centuries old barter system, adds technical (ie internet) updates and some savvy business ideas to allow charities as well as a myriad of other businesses to save their money. This economic system goes back to the caveman days – “trade me your piece of deer meat for a dry place to sleep and we’re both happy”. I don’t have to spend my dollars to get your deer meat and since you already have a spare square on the cave floor it won’t cost you anything.

The tax man won’t care that money hasn’t changed hands. He still wants his piece of the deal and there are some very specific rules that must be followed so that he doesn’t send his cheetah after you. Aside from that, it has some very specific advantages for charities.

So how does it work? Let’s say the Sleepytime Motel has 50 unsold rooms this month and would like to get some return instead of just seeing those tourist dollars turn to dust. It posts the availability of those rooms on Trade Exchange Canada’s website. Let’s suppose there is a convention of circus performers coming to Vancouver that needs hotel rooms and Orville’s company is hosting the convention. Pete owns Pete’s Perfect Printers in Kelowna and Steve Suds has a laundromat in Vancouver with capacity.  All are members of TEC. Orville agrees to buy the rooms and pays Sleepytime in trade dollars which he received on a transaction some months earlier. The motel uses those trade dollars to buy laundry services from Steve which he then uses to buy brochures and other printed items from Pete. So the motel can sell its unused rooms and Orville doesn’t have to put out cash. Steve gains a new customer, being the motel, and with the trade dollars gets some badly needed printing done. Pete also gets a new customer. All transactions are at wholesale and everyone saves money.

The obvious question is how do charities participate when they don’t usually have anything to sell? Charities’ biggest need is often services but Revenue Canada does not allow the issuance of a receipt for services on a barter system – something about services being harder to verify! So what kind of goods can charities get using this system and how does the barter work if the charity has nothing to offer in return?

Scott Berg, one of the principals of TEC, said the main advantage for charities is to acquire silent auction items for events and apparently many charities use TEC or other barter sites for just such a purchase. For instance, a charity might use trade donations which it has received to purchase a holiday week in Cancun. Just like the Sleepytime Motel, the resort has excess rooms available and would rather part with them at wholesale value than let them lie empty. Since the rooms would otherwise have been empty, the real cost to the resort for selling the rooms is minimal. The resort can use the trade dollars received to buy other items. The charity can auction off the holiday week and convert that trade donation directly into cash to help the people it is designed to help. And of course this is a donation that the charity might not have otherwise received.

Another major benefit for charities is from a donation perspective. Often a business will buy an item through TEC and then donate it to a charity for sale at its silent auction. In exchange, the business receives a tax receipt from the charity for the donation and, when the item is sold at the auction, the charity receives cash which it can use for its purposes. A further potential benefit is that the charity is gaining access to businesses who might not otherwise have donated to its cause.

Alternatively the business can purchase suitable auction items through TEC (using either cash or any trade dollars that it has) and then donate them to the charity. One example of this is when liquidators have skids of distressed clothing available. Clients of TEC might purchase the clothing wholesale, using trade dollars, and then donate it to an organization like the Salvation Army. The donor gets a tax receipt, the liquidator receives trade dollars which it can use for later purchases, and the Salvation Army receives clothing to use for disaster relief.

Some of the charities which use TEC are the Salvation Army, Union Gospel Mission, and MS Society of Canada. As an example, Canucks Place Children’s Hospice is using trade dollars donated to it by other TEC members for the purpose of maintenance and construction of its new facility. Canucks Place Children’s Hospice can use these trade dollars to purchase printing, furniture, signage, flooring, fixtures etc. The donated trade dollars will be receipted for tax purposes when the purchase is completed by Canucks Place Children’s Hospice from the donor.

TEC has been operating for 10 years and has offices in Vancouver and Kelowna with members also located in Whistler, the Fraser Valley and Vancouver Island. Through its affiliation with 10 other similar companies, members of TEC can access 100,000 businesses worldwide. If you are a charity that would like to find out more you can contact Trade Exchange Canada by clicking here.

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