Revitalizing a City’s Economy Through Sustainable Business and Tax Rebates

Special to the Philanthropy Journal

By Vicki Pozzebon

From rural main street communities to urban neighborhood centers, local first organizations put on “Buy Local” campaigns, create programming to support and grow businesses, and advocate for policies to better the infrastructure for local businesses. These are some of the ground breaking organizations that have lead a resurgence in communities around local economies in the last 15 or so years that are bringing neighborhoods back to life and making “local” a household shopping choice for better economic solutions. Local first networks are usually set up as nonprofit membership based organizations with the mission to support, advocate for, and grow the local economy by strengthening locally owned independent businesses. Two major national organizations support these groups with startup tool kits and case studies: American Independent Business Alliance and Business Alliance for Local Living Economies. In the last decade, more of these organizations have sprouted up across the country and taken root for deep local economy revitalization. In Newark, NJ one such organization is hoping that economic vitality will be on the minds of households across the city, creating opportunities for businesses and customers alike.

Forward Ever Sustainable Business Alliance was founded in Newark in 2012 by Kimberlee Williams, a longtime community builder, consultant, and marketing guru whose deep devotion to local business and her city inspired her to learn how a local first network could help her own community. With a strong business plan in place to start up Forward Ever Sustainable Business Alliance, Williams smartly recruited Karen Brown-Stovell, whose background in marketing at the Urban Enterprise Zone and as a strategic consultant was a natural fit to lead the organization from its inception. Brown-Stovell has been at the helm of the organization since 2012. While Forward Ever Sustainable Business Alliance has hosted many events to link business owners to each other and consumers to businesses, Brown-Stovell now hopes that its tax rebate program will be the answer to a number of community challenges.

Stopping Economic Leakage

Newark is home to five colleges and universities within walking distance of the Central Business District and 19 colleges, universities, and professional schools within 20 miles of the city, but graduating students often leave the area for jobs elsewhere. That kind of leakage means young professionals don’t stick around to start businesses, work in established ones, or buy homes and contribute to the local economy after spending many years learning and living there. In addition, as Brown-Stovell explains it,  “the city’s various economic issues depend on who you talk to – sometimes it’s housing issues, sometimes it’s jobs issues, and sometimes it’s crime. But, Forward Ever’s tax rebate program could be enticing to many and connect the dots across economic and social issues.” Armed with that information and a leakage study, funded in part by Prudential Foundation (whose Prudential Insurance Company of America corporate headquarters was started in Newark in 1875 and still resides downtown) that showed how much more money could be retained if consumers made a choice to shop local, Forward Ever Business Alliance pitched the property tax rebate to the City of Newark.

The property tax rebate program is quite simple: a shopper signs up to get the rebate card, presents the card at a participating business to purchase goods or services. The business gives a percentage discount (anywhere from 5-10% off the sale) and then sets aside that discount amount on the shopper’s rebate card, which, at the end of the year comes to the shopper in the form of a rebate check or a tax credit on their property taxes from the City of Newark.

Newark City Council passed the ordinance in December 2016, unanimously agreeing it could be an economic incentive to get locals shopping at local businesses and an opportunity to give incentives to homeowners or renters in the city. The City of Newark will send all the rebates out directly to the shoppers signed up for the program, and through partners like the public schools to reach parents, the economic development to reach businesses, and the dozens of colleges and universities, Brown-Stovell is hoping to have thousands of shoppers and businesses and services signed up in the coming months. Grocery stores are also interested in the program. In other New Jersey cities where the program is already operating, shoppers are earning an average of $400-$500 back in rebates to be used however they’d like later. Some homeowners use the rebate for property tax payments or to pay utility bills.

Why does all this local shopping matter?

With national studies showing that for every dollar spent at a locally owned business, more than 45 cents stays in communities for taxes, first responders, libraries, schools, parks, and is multiplied up to four times over when local businesses use other locally owned businesses for supplies and services, the City of Newark has a lot to gain. This type of program provides an incentive to shop local but also a rebate to a consumer who later might otherwise have to make a choice buying groceries or paying property taxes. It’s putting money directly back in the hands of the consumer. It is a tool for financial literacy and economic justice, too, as it can help customers understand how to budget and know where their money goes or helps a family pay property taxes later in the year. For businesses, it’s a great marketing tool, especially for those that are often overlooked or don’t have the budget to market themselves. Now they can be proud participants in a strong community marketing campaign that champions them for their efforts to be engaged locally owned businesses.

Loyalty shopping programs are not a new concept. Corporate stores do this all the time. Buy Local networks have also implemented similar programs where discounts go back on a loyalty card to be used at stores later. The difference here is a program that puts cash back into the consumers’ hands, rather than more discounts and coupons to use later. With cash in the form of a check, consumers have more options on how to spend it. Groceries, bill paying, or saving it for a special item in their favorite store or on a service is now a real option. Or it can be saved in their bank account. With an eye toward expanding this program to everything from arts and culture events to grocery stores, Forward Ever Sustainable Business Alliance sees the multiplier effect in action in Newark. All those local dollars in the community will help to not only generate more tax revenue for the City of Newark from the businesses but an opportunity for citizens to buy a home, stay in the community, and know that they are contributing to their local economy. That is economic justice and the power of buying local – putting the decision back in the hands of the consumers.

Vicki Pozzebon is a purveyor of all things local. She is the owner and principal consultant of Prospera Partners, a consulting firm that designs local economy networks, systems, and developmental plans for businesses, nonprofit organizations, and government agencies that put our communities first. She is a skilled facilitator, public speaker, and blogger about all things local.

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