The Return of Barter
Stories abound of bartering during the Great Depression. From the doctor who got paid in chickens to the grocer who clothed his family by trading food for shoes, resourceful folks swapped what they could to make ends meet.
Welcome to the “Great Recession,” with swapping again on the upswing. Craigslist.org, the free classified-ad Web site, reports that traffic is up 100 percent on its bartering boards compared to last year.
In Boyds, Md., the Kirkes family has used bartering to build a business. Ryder Kirkes was laid off from an office job in July and started a landscaping business using tools and equipment he bartered for on Craigslist. His wife, Megan, says he was able to barter services, from hauling junk to putting up fans and yard work.
“He did it many times in exchange for landscaping equipment. He even bartered recently for a utility trailer for his truck by doing drywall work for a couple, who in return gave my husband their older stove, fridge and microwave. For those things, he had found someone that needed them and would barter for a utility trailer,” she says. “We are still struggling, but we have been able to start getting things that my husband needs to start his own landscaping company. We have faith it will be successful and provide for our family.”
In some communities, the barter system never really went away. The nonprofit Center for a New American Dream, for instance, has long promoted a lifestyle that includes less consumption and waste and more community ties. Bartering involves all of those aspects, says Sean Sheehan, special projects director for the organization.
“Bartering gives people a chance to connect with the community, beyond the actual product or service,” he says. Sheehan points out that these kinds of creative economic solutions could be a silver lining to the economic downturn. Just as the Depression era was known for less waste, this recession era might be known for the resurgence of activities such as bartering, which could stick around even when times get better.
Bartering also has long been used in the business world. Perry Constantinides, founder and president of Barter Systems Inc., a business barter service based in Kensington, Md., says businesses know the benefits of bartering in good times and bad. Bartering for goods and services can help many companies conserve cash flow, which is a useful strategy during this credit crunch, he says. Barter Systems’ network of about 1,200 businesses includes everything from lawyers and dentists to restaurants and house painters.
When considering barter
Here are a few things to keep in mind if considering a barter:
• Join a group. A barter relationship requires trust, so talk before bartering. That’s where joining a network or a group can help, as the would-be barterers are screened.
• Write it down. Lawyers say barter exchanges are governed by contract law, so if it is a complex agreement, put it in writing, with both parties’ obligations clearly specified. The writing could be as simple as an e-mail agreeing to the transaction. This could come in handy if there is a dispute and the case goes to small-claims court. Even if barterers don’t put it in writing, oral contracts are enforceable provided that the terms of the deal specify that the transaction is to be completed within a single year.
• Remember the IRS. The Internal Revenue Service considers bartered items as income and expects barterers to declare noncash exchanges on their annual tax return with a 1099B form.
• Determine fair market value. It is not that difficult to determine fair market value of goods and services. Taking a quick look at Craigslist or eBay.com can help determine the market price for a particular service or item.
Where to Start
In a recent study, Barter Business Unlimited, a network with more than 10,000 member businesses, reports that more than 65 percent of the corporations listed in the New York Stock Exchange are presently using barter “to reduce surplus inventory, boost sales and ensure that production facilities run at near capacity.” To help small-business owners determine whether bartering is suitable for them, the nonprofit International Reciprocal Trade Association (www.irta.com) provides a test aptly named “Is Barter
for You?” Go to http://irta.com/IsBarterForYou.aspx.