Bartering Up as Economy Down – Businesses Embrace Trading For Goods Instead of Laying Out Cash
By KRISTY EPPLEY RUPON – April 25th 2010

Over the past 30 years, Columbia artist Jeff Donovan has bartered for artwork, tuition for his daughter’s private school, a custom-made suit and, most recently, a couple of visits to the dentist. Bartering gives Donovan a way to use his talent – instead of having to pay cash – to get things he might never buy for himself.Bartering, trading goods or services rather than charging cash, is an ancient practice. But it has gained popularity during the economic meltdown that left many short on cash but rich in talent or treasures.

Tim Whitehurst assembles soccer trophies at The Trophy & Gift Shop in Cayce, which uses The Barter Company. for some of its services. – Tracy Glantz/
The number of online barter ads has increased 100 percent since 2008, according to published reports. In 2008, about 250,000 North American companies conducted barter transactions worth more than $16 billion, according to the International Reciprocal Trade Association, based in Portsmouth, Va. Columbia-area businesses also are using barter – trading a meal for carpet cleaning or trophies for landscaping and painting.

Donovan, the artist, uses bartering every few years. One of his paintings titled “Handout,” an oil pastel on canvas, recently caught the eye of a dentist in the gallery where it was hanging. The gallery owner suggested a trade – painting for dental work.”I couldn’t tell you the last time I had been to a dentist, and I felt like it was time,” said Donovan, who is self-employed and has a part-time job but no health insurance. The dentist paid $325 to the gallery for the painting and gave Donovan a $325 credit at her office. He got his first cleaning last week and will go back in six months for a follow-up. “It worked out very well,” he said. “Both parties were satisfied, which is I guess the ideal.” But Donovan has had a bad experience with barter too, overpromising and failing to negotiate the terms upfront. Donovan, who also has contracting experience, traded a bathroom remodeling project for tuition. The problem? Donovan didn’t realize the extent of the project and took six months to complete a job he had promised in six weeks. Plus, he did not agree on a tuition amount before starting the project. Luckily, he ended up with three years’ of paid tuition for the job. “That one was a little hairy,” he said. “It needs to be stated upfront what each person is going to get out of the deal, and they have to agree to it willingly.”

Hennessy’s owner Sharon May barters her restaurant’s meals for coffee service, carpet cleaning and even vacation rentals as a member of Atlanta-based The Barter Company. “You don’t have the cash outlay, and then, in turn, other members come and have dinner with us,” she said. “It’s been very beneficial. You’re just trading with your neighbors.” It is not a straight trade, however. The Barter Company members get barter points for providing a service and then can use their barter points at other members’ businesses. The company has about 300 members in South Carolina and 2,000 in the Southeast. The company charges a $395 enrollment fee as well as a monthly fee and transaction fee.

Clients are provided with a tax form at the end of the year because the IRS has taxed bartered goods and services since 1982, said chief executive Ric Zampatti. The key, he said, is providing the same amount of services as you are getting in return so the taxes even out.

Gregg Pinner, who heads up the West Metro Chamber of Commerce in Cayce, gets points for letting members join his organization on barter. He had built up enough points that he was able to fully stock a recent auction with items including Atlanta Braves tickets, hotel rentals and restaurant gift certificates. “It’s a tough time out there,” Pinner said. “It gave us some cool auction items, and we didn’t have to have the manpower to go out there soliciting.”

Bartering probably won’t work everywhere, says Barter Co. executive Zampatti. For instance, a restaurant that has a waiting list every night is unlikely to strike a deal. But for a place that has some lulls, “it’s a way of filling in those gaps and earning goods,” he said. The concept seems to be catching on. The Barter Company grew 10 percent last year – even as many other companies were failing or just breaking even.

Gloria Cook, who owns The Trophy & Gift Shop in Cayce, joined the network last year. She has been building up points, providing trophies to businesses that participate in the network, such as Six Flags over Georgia. Soon, she will use her points to get some painting and landscaping done at her business and her home. “When things are tight – as they are right now – you’re not having to write out a check or hand somebody cash,” she said. “It doesn’t hurt quite so bad.”