Purchasing Power of Libraries in the Economic Recovery

In the current economic crisis, it is critically important for library leaders to reconsider their approach to purchasing in order to ensure that it benefits the local economy. We are calling on library leaders to shift their purchasing and sourcing away from chain stores and online mega-retail and relocalize it to independent retailers and suppliers.

Public libraries buy a tremendous amount of office supplies, building supplies, cleaning supplies, food and beverages, arts and crafts supplies, and other materials. Your loading dock, backroom, or custodial closet is at the end of a very long global supply chain. Everything from copy paper, gardening equipment, coffee pods, art supplies, and HVAC filters are needed in order to run your library very day. In the current Coronavirus economic crisis, it is critically important for library leaders to reconsider their normal approach to purchasing these everyday products to ensure that it benefits the local economy. We are calling on library leaders to shift your purchasing and sourcing away from chain stores and online mega-retail and relocalize it to independent retailers and suppliers.

If your library is mission-aligned to help entrepreneurs and small business owners with reference services and databases but you primarily buy from Big Box chains, catalog companies, and online retailers you are not helping your community in its time of greatest need. As we look to reopen to public services and restart our economy, we want to encourage library leaders to consider the impact of every dollar spent and that your purchasing policies should be mission-aligned. 

If your library has a mission to support workforce development, small businesses, entrepreneurship, and the vitality of your neighborhoods, the decision to source everyday products from local stores and suppliers rather than catalog companies, Big Box stores, and online retailers are at the heart of this conversation. Post shutdown, we believe that your library purchasing practices should be values-aligned and mission-informed to maximize impact on the local economy rather than simply looking at the lowest relative cost. If we let commodity pricing drive library purchasing policies, then we potentially sideline our libraries as a full partner in local economic recovery and revitalization efforts.

As taxpayer-supported institutions, library leaders have a responsibility to spend money wisely and in the public trust. Pre-crisis, that trust was expressed by maximizing your limited purchasing power by finding the cheapest supplier. Big Box stores, online retailers, and catalog companies are the preferred partners of cheap. When our main goal was to spend less of the library’s limited funding on goods and services, then the nature and character of the source for everyday products were irrelevant. In the post-shutdown world, library leaders need to reevaluate what defines wise spending practices and whether there is a deeper-level of acting in the public trust than simply finding the cheapest source. Buying locally is more than a buzzword; it is an engine in the local economic recovery. 

An Issue of Tax Fairness
We are not making a Progressive appeal to the virtue of buying locally or sustainably. This is a stark economic decision. Shifting your purchasing policies toward local sources in the post-shutdown era is a rational economic choice for library leaders for two reasons: one is the multiplier effect of your purchases on the local economy and the other is the direct benefit to the library through a rapidly improving tax base. According to the University of Michigan’s Local Works project, for every $100 in chain store or Big Box purchases only $43 in economic impact with the local community in the form of wages, taxes, and charitable donations. When purchases are made from a locally or regionally owned business, $73 is retained in the locality through wages, taxes, charitable donations, and profits. The study goes on to say that “when economic stimulus comes from outside of an economy (e.g., tourism, federal funding, and industrial exports) the full effect of those dollars depends on how much of that money remains in the local area.” 

While a library’s purchases may be tax-exempt, our institutions are tax-supported. It does not make much sense for a library to willfully and intentionally source from companies that do not believe - at the corporate level - in paying a fair amount of taxes. Those taxes fund the library, the municipality, the schools, the parks, and other infrastructure. But huge online retailers like Amazon and Walmart have fought the collection of online sales taxes thereby starving local municipalities and states for revenue in the process. Big Box retailers like Walmart, Menards, Lowes, Target, Walgreens, and Costco are actively involved in efforts to pay less property taxes through loopholes and the so-called Dark Store exemptions. A store is considered “dark” if it is empty and not currently open. In that case, property owners can file for a tax abatement or reduction because the store is not producing any revenue. But Big Box retailers in many states are trying to use this reasonable exemption as a loophole by arguing that the city or county tax assessor should treat their open and running Big Box stores as if they were “dark”. According to CityLab, “lawyers representing retailers [argue] that big-box stores are effectively worthless at the point of sale, which should be reflected in the taxes they pay—even while the stores are still active. And many companies file repeat tax assessment appeals until municipalities capitulate. Tax assessors say that this argument defies common sense and that the lost revenue will eventually force a heavier tax burden onto other homeowners.” Anti-tax and anti-government organizations like the Americans for Prosperity, Heritage Foundation, and the Americans for Tax Reform are advancing these agendas.

Many of the items your library buys and uses every day are commodity products. As a commodity product, they can be bought almost anywhere and the perceived-price is often the key differentiator. Whether you prefer Pine-Sol, Simple Green, Clorox, or Limpio to clean your floors, this mission-aligned purchasing approach asks you to source those commodity products from the ‘most local’ supplier or retailer. Online retailers like Amazon, DollarDays, or Warehouse Direct are not selling any commodity products that you cannot attempt to buy locally from an independent or franchise retailer. Buying copy paper from a local supplier returns a better economic result to the community than getting three bids from Quill, Staples.com, and Amazon. Purchasing at the local grocer, dollar store, mini-mart, bodega, hardware store, lumber yard, or electrical and plumbing supply place is an economic and social multiplier.

 

Defining Local
In urban and suburban areas, your “local option” may be right around the corner from Costco, Walmart, Home Depot, Lowes, Target, or CVS. In rural areas, there may be fewer close-local stores and suppliers, but if we define your local area as a township or even a county, there is still regional impact. The most-local supplier for a particular product may not share your immediate zip code, but it is a part of your area’s business ecosystem. We can look to Community Supported Agriculture (CSA) and the sustainable food community for inspiration on what defines a local source. With food and agricultural products, the CSA community looks at a combination of “food miles” (i.e. the distance between production and consumption), the opportunity for direct sales to consumers from the grower (i.e. a shorter supply chain), and the impact on the ecology or ecosystem of growing a particular foodstuff in a particular place (e.g. is it possible to grow that tomato here) to determine sustainability. Likewise, the B-Corp movement has a clear approach to quantifying the benefits that accrue not only to shareholders but to stakeholders with a locally-sourced and equitable supply and value chain.

It may be easiest for library districts and non-profit libraries to make these critical post-crisis policy changes quickly. Every month and all across our great nation, library boards approve payables that include everything from reimbursements for staff to attend conferences to fees for storytime performers to charges for cleaning supplies and hardware and paint and copy paper and art supplies and everything else. If just a portion of those payables were shifted over the course of a year away from huge online retailers and big box stores to locally owned businesses, retailers, and suppliers, there would be an infusion of cash into those local economies. 

Libraries that are departments of a municipality or part of a school district or other jurisdiction have an opportunity to lead here as well. Your library may have the latitude to make purchase decisions within your city’s operational structure or you may be prescribed by policies that are set at a council level. Municipal library leaders should remember that their bosses on the town board, city council, or county commission are interested in ways to jumpstart the economy in smart, effective, measurable, and marketable ways. The pathway to a successful conversation about a mission-aligned purchasing policy in your municipality could run through a city or county manager's office, an economic development office, or with a local elected official. A library-led project that refocuses the purchasing power of your municipality into the town, county, or neighborhood businesses is a legitimate local economic stimulus package that your elected officials can get behind. 

Resistance to Mission-Aligned Purchasing
Despite the benefits to the economy, business climate, and tax base, your board or staff may resist changing to mission-aligned purchasing for several reasons. People may feel that shifting your purchasing away from the local Walmart, Home Depot, Meijer, Target, or CVS would hurt those businesses. That argument is rooted in the nature of the relationship those businesses have with your community as well as with the personal shopping habits of your staff and board. In many places, Big Box retailers make up the majority of available shopping outlets, so they feel local. Your staff and board may shop at Big Box retailers and grocers themselves. But Big Box stores are only quasi-local. While they employ workers and managers in a local community, profits are generally not returned to your community. Big Box retailers and grocers are also significantly different than franchises where ownership is local or regional rather than national or even multinational. Convenience is also a significant factor in how purchasing decisions are made. It is sometimes much easier to run to the Big Box and grab everything in one trip than it is to make a shopping list and spread your purchase-power out across several smaller stores. A locally-focused approach to purchasing challenges us to not only reconsider what cost means but also to reconsider what the price of staff convenience is. 

Likewise, there could be discussions at staff meetings or at the board table about which local businesses would benefit or be harmed by the library redirecting its purchases. Don’t let complex discussions make it easy to stay with a pre-crisis status quo. Consider the simple act of buying a sheet cake for staff day from a local bakery instead of the Walmart Super Store. The positive impact of buying that one item from a small business is significantly higher than the negative impact on a Big Box store missing that one sale. There may also be concerns that donations will be negatively impacted if you shift away from big chains. Again, the University of Michigan's study found that for every $1 million in sales, local businesses contributed $4,000 to charitable causes while Wal-Mart contributed only $1,000. “Fully 91% of local business owners contribute to their community, including schools, nonprofits and community groups, by volunteering and making donations. Local business owners invest in the community and have a vested interest in the future of the Community.”

We are not suggesting that you should start grossly overpaying for products. Comparison shopping and working with your suppliers is what any rational actor in any marketplace should do. Mission-aligned local purchasing is not a license for inside deals or the abrogation of a board’s responsibility to the taxpayers, nor is it an invitation to graft, fraud, or corruption. In fact, adopting this intentional approach to purchasing encourages transparency through consultation and consideration. All of these characteristics are hallmarks of wise management, good governance, and fiduciary duty. This is not a zero-sum game. There are real benefits for the community and the library by making this decision. 

Library Impact on Our National Economic Recovery
A library sector-wide shift to buying from local sources would have a massive multiplier effect on local economies all across the country. In 2017, IMLS reported on the revenue and expenditures of 9,246 public library “administrative units”. The annual IMLS survey questionnaire asks libraries to specifically account for Salary & Wages, Employee Benefits, and collections expenditures for Print, Electronic, and formats like microform, AV, and DVDs. Then there is an “Other Expenditures” line. Basically, everything that isn’t for staff, for significant capital and building projects, and for the collection is lumped into the “Other Expenditures” line. In 2017, the line for the “Other Expenditures” line was over $2.7 billion ($2,703,178,202) in purchasing power across 9,246 public library administrative units. It is this category of expenses where the global supply chain of products that your library - and every other public library consumes every day - ends.

As your leadership team looks for ways to position the library as a solution to coming economic problems in your community, it should be a relatively simple decision to intentionally shift your purchasing power to the most-local source. This is a singular opportunity for the library to lead in your community by example. What part of your purchasing power can and should be rededicated to local sources?

 


Works Referenced

"After the Retail Apocalypse, Prepare for the Property Tax Meltdown"
CityLab – Laura Bliss, 11/14/18
https://www.citylab.com/equity/2018/11/property-tax-dark-store-theory-retail-apocalypse-walmart/574123/


"Local Food Systems: Concepts, Impacts, and Issues"
USDA – 2010
https://www.ers.usda.gov/publications/pub-details/?pubid=46395

"Why Buy Local? - Michigan State University (PDF)"
https://ced.msu.edu/upload/reports/why%20buy%20local.pdf


"Local Purchasing Policy - B Impact Assessment (PDF)" 
https://bimpactassessment.net/sites/all/themes/bcorp_impact/pdfs/B%20Resource%20-%20Local%20Purchasing%20Policy%20(1).pdf


"Conservative groups urge Congress to oppose online sales tax bill"
The Hill, Naomi Jagoda - 02/27/18
https://thehill.com/policy/finance/375873-conservative-groups-urge-congress-to-oppose-online-sales-tax-bill


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