Jane Clark, president of the Holland Area Chamber of Commerce, got the news on Friday, February 27.
The Holland chamber used Certifi-Checks to manage a “buy local” gift certificate program since 2001. Clark said individuals purchased $350,000 in “HollanDollars” between January 2008 and January 2009.
Recipients could walk into participating businesses and buy whatever they wanted. The merchant would deposit the certificate like any other check, and the chamber earned a slight commission. CertifiChecks administrated the program, issued certificates, reaped interest on the money they held, and kept the funds from certificates nobody redeemed.
After she heard CertifiChecks had suspended operations, Clark spent the weekend conferring with legal counsel and trying to discern how much money it would take to cover the gift certificates still out there.
Some chambers told merchants to remove promotional signs and warned them to stop taking the certificates. Many chambers did not have reserve cash to cover the problem.
“We decided this right out of the gate,” Clark said. “By Monday morning, our executive committee met with our attorney and decided that we couldn’t do that. You can’t say to a community that’s trusted the chamber of commerce, ‘Sorry, your certificate is worthless.’”
The Holland chamber has a $1 million budget, and Clark estimated about $120,000 in “HollanDollars” remained unredeemed. She told the board, “We have a rainy day fund—and it is pouring.”
The board decided to take responsibility for the “HollanDollars” community members still had, allowing merchants to accept the certificates and then receive a reimbursement check from the chamber.
Over the next three months, the chamber paid out $60,000.
On March 3, the board of directors for The Chamber of Commerce for Grand Haven, Spring Lake, and Ferrysburg adopted a similar plan, agreeing to back CertifiCheck-issued certificates through March 2010.
President Joy Gaasch estimated it could cost her chamber’s general fund $77,000, but she said, “The chamber board of directors recognized the importance of a ‘buy local’ program. We knew we would be developing a locally controlled, in-house program to replace the CertifiCheck program.
Failing to honor the CertifiCheck-issued certificates would have undermined our community’s trust in a new program, but more importantly, the board of directors felt it was the right thing to do.”
In July, the Grand Haven, Spring Lake, Ferrysburg chamber launched its new “Dune Dollars” program, and they now allow holders of the old certificates to swap them for the “Dune Dollars.”
On March 6, the Defense Commissary Agency announced it would absorb the cost for military personnel to redeem CertifiCheck gift certificates through July 31.
Inside Lokers Shoes on Eighth Street in Holland Michigan, Tom Lokers said he hasn’t had much feedback from customers because nothing really changed for them. They come in, spend their “HollanDollars,” and go home.
Other merchants echoed his sentiment. It’s almost a non-issue in downtown Holland.
“By doing that [the chamber] showed us that they’re a stand up organization,” Lokers said.
This article first appeared in Character First's business bulletin series 4. It is reprinted here with permission from Character First and Strata Leadership.