LETS are a means of stimulating localised economies. They allow people access to a wide range of services and skills that they might otherwise not have been able to afford, and enable them to make meaningful contributions to their community. The schemes help build relationships between neighbours, provide access to a range of skills, knowledge and equipment, and can help build confidence and a sense of self-worth among participants. The schemes are normally set up by a group of people or organisation that administers the exchanges, typically using a website to do so.
Members sign up, sometimes paying a small administration fee, and list which products or services they are willing and able to provide, and are able to look at what other members are willing to provide. When a member performs a service, they are credited with community credits, which they are able to exchange for other services provided on the network. All transactions are logged on a centralised system, and there are normally restrictions on how far a member can go in credit or in debit. Most systems operate according to a principle by which all members time is valued equally. Members are not normally permitted to provide a service which they also provide professionally, as this way the exchanges are exempt from tax.
Typical services might include bike maintenance, gardening help or advice, childcare, book loan, power tool loan, use of a private garden or room, music or language lessons, business or financial advice, yoga sessions, or the use of large van. By facilitating the lending and borrowing of tools, equipment, space and accommodation, LETS reduce the need for its members to make purchases of things they rarely use and commoditise possessions that would not otherwise not have been. This creates value in society outside the functioning of the mainstream economy, and recognises that everyone, even those inactive in the mainstream economy, has something to contribute.