Describing the financial and economic impact of your sector Sarah Longlands Director of policy Centre for Local Economic Strategies (CLES)

About CLES Established Focus – influencing economic development and regeneration policy and practice Membership – local authorities, private, social enterprise Independent research to understand challenges and influence policy Publications – informing policy and effective practice Training and events CLES Consultancy - link to projects and financial independence

Resilience

Economic Impact of the community and voluntary sector Economic impact of expenditure in community and voluntary organisations Start up capital Stimulating innovation Supporting partnership Economic viability of orgs Local employment/ Volunteering Supporting local communities and development of resilience places (skills, social capital etc) Reducing demand for public services Multiplier effects in local economy

Economic benefits of grants Recent CLES/VSNW Research To seek to demonstrate the continued viability and value of grant making in the region To think again about the move towards contracting as a panacea for development To explore voluntary and community sector policy and the role of grant making in that policy To demonstrate the scale of grant making in the region and the distribution of that grant funding To explore the local social and economic impact of grant making

What is a grant? ‘A grant-maker is not contracting for a service that forms part of its own business. It is offering financial support in an area of work designed by the third sector, which is wishes to sponsor. The work would add value to the funder’s overall aims and objectives. The organisation retains considerable freedom in the way in which it carries out the work.

Key element of research - survey Survey sought to: Derive the scale of grant-making in the North West region Derive the spread of grant-making by theme and spread Explore grant-makers thoughts on grant-contract shift Develop list of example grant recipients to explore in case studies Survey sent to: Community Foundations Local Authorities CVS’s Other grant-makers

Stage 2 – survey Overarching results Response rate of 37% Accounted for 126million of grant-making With all local authorities a projection of £139million of grant-making in the North West 44% of grant issued in Greater Manchester Strong reliance in Cheshire and Lancashire upon one grant-maker 21.3% of grant issued for volunteering activities 29.9% of grant issued for children (5-16) focused activities Variety of methods of presenting the results

Stage 2 – survey

Economic impact of your work– “multiplier effect” Multipliers – the “hydrology” of local spend. How money flows from one part of the economy to another Put another way “economic” footprint of your organisation Increasing interest in multipliers in order to capture more local spend in communities Can use local multiplier methodology to capture impacts of your spend and to further demonstrate economic benefits First developed by NEF, used by CLES to explore value of public spend

LM3 – What does it involve? The LM3 methodology Round 1 – total spend of your organisation Round 2 – spend upon (local) your suppliers Round 2 – spend upon (local) your direct employees Round 3 – re-spend of local suppliers upon their own local suppliers and their own local employees Round 3 – re-spend of direct employees upon goods and services in the local economy LM3 = Round 1 + Round 2 + Round 3 Round 1

Using LM3 methodology to illustrate multipliers 1 Total spend 2 Spend on suppliers in an area, other com & vol organisations, local businesses and mapping where they spend their money 3 Amount spent on employees/volunteers and mapping where they spend this money Multiplier effects increase

Manchester results (supply chain analysis) MCC spent £183,967, upon Manchester based suppliers (51.5%)

Manchester results by ward MCC spent £183,967, upon Manchester based suppliers (51.5%)

Key results from Manchester research (supplier re-spend) All suppliers re-spent £89,345, in the Manchester economy This equates to 25p in every £1 received Manchester based suppliers re-spent 23p in every £1 received Greater Manchester based suppliers re-spent 45p in every £1 received National based suppliers re-spent 12p in every £1 received The catalytic impact of spend for the Manchester economy is £687,030,798 Manchester procurement contributes towards the support of 5225 jobs in the Manchester economy

Using this methodology in your organization Once you understand the multiplier effect of your spend – powerful tool to demonstrate economic/social benefits to public (and private) sectors Also means you can influence multiplier through procurement and spending policies, perhaps also to reinforce organisational ethos, e.g. ethical trading Economic impacts may be particularly important in areas where commercial sector is weaker/lack of private sector investment Can be time consuming, but even tacit understanding and demonstration of economic impacts is important

Conclusions Think about the economic impact of your work and how your money is spent Consider how you might present the economic benefits of your organisation and your activity Powerful argument in the current climate of cuts Reinforces the argument for “big society”, community and voluntary organisations can be big local spenders Tension between efficiency of spend and effectiveness of spend

More information

Task/discussion In general terms what are the economic impacts of your organisation? How might you start to quantify the economic impacts of your organisation What would the value of understanding this impact be for your work? Are there any concerns that you might have about collecting this information?