Measuring Economic Impact
Not only do charities and social enterprises have to produce financial accounts in a specific way or prove public and/or community benefit. Funders and those making loans to the third sector are asking organisations to measure how much their initiatives impact on the local economy.And as you can imagine, there is a tool to help you do it. The Local Multiplier 3 (lm3) tool enables you – whether you are a community organisation, business leader, or government official – to measure your economic impact. It also claims to help you work out where you need to make changes to improve that impact.
lm3 takes its name from the Keynesian multiplier, which has been used since the early 20th century to measure how income entering an economy then circulates within it. The New Economics Foundation (nef) has adapted it for use at the local level. Nef only measure three ‘rounds’ of spending: that’s how it came to be named local multiplier 3.
Across the UK and further afield, people have taken up lm3 to figure out how to make the most of the money that they do have so that their communities remain vibrant places to live.
Eden Community Outdoors, a social enterprise in Cumbria, commented: lm3 "has raised awareness of how communities can benefit when projects invest their income back into the local economy and how this way of thinking can be used to prepare the ground for small scale community enterprise".
For more information about how to measure the economic impact of your organisation, visit http://www.neweconomics.org/gen/tools_lm3.aspx?page=944&folder=160&
Click this link for information about the tools used to measure economic impact