Describing the financial and economic impact of your sector

Sarah Longlands

Director of policy

Centre for Local Economic Strategies (CLES)

About CLES

Established - 1986

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 grantsRecent 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

10.3%

10.3%

6.9%

13.8%

6.9%13.8%

37.9%

less than £50,000

between £50,000 and £100,000

between £100,000 and £250,000

between £250,000 and £500,000

between £500,000 and £1million

between £1million and £2million

more than £2million

Stage 2 – survey

0%

10%

20%

30%

40%

50%

60%

Cheshire Merseyside Greater Manchester

Lancashire Cumbria

Prop

ortio

n of r

espo

nden

ts is

suin

g gr

ants

Sub-region

Stage 2 – survey

11.6

11.8

13.8

15.8

21.3

8.9

16.8 Cultural activities

Employment activities

Environmental activities

Health and education activities

Participatory and volunteering activities

Running of facilities

Sports activities

29.9

27.1

12.0

11.7

7.6

11.6

Children aged 5-16

Young people aged 16-24

Black and ethnic minorities

People with disabilities

Refugees/asylum seekers

Older People

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 multipliers1

Total spen

d2

Spend on suppliers in an area, other

com & vol organisations, local

businesses and mapping where they spend their

money3Amount spent on

employees/volunteers and mapping where they spend this

money

Multiplier effects

increase

Manchester results (supply chain analysis)

MCC spent £183,967,557.15 upon Manchester based suppliers (51.5%)

Spend upon suppliers by ward

£0.00

£5,000,000.00

£10,000,000.00

£15,000,000.00

£20,000,000.00

£25,000,000.00

£30,000,000.00

£35,000,000.00

£40,000,000.00

£45,000,000.00

£50,000,000.00

Ancoa

ts

Ardwick

Bagule

y

Bradf

ord

Brook

lands

Burna

ge

Cheet

ham

Chorlt

on P

ark

City C

entre

Crum

psall

Didsbu

ry W

est

Gorto

n Nor

th

Gorto

n Sou

th

Harpu

rhey

Higher

Blac

kley

Hulme

Leve

nshu

lme

Mile

s Plat

ting

and

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n Hea

th

Mos

s Side

North

ende

n

Shars

ton

Woo

dhou

se P

ark

Ward

Am

ou

nt

(£)

Manchester results by ward

MCC spent £183,967,557.15 upon Manchester based suppliers (51.5%) Procurement spend in 10% most deprived areas of England

£0.00

£5,000,000.00

£10,000,000.00

£15,000,000.00

£20,000,000.00

£25,000,000.00

£30,000,000.00

£35,000,000.00

£40,000,000.00

£45,000,000.00

Ancoa

ts an

d Clay

ton

Ardwick

Bagule

y

Bradf

ord

Brook

lands

Burna

ge

Cheet

ham

Chorlt

on P

ark

City C

entre

Crum

psall

Didsbu

ry W

est

Gorto

n Nor

th

Gorto

n Sou

th

Harpu

rhey

Higher

Blac

kley

Hulme

Leve

nshu

lme

Mile

s Plat

ting

and

Newto

n Hea

th

Mos

s Side

North

ende

n

Shars

ton

Woo

dhou

se P

ark

Ward

Sp

end

on

su

pp

liers

Key results from Manchester research (supplier re-spend)

All suppliers re-spent £89,345,553.76 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

Sarahlonglands@cles.org.uk

0161 236 7036

www.cles.org.uk

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?