Describing the financial and economic impact of your sector Sarah Longlands Director of policy

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

2. 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

3. Resilience

4. 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

5. 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

6. 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.

7. 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

8. 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

9. Stage 2 – survey

10. Stage 2 – survey

11. Stage 2 – survey

14. 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

15. 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

16. Using LM3 methodology to illustrate multipliers 1 Total spend Multiplier effects increase 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

18. Manchester results (supply chain analysis) MCC spent £183,967,557.15 upon Manchester based suppliers (51.5%)

19. Manchester results by ward MCC spent £183,967,557.15 upon Manchester based suppliers (51.5%)

20. 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

21. 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

22. 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

23. Moreinformation Sarahlonglands@cles.org.uk 0161 236 7036 www.cles.org.uk

24. 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?