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Measuring Economic Impact: A Vital Tool for Small Organizations, Nonprofits, and Advocacy Efforts


In a world driven by data and results, understanding and measuring economic impact has become essential for organisations of all sizes. Small businesses, nonprofits, and advocacy groups, in particular, stand to gain tremendously from harnessing the power of economic impact analysis. In this article, we'll explore the reasons why comprehending and quantifying economic impact is crucial for these entities, shedding light on the valuable insights it can provide.

If you need an economic impact evaluation for a project or for your organisation, reach out to us through our contact form here. We'll be excited to chat through your needs in a free consultation.

What is Economic Impact?

Economic impact can be broadly understood as the total value of transactions caused as a result of a specific project. This includes the purchases, salaries, and amount of funds invested into a community.


Direct Economic Impact is calculated based on the direct transactions that take place between the entity being measured and the community surrounding it. For example, if you’re measuring the Direct Economic Impact of a restaurant, then you’ll be looking exclusively at the transactions between the restaurant and its suppliers and customers.

Indirect Economic Impact can be defined as the total of the transactions between an entity’s suppliers and the business partnerships of those suppliers. For example, if a restaurant orders ketchup from a supplier, the purchase of the ready-made ketchup by the restaurant would be considered a Direct Economic Impact. The purchase of tomatoes by the ketchup company would be considered an Indirect Economic Impact.

Induced Economic Impact can be defined as the transactions that take place when the employees of an entity, or the entity's business partners, spend their salaries. For example, if a restaurant employs 100 people, induced economic impact is created when those 100 people spend money in the community surrounding the restaurant.

How to Measure Economic Impact

Measuring economic impact involves a systematic approach to gathering and analyzing data. While the specific methods may vary, the general steps include:

1. Identify Goals and Objectives: Clearly define what you want to measure and why. Determine the scope of your analysis, including the geographic area and time frame. Specify if you want to look at direct, indirect, or induced economic impact.

2. Data Collection: Gather relevant data, including financial records, employment figures, and spending patterns. Surveys and interviews with stakeholders can provide qualitative insights that might not be readily available from secondary sources.

3. Choose the Right Metrics: Select appropriate economic indicators, such as Gross Domestic Product (GDP) contribution, job creation, or tax revenue generated.

Methods for data collection and measuring economic impact

1. Input-Output Analysis: Use input-output models to understand the interdependencies between your organization and the broader economy. These models can reveal indirect and induced economic effects.

2. Economic Multipliers: Calculate economic multipliers to estimate the ripple effects of your activities on various sectors of the economy.

3. Benchmarking: Compare your organization’s impact to relevant benchmarks, such as industry averages or regional economic data.

Why do an economic impact measurement at your organization?

Now, let's delve into the reasons why comprehending and quantifying economic impact is crucial for small organizations, nonprofits, and advocacy efforts.

Small Organizations: Navigating Growth and Sustainability

Small businesses and startups are the backbone of economies worldwide. Understanding the economic impact of their activities is paramount for several reasons:

Resource Allocation: Small organizations often have limited resources. Measuring economic impact helps them identify which aspects of their operations are most financially productive. This insight aids in optimizing resource allocation for sustainable growth.

Access to Financing: Lenders and investors typically require a clear picture of a business's economic viability before providing funding. Economic impact assessments can bolster funding applications and attract investors by demonstrating the potential for growth and job creation.

Community Engagement: Small businesses are closely intertwined with local communities. Recognizing their economic contributions helps foster community support, strengthening relationships and customer loyalty.

Nonprofits: Demonstrating Value and Attracting Support

Nonprofit organizations operate with a mission to make a positive impact, often in social, environmental, or humanitarian realms. Understanding and measuring economic impact is essential for nonprofits. Here are some key themes that an economic impact measurement can support for nonprofits

Accountability and Transparency: Donors and supporters want to see tangible results for their contributions. Economic impact studies provide clear evidence of an organization's effectiveness, enhancing transparency and trust.

Fundraising Success: Grant applications and fundraising efforts benefit from economic impact data. Nonprofits can illustrate how their programs not only address important issues but also have economic benefits, such as reducing healthcare costs or increasing educational attainment.

Strategic Decision-Making: Economic impact analysis helps nonprofits identify where their efforts are most effective. This knowledge guides strategic planning and ensures that resources are used efficiently to maximize positive outcomes.

Advocacy Efforts: Influencing Policy and Change

Advocacy groups dedicated to various causes rely on data to drive change and shape policies. Understanding economic impact can be a powerful tool for advocacy:

Influencing Decision-Makers: When advocating for a specific cause, demonstrating its economic impact can sway policymakers and stakeholders. It showcases that the cause not only has societal benefits but also financial advantages.

Building Coalitions: Economic impact analysis can bring together diverse stakeholders, including businesses, government entities, and nonprofits, by highlighting common interests and mutual benefits.

Creating Long-Term Change: Advocacy efforts often seek systemic change. Economic impact studies can provide a long-term perspective, showing the cumulative benefits of policy changes over time.


Reach out to us if you'd like to chat about an economic impact evaluation for your organisation. Reach out to us through the web form on our site, or directly by phone (+1 - (902) -748 -0465) or email (

Understanding and measuring economic impact is not exclusive to large corporations and government agencies. Small organizations, nonprofits, and advocacy groups can equally benefit from harnessing the power of economic analysis. It helps them make informed decisions, attract support, and advocate for change more effectively. In an increasingly data-driven world, embracing economic impact assessment is a strategic move that can drive growth, sustainability, and positive societal change for these entities. By adopting appropriate measurement methods, organizations can unlock valuable insights and enhance their impact on both the economy and society.

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