SOCIAL IMPACT TOOL 

The tool is easy to use, but the terminology could be unfamiliar Under the tool, we have provided a glossary of terms and a few practical examples of the results. If you have any questions about this tool, please get in touch with us. This calculator is for educational purposes only. Please read the disclaimer before using the outputs from the calculator

Here are a few key tips for using the tool:

Step 1. Click on the region of the map where you are based.

Step 2. Select your industry sector

Step 3. Select your industry

Step 4. Select a sub-industry (if available)

Step 5. This tool can be used in two main ways. The first is to determine your organisation's annual impact. The second is to understand the potential impact an investment would have.

Scenario 1.

Total impact. Enter your TOTAL ANNUAL REVENUE. You must use revenue and not profit. For example, if a web development company sent $400,000 in invoices last year, then that is the number that should be entered.

Scenario 2.

Enter the amount you are planning to invest. For example, a school is building a new classroom costing $800,000. Or your business is developing a new education programme that will cost $20,000 to set up and $30,00 to operate annually for a total of $50,000. The school would enter $800,000, and the business would enter $50,000.

The results show your annual impact.

Scroll down for detailed instructions. The calculator ‘instructions’ button only reloads this page.

The calculator is not optimised for mobile - it should be viewed on a larger screen

 
 

 WHY USE THIS?

There are several reasons you may want to use this tool, but we have found the main uses to be:

  • Demonstrating a positive social or economic contribution when applying for funding.

  • Showing impact investors the positive social and economic contributions their investments will support.

  • Raising crowdfunding.

  • Communicating your social impact in reports.

  • Identifying opportunities to create even more social impact.

  • Identifying investments that have the largest community benefits.

Brief Glossary of Terms

  • Value Added - the total value of income to businesses (EBITDA in accounting terms) and to household (wages, salaries and self-employed income). This can be interpreted as contribution to (local) GDP

  • Employment - the total change in employment resulting from a change in economic output in an operation. Measured as FTE per $1m output

  • Total Employment (FTE) Created in [Region] - This value is known as a Type II multiplier. Type II multipliers not only account for the direct and indirect effects associated with changes in production, but they also account for the induced impacts associated with increases in earnings. It is calculated as (Direct + Indirect + Induced) / Direct.

  • Total Value Added to [Region] - This value is also calculated using a Type II multiplier, with the formula (Direct + Indirect + Induced) / Direct.

  • Direct effects are those occurring to the firm that creates additional goods or services.

  • Indirect effects occur to industries in the backward linked industries that supply the firm.

  • Induced effects result from households spending some of the additional income they receive in the local area.

  • Economic output includes the total cost of all goods and services produced by an organisation. It includes both the cost of operating the organisation and the gross income generated.

A more detailed explanation of what is going on here

The calculator is based on a ‘multipliers analysis’. A multiplier summarises the total impact that can be expected from the change in a given economic activity. For example, a new manufacturing facility or an increase in exports by a local firm are economic changes which can spur ripple effects or spinoff activities. Multipliers measure the economic impact of these new exports, including the resulting spinoff activities. The data are drawn from Statistics New Zealand’s National Accounts and are derived from Input-Output (IO) tables.

A multiplier is a measure of how dollars interjected into a community are represented, thereby leading to additional economic activity. Or, for one dollar of economic activity, the output multiplier measures the combined effect of a $1 change in its sales on the output of all local industries. In this regard, we need to think of the community as a closed economic system, with dollars and resources flowing between entities in the community and between those same entities and the outside world.

To understand how multipliers are calculated, knowing the meaning of direct, indirect, and induced effects is essential.

  • Direct effects are those occurring to the firm that creates additional goods or services.

  • Indirect effects occur to industries in the backward linked industries that supply the firm.

  • Induced effects result from households spending some of the additional income they receive in the local area.

Working Examples

Let’s take a Horticulture and fruit growing business in the Auckland Region as an example to show how the value-added and employment calculations work.

Value-Added Multipliers

The value-added multiplier provides an estimate of the additional value added to the product or service as a result of this economic activity. Value-added includes employee compensation, tax on production and imports, proprietary, and other property income. Summing the value-added of all businesses in a state is equivalent to the Gross Domestic Product. This is very similar to output multipliers; however, it takes costs into account and therefore is lower.

  • Direct (0.43) - $1 invested in horticulture raises value added by $0.43 for horticulture.

  • Indirect (0.27) - $1 invested in horticulture raises value-added in supporting industries by $0.27.

  • Induced (0.17) - $1 invested in horticulture raises value-added in household spending by $0.17.

Employment multipliers

Communities often wish to know the number of jobs that will be created because of a new economic activity. The employment multiplier measures the total change in employment resulting from a change in economic output in an industry. These are a little different to the other two as they measure the increase in employment rather than money. They also work per $million of economic output and are expressed as Full-Time Equivalent (FTE) jobs, 1 FTE being a full-time job.

  • Direct (7.62) - $1m invested in horticulture raises employment in horticulture by 7.62 FTE.

  • Indirect (2.79) - $1m invested in horticulture raises employment in supporting industries by 2.79 FTE.

  • Induced (1.45) - $1m invested in horticulture raises flow-on employment in the Auckland region by 1.45.

Putting it together

In this example, we will use the calculator to discover the impact of a lemon grower in the Auckland region. The following information is entered into the calculator.

Step 1 - Select a Region from the map: Auckland

Step 2 - Select a Sector: Primary Industry

Step 3 - Select an Industry: Horticulture and fruit growing

Step 4 - Select a Sub-Industry: Citrus fruit growing

Step 5 - Enter an Investment Amount or Economic Output: $400,000

The total employment impact of this investment will be the creation of 0.62 FTE and $803,812 added to the Auckland economy. These ‘Total’ impacts are calculated using a Type II multiplier as described in the glossary.

The detailed Breakdown of these numbers looks like this:

Disclaimer

This calculator is based on data from Statistics New Zealand's National Accounts. It is intended to be a rough guide and should be used for education purposes only. The accuracy or reliability of the data is not guaranteed or warranted in any way and the providers disclaim liability of any kind whatsoever, including, without limitation, liability for quality, performance, merchantability and fitness for a particular purpose arising out of the use, or inability to use the data.