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United Way Stimulating Local Economy

According to a recent Arizona Rural Policy Institute study, the economic impact of the United Way of Northern Arizona on Northern Arizona is approximately $4.5 million in total output and 50 full-time-equivalent jobs. The Institute, part of the award-winning W.A. Franke College of Business of Northern Arizona University, stated, “In addition to aid provided to regional non-profit agencies, the United Way’s operations stimulate economic activity and employment.”

“We’ve set up systems to monitor our strategies and assess what kind of influence we are having on the community as a whole. We’ve known that we make an impact every day on education and health, and now we can show that we are also a part of the economic fabric of Northern Arizona,” said Kerry Blume, president and CEO of Flagstaff-based United Way of Northern Arizona. Blume announced her June 2013 retirement last month.

“We were really pleased to see the results of the study,” said Blume in an exclusive FBN interview. “In three counties, our impact is almost 50 jobs and $4.5 million – that is really significant. It shows that non-profits have a meaningful role to play in the economic vitality of the area.”

The institute used IMPLAN, IMpact analysis for PLANning, developed by the University of Minnesota, to measure the ripple effect of United Way’s spending.

“The model is complex but the analysis is straightforward,” explained Wayne R. Fox, director of the Rural Policy Institute. “For the most part, many individuals think that once their money is spent, it just vaporizes. But the dollars get respent and create jobs and economic consequences. Further, there is a multiplier effect.” The IMPLAN system measures those effects and consequences and is accepted throughout United States and by the Office of Management and Budget (OMD).

IMPLAN measured two sources of United Way of Northern Arizona economic activity. The first source was the FY2011 United Way budget, including operating costs and United Way allocations to other human service agencies. The second source of economic activity was the increased household income resulting from the Volunteers in Tax Assistance Program (VITA), a free tax service offered by the United Way to lower-income households.

In 2011, more than $1.7 million was returned to local families and individuals through the program. Not only does United Way’s VITA program promote financial stability and independence for clients, but the study indicates that tax refunds were part of the positive ripple effect United Way had on the local economy. Since the majority of VITA clients planned to use refunds to support family, pay bills and even afford medical care, much of the $1.7M in tax returns stayed in the local economy.

Dollars from the two sources were entered into IMPLAN, which estimated $2,270,988 as Direct Effect Output. Direct spending caused increased demand and gave rise to an additional $316,395 of indirect spending by local businesses. Further, the study estimated that household income increased due to the direct and indirect spending. Consequently, households increased spending by $1,411,106. “All of these effects represent the economic activity resulting from the United Way’s actions in FY2011,” stated the study.

“The report is an understatement because there were a few things that we didn’t measure,” said Fox, who is also a member of the accounting faculty at the W.A. Franke College of Business. “We didn’t – or couldn’t – measure the economic benefit of having a physically and mentally healthy community. We also did not include the economic benefit of volunteer hours.”

Fox added, “We did not include the cost to local government if they had to provide the same level of services.” FBN

 

 

SIDE BAR INFO:

 

Highlights from The Economic Impact of the United Way of Northern Arizona on Coconino County:

 

  • UWNA, the funds it distributes to other human service agencies and VITA* client tax returns collectively generated $2.27 million in direct economic activity.

 

  • Direct spending yielded an indirect impact of $.32 million as local businesses that sold goods and services met the demand produced by the initial money spent.

 

  • Induced impact was $1.4 million as households increased spending as a result of increased household incomes.

 

  • Direct, indirect and induced effects likely generated $4 million and 44 jobs in Coconino County in 2011.

 

  • When factoring agency allocations made outside of Coconino County, the total budget would be approximately $4.5 million in total output and 50 full-time equivalent jobs.

 

  • As a result of total spending, state and local taxes totaled nearly $163,000 in FY 2011, and federal taxes were nearly $330,000.

 

*Volunteer Income Tax Assistance

 

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