Ecocentricity Blog - Front Six: Sensitizing Stakeholders

The multiplier effect. Sounds like a movie title, doesn’t it? You know, probably some flick that involves time travel and then tries (and fails) to resolve the inherent paradoxes involved, but because just enough things blow up in spectacular fashion, you walk out of the theater saying, “I kinda enjoyed that, even if my brain hurts.” You know what I’m talking about.

The multiplier effect is a concept from economics. It refers to the phenomenon whereby an injection of income into a community results in more economic benefit to that community than the original amount. Here’s an example.

Let’s say Bill Gates decides to write a $10 million check to a nonprofit in Smalltown, USA to build a new community center. Thanks Bill! Well, the community gets a shiny new building worth $10 million. In addition, those funds are now in other people’s pockets (like wages to construction workers), ready to be spent or saved. Perhaps some of the dollars are spent locally at shops and restaurants, further benefiting the community’s economy. And on and on and on. When you add it all up, the $10 million gift generates far more than $10 million of economic benefit for the community.

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