NRPA Measuring Impact of Park & Rec

Measuring the Economic Impact of Park and Recreation Services www.NRPA.org National Recreation and Park Association © 2010 All Rights Reserved 38 The multiplier process is diagrammed in Exhibit 4-1 . To illustrate the process, the exhibit assumes that visitors spend their money at four different types of establishments in a community. Their initial injection of money constitutes the direct economic impact on the community. Exhibit 4-1 shows six different ways in which each of the establishments receiving the initial funds could disburse the money it receives. They are: 1. To other private sector businesses in the same jurisdiction (local interindustry purchases) to restock inventories to provide for future sales; to maintain buildings, fittings, and equipment; to pay insurance premiums; and for a myriad of other purposes. 2. To employees or shareholders who reside within the community in the form of salaries and wages or dividends, which constitutes personal income to them (direct household income). 3. To local governments as sales taxes, property taxes, and license fees (local government revenue). 4. To private sector businesses located outside the local jurisdiction (non-local interindustry purchases). 5. To employees or stakeholders who reside outside the community in the form of salaries and wages or dividends which constitute personal income to them (non-local household income). 6. To non-local (e.g., state and federal) governments as sales taxes or taxes on profits. The latter three categories of spending illustrate that the host city is part of a larger economy. As a result, some money leaks out of the community’s economic system to pay taxes to, or buy goods and services from, entities outside the community. Only those dollars remaining within the host community after leakage has taken place constitute an economic gain to the community. The amount of the initial expen- ditures that remains in the jurisdiction from local interindustry purchases, direct household income, and local government revenue is subsequently spent in one of the six ways previously listed and thereby sets in motion a further chain of economic activity. Exhibit 4-1 The Multiplier Effect of Visitor Spending at a Park and Recreation Event