The terms “economic impact” and “economic contribution” are often used interchangeably. However, the results they provide differ significantly. Impact analyses predict economic shifts based on change in an industry. Contribution analyses model the effects supported by an existing business or industry in a defined area. Industry contribution analyses are particularly important to groups like trade organizations or businesses that would like to determine their overall economic contribution at their current production rate.
Contribution analysis is a modeling method used to estimate the value of a sector or group of sectors in a region at their current levels of production. Naturally, it is a valuable and useful tool for groups like industry associations and government entities that are evaluating the value of an industry to their community.
Regulatory standards, depending on your reading of the latest IRS Tranches and guidance, have either changed or come into clearer focus when it comes to what the CDFI Fund identifies as a "successful" Opportunity Zone (OZ) project. Regardless of your reading of IRS's latest missives, there are a few tactics worth highlighting that will ensure that the economic impact analyses describing the significance of your projects and the potential economic significance of your program (or portfolios) will stand ready for review when the time comes to evaluate their contribution to the economic well-being of your service area.
There’s never an easy path to affecting policy change whether we’re talking on the national, state, or local level. But among the tools available to give clarity to the conversation, economic contribution and economic impact analyses rank among the most widely used.