Territories4resilience

The Impact Multiplier triples the effect of local spending

The Impact Multiplier (IM) is an innovative tool for governments and consumers that want to enhance spending locally. IM helps economic actors to increase the impact of their expenditures on the revenue of SMEs. Thanks to this new FinTech innovation, the money that is spent in the regional economy can circulate faster and more often in the community: allowing business to earn and spend more.
Thus, the Impact Multiplier provides a simple and cheap way to boost economic activities and support the recovery from an economic crisis.

Spending locally for 1 year: embracing inconvenience to grow

When a business earns money within the Impact Multiplier payment environment they can only spend that money with other companies in the local network. This restriction is for the duration of one year. The clock starts ticking once economic actors transfer money to the local digital account. Undeniably, local businesses paid on a regional account, would rather have Euros that they can spend everywhere- also outside the local network. That, however would limit the chance of other local businesses to also benefit from additional sales in the Impact Multiplier network. The money would leave the network before that can happen. Companies that embrace this inconvenience will eventually earn more and be able to sell their full capacity. This additional income is will become preferable above the costs of the limitation to spend in the region.

What is needed to implement the
Impact Multiplier:

  • a large number of local SMEs willing to spend and earn more;
  • a local/regional government (and consumers) that actively make the choice to buy local, because of the positive impact on the local SMEs;
  • a bank or financial institution that will offer a special type of current account in the region;
  • FinTech software that can increase local earning and spending.

Expected results:

  • more income for SMEs;
  • more jobs;
  • more local production for local consumption leading to more resilient regional economies;
  • a stronger businesses community that is better equipped to realize exports;
  • A more sustainable production
  • stronger social cohesion;
  • an increase of tax income;
  • a bottom-up contribution to the recovery of the world economy, with reduced debts to the financial sector.

Proof of concept

During the Great Depression a non-digital pilot in Austria delivered no less than 25% reduction of unemployment, better housing, improved public services and infrastructure.

A modern version in Sardinia offers the 4000 participating SMEs an average of €25.000 additional turnover yearly.

Self-sustainable

In order to ensure that money keeps on flowing within the SME network, earnings are taxed with a commission of 1/30% per day. The obligation to pay that commission can be avoided by spending the money allowing others companies to earn. The commission covers a premium of 7.5% to reward the transfer of money to a regional account. Once the investments in the start-up-costs are repaid this commission becomes available for the community, who can use it as it sees fit.