Local money flows

New Economics Foundation LM3

This is a methodology to measure money flows within a community, be it a business community or social community, and the multiplier effect of keeping the money circulating within the economy for longer. It provides a system to evaluate the benefits of promoting initiatives such as:

• Purchasing of local products and localising supply chains
• Developing local investment opportunities
• Encouraging the use of local labour

LM3 is an analysis of money that comes into an organisation or community and maps its route at 3 levels:

To its own employees
To primary suppliers and their employees
To suppliers to the primary suppliers

The New Economics Foundation calculates that in a typical community economy the LM3 is usually (1). This means that every pound spent in a local business is likely to result in the re-spending of the money just once before it leaves the local area. By developing the local economy so that businesses support each other by using their services, for example, pubs and cafes selling food using local produce, keeps money within the local economy for longer.

See http://www.pluggingtheleaks.org/ for more information.