Counting the Ripples: The Value-added Economic Impact of Habitat for Humanity

How many ripples does a stone tossed in a pond create? The Nicholas Center was asked to answer a similar question: what economic impact does the Dane County chapter of Habitat for Humanity have on the wider community? A team from the Nicholas Center dove into this topic with verve as they sought to calculate the value added to the greater Madison area by Habitat’s activities.

In the process of valuation, the team used two main approaches. The first was IMPLAN, a proprietary multiples approach that enabled them to determine what impact a dollar spent in one specific industry has on the other industries in this area. For instance, if Habitat spends $2,000 on lumber for a particular building project, the team can employ IMPLAN to see what direct and indirect impact this spending has on the wider industrial context. The second approach was to determine the incremental benefit of the chapter’s neighborhood developments on the overall community and on the property tax base. In contrast to other Habitat chapters, Dane County’s chapter develops whole neighborhoods as opposed to refurbishing dilapidated houses or just building new houses. As part of this valuation approach, the team appraised the donated labor of the volunteers who helped construct these neighborhoods and houses.

The Nicholas Center team did encounter challenges in their process. The most significant one was the lack of comparable examples. Because Dane County Habitat’s method of developing whole neighborhoods is so unique, the team was breaking trail in its valuation. Undeterred, the team valued the economic impact based on the evidence available.

Documenting their work in a thorough report that combined the two valuation approaches into one coherent result, the team shared its finding with Habitat for Humanity, with the anticipated outcome that Habitat will circulate the findings with its key stakeholders and other interested parties. The team itself grew in its knowledge of valuation methodology and was gratified to be able to help this noteworthy nonprofit.