Scotland’s independent think tank
Scotland’s independent think tank

The growing impact of social enterprises in Scotland – Duncan Thorp

Social enterprises have a long and rich history in Scotland. They’re very much a part of the fabric of our local communities, particularly in rural and remote areas. But it’s only quite recently that we’ve begun to see widespread public awareness and a real interest in what they’re achieving for people and for our economy.

Social enterprises use the power of business to profit society. They’re independent enterprises that are set up to deliver a specific social mission (and they invest 100% of any profits into that mission). It’s really what they do with their money that makes the difference. They’re not just an ethical private business and they’re not charities that rely only on grants and donations. Achieving their social or environmental purpose is what really counts. This is why they face many additional challenges compared to a standard SME (or indeed a big business) and therefore sometimes need additional business support.

Well-known examples include The Big Issue, The Wise Group, Social Bite, Divine Chocolate, the Homeless World Cup, Kibble Education and Care, Glasgow Housing Association, Capital Credit Union, the Eden Project and many others.

Social enterprises can come from anywhere, it’s not just about the “enterprising third sector” and charities. Entrepreneurs setting up a new business should consider a social enterprise model (maybe a Co-operative or a Community Interest Company or just a Limited Company with an asset lock). Those running family businesses might want to guarantee continued ethical values and local employment by selling to a social enterprise. Planning for succession might mean an employee buyout or local community ownership of a pub or shop by a Development Trust.

The new Social Enterprise in Scotland: Census 2015 research has revealed some intriguing and impressive results about the size and economic impact of Scotland’s social enterprise community. We can now see, for the very first time, that there are over 5,000 social enterprises across urban and rural Scotland, with 200 new social enterprises formed each year. The Highlands and Islands have 22% of all social enterprises, with Edinburgh and Glasgow accounting for 26%.

They provide over 112,400 jobs, with £1.15bn in combined traded income, net collective assets of £3.86bn and a Gross Value Added (GVA) figure of approx. £1.7bn. In addition 60% of social enterprises have a woman as their most senior employee and 68% of social enterprises pay at least the recognised, authentic Living Wage.

These are some impressive statistics and demonstrate a business community that compares well with other parts of the economy. In fact our social enterprises collectively employ around the same number as Scotland’s food and drink sector, more than the energy or creative industries sectors and well over half the numbers working in our financial sector. 45% of social enterprises are also operating with the stated intention of “creating employment opportunities” and 75% employ more than half their workforce locally.

In terms of the policy environment we’re in a pretty good position. The Scottish Government has invested in social enterprise development with tailored business support through Just Enterprise and the Enterprise Ready Fund plus other funding streams. Support for social enterprise cuts right across political party boundaries. With a tough business and competitive edge, a charitable heart, local community roots and a clear remit to improve lives, there’s something that everyone can support.

In addition local authorities have some specialist advisors within their Business Gateway services and some social enterprises are supported through Highlands & Islands Enterprise (that has a specific remit) and Scottish Enterprise, including Co-operative Development Scotland. Social investment is available through organisations like Social Investment Scotland too.

While we face similar challenges to SMEs in terms of accessing public sector procurement, things have improved with Ready for Business and other developments like Public-Social Partnerships (PSPs). Public service redesign and reform need social enterprise solutions. We also need to roll out more partnership working with ethical and local SMEs who share our values and boost inter-trading within the social enterprise community. The social enterprise narrative must become the norm, in place of moves towards big, remote outsourcing companies that don’t understand or care about local communities and have a single priority of shareholders and the bottom line.

The old business, charity and public sector models are becoming outmoded as effective ways to deliver goods and services to people. Independent social enterprises combine the best of these and ensure that inclusive, local, sustainable, efficient and ethical are the top priorities. As social enterprise becomes more mainstream we’re working towards a Scotland where it becomes the standard way to do business.

Duncan Thorp is the Parliamentary, Policy and Communications Officer at Social Enterprise Scotland