Social enterprises worth £2bn more than whole third sector

Social enterprise-flickr-web

Social enterprises in Scotland are worth £6.9 billion to the Scottish economy.

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3rd April 2014 by Susan Smith 1 Comment

Social enterprises in Scotland are more lucrative than the whole third sector, according to a major new piece of research.

Third sector support bodies have questioned the findings of the first Scottish social enterprise mapping survey, which has been released by the Big Lottery Fund Scotland. 

The research, carried out on behalf of the funder by Ekos, found 3,547 social businesses operating in Scotland.

It examined a range of different organisations including developmenttrusts, community interest companies, social enterprise networks, trading charities, housing associations and credit unions and cooperatives.

It also, however, included universities and quangos, which are not usually classed as either social enterprises or third sector bodies. 

The Scottish Council for Voluntary Organisations (SCVO), which itself released research revealing the third sector as a whole to be worth just £5bn earlier in the year, said this skewed the findings.

The results demonstrate a thriving social enterprise community, with room for growth - Fraser Kelly

“Including Glasgow and Edinburgh Universities alone increases the sector’s apparent turnover by £1.1bn, which is around 20%, and makes you question, the credibility of the report,” said John Downie, public affairs director at SCVO.

“However, the mapping does shed new light on some parts of the social enterprise picture and also raises points which need closer examination but the overall figure cannot be taken seriously and will not help inform future policy for the sector.”

The research found a sector that is employing 120,900 people and that expects to increase trading income by 40% over the next three years.

It said nearly three in five organisations generate more than half of their income from trading. 

The environment and recycling sector is expected to see the most growth in the near future. Other areas that are thriving include the arts and culture sector.

Fraser Kelly, chief executive of Social Enterprise Scotland, also welcomed the research but said his organisation believe the sector is much larger.

“The results demonstrate a thriving social enterprise community, with much room for growth,” he said.

“We view the research as a first step, as we believe that the number of social enterprises in Scotland is higher. The difficulty is always in identifying hidden organisations that are indeed social enterprises but are not engaged with support networks or don’t self-identify as a social enterprise.”

According to the research, Glasgow has the most social enterprises, with a total of 539, followed by Edinburgh, which boasts 417.

Exactly a quarter of all social enterprises, however, are based in the Highlands and Islands of Scotland. 

Big Lottery Fund Scotland director Jackie Killeen said: “Reading the report I was encouraged to see that those organisations surveyed were typically optimistic about their future, anticipating increases in demand, turnover and staffing.

“This report is only the beginning for us and we look forward to building on the findings to inform our future contribution to the social enterprise sector in Scotland.”

Case in point: Forth Sector
Forth Sector runs five social businesses: the Scottish Soapworks, St Jude’s Laundry, EES Logos, Forth Sector Development and the recently acquired Thompsons’ schoolwear and sports kit business.
With an income of £2.2 million, Forth Sector employs 90 staff, many of whom have experienced mental health problems, and makes £1.6m from trading.
Its chief executive Mike Finlayson said the main challenge is developing services against the background of declining public expenditure. “The third sector holds the social fabric of Scotland together at a time when the public sector is increasingly less able to do so,” said Finlayson. “At Forth Sector we believe that many organisations will have little choice but to engage in enterprise as funding cuts bite (we have seen less than half the cuts due).
“For this reason, social enterprise will have a central role in maintaining and developing Scotland’s third sector. We are, therefore, optimistic that social enterprise activity will become a critical element of the wider sector’s development.”

4th April 2014 by Dan Sumners

Did these reports take into account the impact of organisations? For example, the additional tax revenue and reduced benefits bill from keeping people in work?Also, dividing 'social enterprises' and other organisations is arbitrary. A charity shop is a 'social enterprise'. Nobody has ever decided on the definition of the latter.