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The voice of Scotland’s vibrant voluntary sector

Published by Scottish Council for Voluntary Organisations

TFN is published by the Scottish Council for Voluntary Organisations, Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh, EH3 6BB. The Scottish Council for Voluntary Organisations (SCVO) is a Scottish Charitable Incorporated Organisation. Registration number SC003558.

What is social enterprise?

This opinion piece is almost 10 years old

Kirstie Penman on how the environment for social enterprises has changed and what opportunities exist for entrepreneurs today

What does social enterprise really mean? The concept has been around for years, since the late 1970s in fact but there is still some debate going on about the finer points, as unlike charities there is no legal definition of the term, and they are not officially regulated.

Perhaps the most commonly accepted definitions is along the lines of this statement issued by the Department of Trade and Industry Social Enterprise Unit in 2002: “Social enterprises are businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders or owners".

So, social enterprise is simply a way of doing business which focuses on tackling social problems, strengthening communities, improving people’s life chances or protecting the environment, as opposed to generating income for private individuals or bodies.

An example we often use at Firstport is The Big Issue. Driven by a mission to fight homelessness, it produces and sells a magazine, and uses the money it makes to deliver social benefit. Other good examples include Capital Credit Union, The Wise Group, Social Bite and Divine Chocolate.

Kirstie Penman, Firstport

At Firstport, on average, we help to establish two new social enterprises every week, and have supported 3,400 social entrepreneurs on their journey over the last five years alone

Kirstie Penman, Firstport

At Firstport, we work with individuals who are looking to establish their own social enterprises, and we have supported a wide variety of different projects over the years.

However, despite being driven by social purposes, social enterprises also make a substantial and growing contribution to Scotland’s economy. While exact figures are very difficult to work out, research in 2005 suggest that at that time there were at least 1,100 social enterprises in Scotland, employing around 30,000 people and adding £1.25 billion economy.

More recent local and national studies suggest that this figure has substantially increased and is continuing to grow. At Firstport, on average, we help to establish two new social enterprises every week, and have supported 3,400 social entrepreneurs on their journey over the last 5 years alone.

The growth of social enterprise can be attributed to a number of different factors, but one key point we’re hearing from our applicants is that an increasing number of people want to devote time, energy – and their career – to starting something good. They want to feel that they are making their living by contributing to society in a more direct way. The feeling of fulfilment that comes from seeing their hard work make real differences to lives and communities – as well as contributing to the wider economy – is mentioned time and time again as a motivating factor.

It’s clear to us that the added passion and determination social entrepreneurs bring to their businesses has an impact on success and staying power. We’re happy to say that over 82% of the incorporated social enterprises we have helped form over the last five years are still trading.

With the landscape of social investment now opening up in Scotland, the wider business community is taking notice of the increasing potential within the sector. We’re seeing new opportunities for financing social enterprise including LaunchMe, Scotland’s first accelerator for ambitious social enterprises. LaunchMe links up investors with social entrepreneurs and offers seed funding and intensive business support.

With these new developments looking likely to contribute to an already thriving sector, we are expecting to see social enterprises play an increasingly significant role in transforming our society, environment and the economy in the times to come.

To find out more about the work that Firstport does supporting social enterprises visit call 0131 200 05611 or email to [email protected]

Kirstie Penman is awards manager at social enterprise support body Firstport