Scotland’s third sector is a vibrant and diverse feature of Scotland’s economy. It employs 138,000. It has assets of £9 billion. Turnover is now grazing £5 billion.

Scotland’s third sector is a vibrant and diverse feature of Scotland’s economy. It employs 138,000. It has assets of £9 billion. Turnover is now grazing £5 billion.

But arguably greater than these raw statistics is the growing contribution it is making to health and social care provision when central and local government budgets are facing prolonged pressure. Looking at Scotland’s demographic trends, the social care component of the third sector is set to grow substantially. It already accounts for more than a third of the total and more than 40 per cent of third sector employment. If nothing else, these figures point to a depth and level of economic activity greater than currently reflected in official GDP statistics.

Third sector activity also embraces health and housing, culture and recreational activities, law and advocacy, charitable trusts and community development. Overall the sector’s income has grown by £300 million over the past year to £4.9 billion, double the level of ten years ago. But this growth is by no means evenly spread across all third sector activity. The bulk of the income growth is to be found in much larger charities and foundations. Housing associations, for example, enjoyed growth of eight per cent. And new charitable trusts accounted for two-thirds of the income growth.

The rest of the voluntary sector is faring more modestly, with revenue growth of just 0.8 per cent. And more than two out of every five in the smaller income bands are spending more than they get in. Third sector bodies that have reached significant size – annual income of more than £100,000 – are more likely to demonstrate growth. Size brings administrative and marketing capability – and broader public recognition and support.

Arguably most intriguing is the micro sector comprising one or two person operations exploring the market potential of an idea or service through social media before launching themselves as a properly constituted full-time business. Here it is an important incubator of companies bridging the public and private sectors.

But it is the indirect economic contribution through community and social care functions that are of increasing importance in an era of local authority spending retrenchment. The ability of third sector organisations to grow to a size to generate sufficient revenue to cover staff and administrative costs is critical to their credibility – and their contribution to Scotland’s economic growth in the years ahead.

Here the Scottish government’s Enterprise Ready Fund set up to help maintain and grow Scotland’s enterprising third sector can make a positive contribution. But its budget of £6 million over three years seems modest given the increase in the scope sand scale of activities that a £5 billion sector is now being relied upon to undertake.