Social enterprise - Driving a Wellbeing Economy for Scotland: action plan 2024-2026

Priority 2: Developing Stronger Organisations

Developing stronger social enterprises in Scotland continues to be vital if we are to deliver our ambitions for a Fair, Green and Growing economy. Since the launch of the Social Enterprise Strategy in 2016 the social enterprise sector has witnessed steady growth, driven by social missions and innovation, creating sustainable solutions for societal problems and contributing significantly to the economy’s inclusivity and sustainability.

However, for all business models, the pandemic and subsequent cost of living crisis resulted in unforeseen challenges and highlighted vulnerabilities. While some social enterprises found themselves at a crossroads, struggling to sustain their operations and impact, others used the social enterprise model as a strength, pivoting quickly to provide services and support where it was most needed in the communities that they serve.

The National Strategy for Economic Transformation^[16] (NSET) was devised as a strategic response to the global pandemic and to support Scottish Government ambitions to deliver a Just Transition to Net Zero, tackle structural inequalities and grow our economy.

Over the next decade, NSET aims to deliver a Scottish economy that significantly outperforms the previous ten years, both in terms of economic performance and tackling structural economic inequalities.

NSET gives the social economy a platform to showcase its impact and role in driving an economy that is fair, green and growing, viewing developing stronger social enterprises as crucial for Scotland to realise these broader economic and social goals. Action 44 of the NSET report stated that need to undertake and publish a review of how best to significantly increase the number of social enterprises, employee-owned businesses and co- operatives in Scotland, supporting regional regeneration and the wealth of local communities. The conclusions of the review were published in September 2024^[17]. Scottish Government will publish a formal response to the report; however, it is clear that by fostering a conducive environment for these organisations to flourish, Scotland is investing in a future where economic, social and environmental wellbeing are intertwined.

Our collective vision is to strengthen organisations to be resilient, innovative and diverse with a vibrant workforce who are invested in doing business differently. The actions in this plan will help to cultivate a resilient social enterprise sector building on the existing culture of collaboration, knowledge sharing and mutual support. We will achieve this by:

Promoting and showcasing ‘best practice’ across the social economy both within Scotland and globally.

We know that coming together as a community in one space offers networking opportunities and the chance to foster a culture of knowledge sharing and collective growth. Social Enterprise Scotland will build on the success of last year’s annual conference and national awards ceremony by highlighting and celebrating more of the fantastic and inspiring work that happens across Scotland’s diverse communities and sharing areas of best practice. This includes the launch of a new award recognising Inclusive Democratic Business Models (IDMS), aligned with the recommendations in the ‘Developing Scotland’s Economy: Increasing The Role Of Inclusive And Democratic Business Models’ report.

We will also look to build on the success of the Social Enterprise World Forum’s (SEWF) community hubs for future Social Enterprise World Forum events, providing targeted bursaries for young social entrepreneurs to attend the 2025 Social Enterprise World Forum. This demonstrates our commitment to the next generation of social entrepreneurs and to the importance of global networking and idea sharing.

We will continue support for the International Social Enterprise Observatory (ISEO) ensuring that Scotland continues to look outwards for ideas and policy innovation. We will look to use Scotland’s reputation as a leading social enterprise ecosystem by showcasing what Scotland has to offer, supporting inward investment from global philanthropic funds and the relocation of established international social businesses.

Advocate for supportive policies and raise awareness of social enterprises across public sector organisations.

Scottish Government’s social enterprise policy team will work with social enterprise delivery partners to offer training and support to all relevant public sector departments to ensure that an understanding of social enterprise is properly embedded across public sector policy priorities. Scottish Government officials will also continue to work within the public sector to strengthen co- ordinated support responses from Scottish Government and our Enterprise Agencies.

Social Enterprise Scotland will create and oversee the formation of a Policy Advisory Group (PAG), drawing members from across the social enterprise ecosystem. The PAG will form a platform for the social enterprise sector to identify, prioritise, and advocate meaningfully with policy development and ensure that the views of the whole sector are represented appropriately. The PAG will co-ordinate with intermediary organisations representing other inclusive business models to ensure, where appropriate, a joined-up approach to social economy advocacy.

Social Enterprise Scotland currently provide secretariat support for the Social Enterprise Cross Party Group. Across the next two years we will support Social Enterprise Scotland to explore opportunities to closer align the work of the group with other cross party groups who are also supporting the growth of the social economy. This offers the opportunity for more powerful political advocacy and to ensure a better policy understanding at both national and local levels.

Conduct a review of funding and social investment mechanisms to ensure alignment with sector needs.

Working with partners across the social enterprise ecosystem we will support a review of current funding and social investment mechanisms, with a specific focus on the barriers experienced by entrepreneurs with protected characteristics. The review will build upon Dechomai’s recently published ‘Barriers to Access Report 2024: Investigating Access to Finance for Ethnic Minority Social Entrepreneurs in Scotland’^[18] as well as taking evidence from other reports which demonstrate the barriers faced by underrepresented communities.

The review will help to inform where gaps in access to funding or investment may exist and identify specific barriers to receiving funding or investment that might be present. Scottish Government will consider the findings and look at the best ways of supporting the strategies to address gaps or remove barriers to access that may come out of the review. This includes the consideration of establishing a Social Investment Forum, bringing together key stakeholders, such as funders through the Scotland’s Funders Forum, investment providers, government representatives and social businesses. This platform could serve as a collaborative space to discuss, develop, and refine funding strategies that effectively address the evolving needs of social businesses and wider third sector.

Reinvest financial returns from the Scottish Social Growth Fund back into the social enterprise ecosystem to support organisations in crisis.

Some organisations are finding themselves in crisis, not because there are issues with their business model, but due to unexpected short-term cash flow issues. To support these organisations delivery partners are working to pilot a new fund which will offer short-term loans at 0% interest to support social enterprises with a cash injection. The repaid loans will then be recycled back into the fund to support new enterprises.

Any third sector organisation which may foresee significant difficulties in the next 12 months should complete an emergency support request^[19] urgently to see what support can be provided.

Reinvest financial returns from the Scottish Social Growth Fund to support increased diversity and inclusion within the social enterprise ecosystem.

Entrepreneurs from all backgrounds should have an equal opportunity to start and grow their business in Scotland. Funding reinvested from the Social Growth Fund will support recommendations made by the Social Enterprise Action Plan Equality Diversity and Inclusion subgroup to ensure that the sector is open and welcoming to all. The work of the subgroup over the last three years has identified that even though the sector is working hard to support equality, diversity and inclusion, more targeted support is required to ensure everyone in Scotland has the same opportunities to access support services.

The programme funded will help social enterprises to embed the principles of equality, diversity and inclusion in their operations. The support available will include providing equality, diversity and inclusion guidance to social enterprises, easy access to online resources to support the development of internal policies, networking opportunities, and training and development.

Increase the diversity of social enterprise boards to reflect the population of Scotland.

The most recent Social Enterprise Census tells us that while social enterprise boards are among the most diverse across the business community, there is more to be done to ensure they are reflective of Scottish society. To support social enterprises in this journey Scottish Government will fund a programme focussed on increasing the training available for boards who are looking to recruit members and to upskill individuals looking to become board members. This will highlight the advantages that a diverse board can bring to an organisation.