What is Social Enterprise?

Social enterprises trade in many markets – selling goods and services to individual consumers, local authorities, government and private businesses. They aim to make a profit just like any private sector business. However, their profits or surpluses are reinvested back into their social and/or environmental purpose. According to Census 2019 there are over 6,000 social enterprise in Scotland.

Social enterprises in Scotland are often recognised as being asset locked so that only the community and society can profit from their work, buildings, land and other assets. Social enterprises must be sustainable in order to meet their social and/or environmental mission. The Voluntary Code of Practice for Social Enterprise in Scotland is a set of guidelines used by some Scottish social enterprises.

The term social enterprise shouldn’t be confused with private businesses that simply operate in an ethical way, charities that don’t trade or public sector arms-length companies (ALEOs) – though some of these may be on a journey as emerging social enterprises.

There’s no single, legal definition of social enterprise in the UK. Definitions vary across the world and even within the UK. We believe in being inclusive and appreciating the value of other types of business, including ethical private sector companies, mission or values led business and B Corporations – while being very clear about what we mean by social enterprise. A robust debate about definitions, within a constantly evolving business landscape, is something we welcome.

£2.3bn GVA

The economic contribution of social enterprises to Scotland.

88,318

full-time equivalent employees supported by the sector.

1 : 2.5

The average differential between the highest and lowest paid worker.

21 years

The average age of a social enterprise in Scotland.

What examples are there?

There’s probably a social enterprise running a shop, art gallery, sports centre or cafe in your local area. Take a look at our Directory of Social Enterprise or contact us. MSPs and other elected members, the media, public officials, private businesses and others can also contact us to arrange visits. Also take a look at Social Enterprise Scotland TV.

69%

led by and accountable to people in a particular community.

65%

of Scotland’s social enterprises led by a woman.

8%

operate internationally.

33%

of social enterprises located in rural Scotland.


What specific models are there?

Social enterprise is a diverse community and the more-than-profit approach is used by a huge range of organisations, of every size, operating in every corner of Scotland and in most sectors of the economy.

A social enterprise is often simply a standard Company Limited by Guarantee with an appropriate social mission and asset lock.

It could also be a registered charity (of which there are over 23,000 in Scotland) or a Scottish Charitable Incorporated Organisation (SCIO).

Below are some of the common types (both descriptive and legal model) and a social enterprise can often be one or more of these. Together they make up Scotland’s social enterprise movement.

Co-operatives and Mutuals

Democratically-owned businesses which give employees, customers or members a direct stake in the business. There are around 600 co-ops in Scotland, with a turnover of more than £4bn a year and employing 28,600 people. Legal models are known as co-operative societies or community benefit societies. Co-operatives UK and Co-operative Development Scotland.

Social Firms

Commercial businesses that provide real, integrated employment for people with disabilities or other disadvantages in the work place. They may be registered charities, a CIC or other model. There are around 80 members of Social Firms Scotland.

Community Interest Companies (CIC)

CICs are limited companies created for the use of people who want to conduct a business or other activity for community benefit. They are required to report on activity to the UK CIC Regulator. Community Interest Companies Association and the CIC Regulator.

Development Trusts

Community run organisations that are concerned with the economic, social, environmental and cultural needs of their community. They are owned and managed by the local community and aim to generate income through trading activity that enables them to deliver services. They might be a CIC or charity or other model. There are around 200 members of Development Trusts Association Scotland.

Credit Unions

A type of co-operative that provide financial services to members. Many operate in areas of social and financial exclusion, though more employers are now offering credit union membership and they’re being accessed by ethical consumers. The largest offer a competitive range of mainstream financial products. There are around 100 credit unions in Scotland with over 280,000 members and assets of over £300m. Association of British Credit Unions Ltd and the Scottish League of Credit Unions.

Housing Associations

Known as Registered Social Landlords (RSLs). These are companies providing affordable housing for both rent and sale. They give priority to those in greatest need and reinvest any surplus income in maintaining or adding to their housing stock. Many Housing Associations support other social enterprise activity through Wider Role community regeneration/tenant support. There are around 160 Housing Associations and co-operatives in Scotland. Scottish Federation of Housing Associations and Scottish Housing Regulator.

62%

of social enterprises generating at least half of their income from trading.

£4.4bn

The total annual income of social enterprises in the country.

£396m

The combined operating surplus of all social enterprises.

43%

negatively affected by the economic climate over the last 12 months.


Statistics taken from Social Enterprise in Scotland: Census 2019.