Scotland's social investment market: a snapshot
Is social investment in Scotland thriving or just about surviving? CEO of Social Investment Scotland Alastair Davis provides an overview of the sector.
Just like many other industries and sectors, the worlds of social enterprise and social investment are often criticised for being London-centric and too focussed on the south east of England. This feeling is as prevalent in other parts of England as it is in Scotland.
Over the last few weeks and months, and particularly since the general election, the influence of Scotland in public and political life has undoubtedly become noisier and more restless. There is greater contrast than ever before between the policies and approach of the Scottish Government and Westminster politicians.
Elements of this contrast are reflected in the social enterprise and investment marketplace in Scotland, where differing approaches and infrastructures have evolved over time. For example, Scottish social enterprises do not have access to the same infrastructure as their counterparts in England including, for example, the likes of BIG Potential and the Access Foundation. Nor has the sector witnessed the same growth in the use of structured products such as social impact bonds.
Despite these differences, Scotland has made great strides in creating a sector that plays an increasingly important role across the economy. Research from the Big Lottery Fund found that social enterprises in Scotland contribute £6.9bn to the economy, more lucrative than the entire third sector. An estimated 3,500 social enterprises are playing a greater role in the Scottish economy and the sector enjoys enthusiastic government support, particularly from deputy first minister John Swinney.
Social Investment Scotland (SIS) has made almost 300 social investments to support the growth of this sector totalling just under £50m since being set up in 2001. The scale of this investment activity is impressive when compared to some of our contemporaries in England, particularly given the more limited geography.
Social enterprises in Scotland contribute £6.9bn to the economy, more lucrative than the entire third sector
There are a number of factors that underpin this success, not least the investment and support ecosystem that supports the social enterprise movement in all its forms. The support provided by Highlands and Islands Enterprise to social enterprises is worthy of note, resulting in a third of social investment from SIS going into this region, way out of step with its share of the population. The £32m Scottish Investment Fund, now fully invested by SIS on behalf of the Scottish Government, has catalysed the maturity of the social investment sector, helping to foster and maintain a strong pipeline of investment opportunities.
SIS does, however, have access to interventions that apply UK-wide. In 2014, we launched the £16m Social Growth Fund, including £8m of investment from Big Society Capital. In May 2015, we developed SIS Community Capital, the first fund anywhere in the UK raising investment from individual social investors using Social Investment Tax Relief (SITR). And this capital won’t be absorbed by a plethora of social impact bonds – to date Scotland still only has one. SIS has committed its continued support to the growth and development of community-led solutions to some of society’s greatest issues, by listening to and engaging with those we seek to serve.
While Scotland’s social enterprise sector continues to face a number of challenges, including its geography, population and more limited availability of capital, it has undoubtedly made great strides to forge its own path and increase its influence within the national economy. Through continued support, investment, and innovation, the sector can continue to thrive and mature. In doing so, I’m confident that Scotland can provide a leading example to other countries and economies of a comparable size and character.