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CHAPTER 1 INTRODUCTION
1.1 This chapter describes the background to this study. It also describes the study objectives and the work carried out to meet these.
Background
1.2 Social enterprises form part of the wider social economy sector. They 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.
1.3 In 2003, the Scottish Executive published its Review of the Social Economy 1, which looked at ways to support and develop the social economy. The review adopted a broad definition of the 'social economy' and did not explicitly focus on social enterprises or start-up organisations.
1.4 A year later Futurebuilders Scotland was introduced to provide a significant programme of investment and support for the social economy 2. It included a Seedcorn Fund to encourage the longer-term flow of social entrepreneurs and enterprises, and to encourage the upscaling of these. 3
1.5 Reflecting growing interest in the trading potential of the social economy, a differentiated strategy for social enterprise has now been developed 4. This links to the Scottish Executive's commitments for growing Scotland's economy and delivering excellent public services. The strategy was published in March 2007 and will be refreshed in 2008.
1.6 The strategy provides an estimate of 3,000 social enterprises currently operating in Scotland and suggests that social enterprise is an underdeveloped business model. However, the strategy, or the research that underpins it, provides little reliable evidence on the flow of new social enterprises into the sector, or churn of existing organisations within it.
1.7 Most recently, the Scottish Government Budget has set out plans for further investment in the sector 5. Over the next three years the Government will invest £63 million in a development programme and a further £30 million through a Scottish Investment Fund to encourage greater investment in assets, business development and the skills of those working in the sector.
1.8 This research was commissioned to help inform the refresh of the strategy, and in particular decisions concerning the support for start-up social enterprises and the detailed plans for future Scottish Government investment.
Study aims and objectives
1.9 This study examines those initiatives in Scotland and beyond that promote the start-up of social enterprises.
1.10 The main aims of the study are to:
- review existing initiatives that are providing effective support to start-up social enterprises in the United Kingdom or elsewhere, that might be identified as good practice examples;
- identify the strengths and weaknesses of initiatives, in particular looking at both the cost and long term sustainability of start-up social enterprises supported through these initiatives; and
- provide recommendations on how to promote, develop and support start-up social enterprises.
1.11 In effect, the study is to map existing provision in Scotland, identify issues, suggest alternative approaches to enhance provision, and make recommendations on future activity.
1.12 In practice, evidence relating specifically to start-up support has been found to be lacking. It is insufficient to enable firm conclusions to be drawn on the effectiveness of existing approaches and therefore on the strengths, weakness, gaps, and value for money. As such the approach to, and content of, the study has been modified over time in light of the information available.
Study Method
1.13 The research was carried out between April and July 2007 and included a number of main elements:
- a comprehensive review of documented evidence on:
- the pathways and processes that lead to new social enterprises;
- typical characteristics and needs of new-start social enterprises;
- the rationale for supporting new-starts, and common interventions;
- current provision of start-up support in Scotland;
- initiatives that support start-ups throughout the UK and beyond;
- in-depth interviews with 34 people representing the views of those main organisations with an interest in, or influence on, the start-up of social enterprises in Scotland;
- short consultations with representatives from more than 35 start-up services and initiatives operating in other parts of the UK and Ireland; and
- a Development Workshop with research participants to validate the findings and examine an agenda for action.
Structure of the report
1.14 The remainder of this document is structured as follows:
Chapter 2, Social Enterprise Start-up, discusses the typical characteristics and needs of start-up social enterprises and typical public sector responses;
Chapter 3, Start-up Support in Scotland, provides an overview of the current initiatives and support available to start-up social enterprises in Scotland;
Chapter 4, Delivering Start-up Support, outlines the reported strengths, issues and challenges inherent in the existing start-up provision in Scotland;
Chapter 5, Comparative Approaches, examines the approaches to delivering social enterprise start-up support in other parts of the UK;
Chapter 6, Start-up Interventions, identifies examples of new and innovative interventions evident outside of Scotland; and
Chapter 7, Conclusions and Recommendations, draws together the main findings, issues, and implications arising from the research.
1.15 The document also contains the following appendices:
Appendix 1, Consultees, lists those individuals that have provided their views and opinions on start-up provision in Scotland; and
Appendix 2, Evaluation Evidence, provides research/evaluation evidence on the two main
UK-wide initiatives designed to promote social entrepreneurship and social enterprise start-up.
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