We are testing a new beta website for gov.scot go to new site


This content is not being updated. You can find the latest Scottish Government content on the Third Sector at https://beta.gov.scot.

Growing the Social Economy

The programme strengthens and increases the role of the social economy to support disadvantaged client groups to develop skills and participate in society.  It enhances the sector’s ability to deliver positive transformative change in the lives of the most disadvantaged by:

  • increasing the capacity and sustainability of third sector organisations to develop, enhance and deliver support programmes and create new employment.

  • encouraging and supporting social innovation approaches to tackle poverty, creating stronger links between social economy organisations, communities, academia and research institutes.

  • providing opportunities for individual social entrepreneurs to participate in a bespoke high quality package of training and leadership activities and mentoring.This will improve their motivational skills, knowledge, personal resilience, and capacity to grow their businesses.

The programme works towards achieving the following ESF Operational Programme targets:

  • Number of supported micro, small and medium-sized enterprises

  • Number of social innovation projects supported

  • Number of supported projects which increase R & D capacity and investment in the social economy

  • Number of collaborative projects supported between academic partners,social enterprises and communities

  • Number of jobs created

  • Number of individuals completing development programmes

Please see the following pages for more detailed information on Growing the Social Economy Programme:

Social Economy Growth Fund

Social Innovation Fund

Developing Social Entrepreneurs


European Social Fund Tackling Poverty Funding Models

The Social Innovation and Social Economy Growth Funds are part of the ESF Tackling Poverty Social Economy Development Programme.  The Scottish Government will use some of our own Third Sector budget resources to match against ESF.  This means that applicants do not have to find their own ‘match’ before applying because we will contribute towards all approved eligible expenditure. 

These Funds will support social economy organisations to develop and deliver new projects and/or additional activity for a limited period of time.   At present, this is up to the end of December 2018.

As a Lead Partner we are responsible for ensuring any money we pay out fully complies with ESF National Rules on Eligibility of Expenditure.  We are aware of the challenges to comply with the rules and will support applicants to make sure they can access the funds and deliver their projects compliantly.

Cost Models and ESF National Rules

Actual Costs – full audit trail for every single item of eligible expenditure.  We will apply the Actual Cost model to Growth Fund activity.  This means that all claims must include documentary financial evidence of ‘defrayed’ spend.  Examples of supporting evidence include:

  • invoices and purchase orders

  • claim/expenses forms

  • receipts

  • payroll/wage slips

  • BACs

  • bank statements of organisation and end beneficiary

The Growth Fund will include payment of staff costs for those who spend 100% of their time working on eligible project activity.  Staff can be full or part time.  We are required to report the details of new jobs created in the Growth Fund to meet ESF Programme targets.

Flat Rate +15% or 40% - we will follow the Flat Rate Direct Staff Cost model that applies to a ‘Challenge Fund’ for the Social Innovation Fund.  This will enable us to pay the salary costs for all staff employed 100% of their time on a project.  Staff can be full or part-time, employed for intensive periods of time or for the duration of a project. 

Using a flat rate model allows us to pay up to 40% towards additional project costs that are indirect.  These indirect costs can include travel, accommodation, events, and non-dedicated staff time which includes people who only work occasionally, intermittently or temporarily on a project.  Indirect project costs do not require a full audit trail, so it should be simple and straightforward for applicants to claim payments from us. 

As an example, if the salary cost of staff employed for a dedicated period on a project is £35,000, we can pay £14,000 on top of this to cover any other indirect project costs (40% x £35,000).   In this case the project would receive a total of £49,000 from the Social Innovation Fund.   The additional £14,000 can be spent on costs which enable the project to operate effectively, including non-dedicated staff input, without the requirement for supporting evidence.

Whilst it is not an EU requirement for staff to work 100% of their time on projects, the Scottish National Rules on Eligible Expenditure were informed by previous programme audit experience.  This identified a high level of errors in relation to apportioned staff time calculations, timesheet recording, certification and retention.  These errors were frequent and evident across all sectors.  Supporting direct staff costs means there is no need for organisations to keep timesheets for staff employed on the project.  In the case of the Social Innovation Fund if non-dedicated staff spend time on a project, this can be supported within the +15% or +40% indirect costs - we will not ask for timesheets.