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Futurebuilders Scotland was established in late 2004 as a major programme of investment and support for Scotland's social economy sector. It invested almost £18m in expanding the role of the social economy in delivering public services.
The evaluation reported in these research findings was commissioned by the Scottish Government to assess the effectiveness of the programme and to guide any further investment in the social economy.
The study was wide-ranging and carried out over a 16-month period. It included interim and final evaluations that were based on desk-based research, stakeholder interviews, and beneficiary surveys.
Main Findings
- Futurebuilders set out to achieve a broad, diffuse, and ambitious set of objectives designed to expand the sector's role in public service delivery while addressing its development needs.
- The objectives of Futurebuilders were translated into a portfolio of Funds that collectively provided an £18m package of grant funding, training, and support to the sector.
- The funding programme was delivered in a generally effective way, although grant-making arrangements were relatively complex and it proved challenging at times to respond to demand.
- Collectively the Futurebuilders Funds have brought forward and supported a significant level of new social economy activity that is now generally progressing well.
- The Futurebuilders programme has achieved a substantial impact within a relatively modest budget, with a range of new social enterprises, services, skills, and support now evident.
- While having achieved much in a number of respects, progress has been less evident in changing the investment and learning culture within the social economy sector.
- The success of future investment in the social economy will depend, in part, on opening up public sector commissioning processes and procurement markets to the sector.
- There is the opportunity to draw on UK-wide experience and to introduce new investment models that combine grants with loans, and financial assistance with capacity building support.
- In moving forward the Scottish Government has been advised to take a more considered and engaged approach that draws on various investment options and delivery models.
Methodology
A comprehensive evaluation process was undertaken, including a number of main elements:
- desk-based research, including a review of, for example, relevant contextual documents and materials on comparable funding programmes;
- stakeholder consultation by means of interviews with a range of policy makers, agency partners and intermediary bodies, supplemented by workshops (with the same group) and telephone interviews with service purchasers; and
- beneficiary research, including telephone interviews with unsuccessful applicants, as well as self-completion postal surveys of grant beneficiary organisations.
Background and Context
Futurebuilders Scotland was introduced in late 2004 as an £18m programme of investment to develop Scotland's social economy.
The programme was conceived to contribute to three public policy agendas:
- public service reform - it was driven by a commitment to bring about improvements in frontline public services;
- community regeneration - it was to contribute to the national priorities for 'Closing the Opportunity Gap'; and
- social enterprise - it aimed to create more 'business-like' and financially sustainable organisations.
The evaluation suggests that the programme adopted a broad, diffuse, and ambitious set of objectives that sought to meet many policy priorities within a relatively modest budget.
About Futurebuilders
The objectives of Futurebuilders Scotland were translated into a portfolio of Funds providing grant funding, training and support.
The programme was made up of:
- an Investment Fund of £12m to develop organisations with a proven track record in delivering public services;
- a Seedcorn Fund of £4m to enable smaller social economy organisations to expand their trading potential;
- a Social Entrepreneurs Fund of £392,500 to encourage social entrepreneurs and promote social enterprise start-up;
- a Learning Fund of £1m to encourage entrepreneurial talent and leadership skills in the social economy; and
- a Support Programme of £1m to strengthen support for the sector and help it to access new skills and markets.
Programme Delivery
The Programme was managed by the former Social Economy Unit within Communities Scotland, and delivered through the agency's Area Offices as well as other intermediaries.
In establishing the programme, Communities Scotland introduced relatively complex grant-making arrangements. These were needed to manage and test the programme's multiple objectives and funding streams.
Programme management was put under pressure by the high volume of applications. This reflected the programme's broad aims as well as the high expectations and widespread demand for funding within the sector.
It also proved challenging at times to organise, allocate, and manage the various Funds as a coherent package of funding and support for the sector.
Overall, the report suggests that Futurebuilders was managed in a generally effective way by the Social Economy Unit given the timeframe available, the newness of the Unit, and the complicated nature of the funding scheme.
The Activity Supported
Futurebuilders Scotland has allocated almost £18m of funding to the social economy by way of investment in project activity, learning, and support services.
Collectively the Futurebuilders Funds:
- invested in the development of 362 established organisations and 220 social enterprise start-up ventures;
- combined well with funding from the European Social Fund ( ESF) to make support available to small organisations;
- helped to unlock up to £54.3m of project funding from a variety of sources;
- subsidised access to business and leadership training for 121 organisations;
- introduced an important new source of learning - the Social Enterprise Academy - which supported 575 learners; and
- invested strategically with funding partners to kick-start improvements in the support available to the sector.
The evaluation concludes that Futurebuilders has brought forward a significant level of new activity that is now generally progressing well. However, given the lack of detailed targets and milestones within the Programme, a full assessment of performance is not possible.
Achievements to Date
The investment from Futurebuilders has been used to bring about a range of outcomes.
The evidence from the evaluation shows that the programme has:
- had a direct and immediate effect in stimulating an array of promising social enterprise start-up activity;
- improved access to learning and begun to build up a base of business and leadership skills in the sector;
- led to marked improvements in the organisational capacity and financial prospects of assisted organisations;
- brought forward a diversity of services in areas that are broadly in keeping with public policy objectives;
- helped to bring about improvements in the support, guidance, and information available to the social economy; and
- led to wider employment and income impacts for the Scottish economy.
On the other hand, the programme has been able to make less progress in:
- bringing about a cultural shift on the part of the social sector to loan funding and in relation to investment in learning; and
- bringing about changes in the way that public sector services are commissioned, and opened up to the social economy.
The report suggests that while the funding programme has made an important start in many respects, there is still much more to do.
Learning from Elsewhere
The report explores the growing debate and experimentation across the UK around new ways of investing in the social economy.
It points to a small but increasing number of funders that are adopting such practices and breaking new ground. These include Futurebuilders England, Venturesome, and the Adventure Capital Fund.
The experience of these and other Funds indicates the potential to offer tailored packages of investment in the sector that integrate grants with loans, and direct investment with capacity building support.
The study suggests that successful investment in the social economy in Scotland will require a shift in the mindset of funders and public sector purchasers, together with further experimentation in the use of investment models and funding techniques.
Issues and Implications
The evaluation puts forward a number of main implications and recommendations for future investment in the social economy.
Clarifying purpose and objectives
Given the sector's many and various needs, the report suggests that it is unlikely that the development of the social economy can be adequately addressed through a simplistic one-size-fits all funding programme.
The report advises on the need to separate out the different objectives for the sector and to focus on three distinct (and not necessarily overlapping) areas of future investment: asset development; public service innovation; and social enterprise development.
Making use of all investment options
Futurebuilders was conceived as an important new form of investment to build organisations' financial sustainability and reduce the sector's dependence on grants. Paradoxically, the programme relied largely on traditional grant-making approaches to achieve this.
The report suggests that in future all alternative investment methods should be considered as part of the funding mix. As a point of principle, it advises that grant subsidy should be used only where no other form of finance (earned, borrowed or self-generated income) can be more (or as) effectively used.
Aligning funding streams
The study concludes that Futurebuilders Scotland was combined to good effect with funding from other sources. In places, it was matched at source by funding partners, and it was used to unlock project funding from a variety of other sources.
In order to ensure that the total investment in the sector is greater than the sum of its parts, the report recommends that any successor Fund(s) should be structurally aligned (or integrated) with related funding programmes.
Refining funding procedures
In examining future funding methods, the study highlights the importance of: careful planning before implementation; clear funding objectives; robust procedures that are in keeping with relevant investment methods; and the flexibility to respond to emerging trends as they arise.
It suggests that, where possible, funding and support should be packaged together around the needs of applicant organisations rather than allocated on a project-by-project basis.
Opening up public market opportunities
The evaluation shows that the objective of extending the sector's role in public service delivery proved difficult to achieve. Success depends on a clear vision of the public service outcomes that are desirable and a favourable public sector purchasing environment.
The report advocates further action to stimulate the demand for social economy services among public purchasers, and to open up public sector commissioning processes and procurement markets to the sector.
Encouraging a culture of learning
The evaluation highlights the benefits of investing in business and leadership skills. However, while intervention has tended to encourage demand for further or more regular learning, organisations have proven unwilling or unable to pay the market price for learning.
The report calls for further action to stimulate the market for learning within the sector and a more coherent approach to: promoting a culture of learning; widening access to learning; and developing learning provision.
Offering more engaged support
The report notes that while delivered adequately, the support available to applicants through Futurebuilders was not designed to include additional technical assistance or capacity building support to applicants.
As part of any continuation programme, the Scottish Government should consider ways in which development support and training can be combined with direct investment as part of a tailored package of support.
Managing the future investments
Futurebuilders Scotland was managed by the Social Economy Unit. It drew on specialist expertise (via secondments), the experience of an award partner (Scotland UnLtd), and the local connections of Communities Scotland Area Offices. Each of these delivery agents has been restructured or removed post-March 2008.
The report recommends that as part of any successor programme, the Government should consider all opportunities to deliver investment with and through others. The management of any future fund(s) is likely to require a blend of third sector, grant-making, and venture capitalist experience in order to invest creatively and well in the social economy.
This document, [along with "Evaluation of Futurebuilders Scotland Funding Programme" the full research report of the project] and further information about social and policy research commissioned and published on behalf of the Scottish Government, can be viewed on the Social Research website at: www.scotland.gov.uk/socialresearch.
If you have any further queries about social research, please contact us at socialresearch@scotland.gsi.gov.uk or telephone 0131 244 7573.
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