Sector's role in the economy

The voluntary sector is a significant employer, with over 133,000 staff (5% of the Scottish workforce). By comparison, the Creative Industries and Gaming sectors are estimated to employ 90,000 people, and food and drink manufacturing employ 125,000 people (Scottish Government Growth Sector Statistics).

By creating jobs, organisations in the sector contribute to the economy and GDP. Women make up 64.5% of the sector’s workforce. 37% of employees work part-time and 23% of employees have a disability, which is more than in the public and private sectors. Find out more in this Scottish Government study on Scotland's labour market.

Not only do these figures indicate that the voluntary sector is a major employer, they also demonstrate how the sector offers opportunities to individuals who may otherwise be faced with barriers to access employment, and increased likelihood to be living in poverty. Fair Work also matters (see below).

The voluntary sector is supportive of Fair Work. Our workforce makes a huge contribution across Scotland, offering a lifeline to people, families, and communities as the cost-of-living crisis bites. This lifeline shouldn’t need to be extended to voluntary sector staff.

In 2023 Glasgow Council for the Voluntary Sector (GCVS) report on Fair Work in the Third Sector found that fewer than half of respondents felt that they are fairly paid for the work that they do, and fewer still felt they have parity of pay with other sectors. The lack of job security also is a major area of concern for the sector’s workforce. This is usually as a direct result of short-term funding arrangements and late confirmation of funding for posts. Fair Work matters because it is a central pillar to the sustainability of the sector and delivering quality outcomes.

Many organisations in the sector are committed to Fair Work as accredited Living Wage employers. In 2023, 10.5% of people employed by 'not for profit' organisations were paid below the Real Living Wage, down from 13.7% in 2021, but up from 6.3% in 2022 (ASHE data 2023). This figure remains higher than the public sector (1.4%) but below the private sector (15.8%).

The ASHE data shows an overall trend of decreasing numbers of people in the non-profit sector being paid below the Real Living Wage, to around 21,000 in 2023. This helps support staff and volunteers and deliver quality outcomes. This helps support staff and volunteers and deliver quality outcomes.

Voluntary organisations can help reduce public expenditure, either by providing services in health, social care or education which the state would otherwise have to provide or by reducing the need to use public services (Royal Society of Edinburgh).

Children's Hospices Across Scotland (CHAS) utilised the expertise of the University of York's Health Economics Consortium to demonstrate their significant economic and public value. Their findings show that CHAS provides over £49 million of economic benefit each year from an expenditure of approximately £18 million. For every £1 of statutory funding received in 2018/19, CHAS produced £6.24 of public value in return.

Place2Be did a similar study that showed that they fill a critical gap, offering early intervention services for children's mental health, an area currently under-resourced by the state sector. For every £1 spent on Place2Be's work in Scottish primary schools, society benefits by £5.50, demonstrating a significant return on investment. The voluntary sector often steps in to provide support to people who would otherwise be left behind. This is more than a sticking plaster, it is about quality services and support to people, families and communities that need it most.

Volunteering is at the heart of many voluntary organisations. Over 1m people volunteered in Scotland in 2022, and there are over 200,000 charity and community group trustees across the country, all doing so voluntarily.

In 2022, volunteering was estimated to be worth £5.3 billion to Scotland’s economy. Despite the clear benefits, the 2022 Scottish Household survey found that the adult (16+) formal volunteer participation rate has fallen to 22%, down from 26% in 2019. The time contributed by volunteers has also decreased, with 61 million fewer volunteering hours in 2022 compared with 2018. As indicated by Volunteer Scotland this is equivalent to a £132 million decrease in the contribution of volunteering to Scotland’s economy. Volunteering brings in additional skills, experience, and much-needed support to organisations and communities throughout the country.

The economic contribution of Scotland’s social enterprises is important with £2.63bn Gross Value Added, according to the Social Enterprise Census 2021. There are around 90,000 full time equivalent jobs provided by 6,000 social enterprises in Scotland. 33% of the total number of social enterprises is located in rural Scotland, delivering essential public services to local communities.

These enterprises put profits and surpluses towards social and environmental missions that are key to a sustainable and inclusive economy.

The retail contribution is perhaps a more obvious aspect of the sector as an economic actor, and yet it is also ignored. Charity shops employ more than 26,100 FTE employee, with a social value estimated at £75.3bn in Jan-Dec 2022 across the UK.

As reported by Social Investment Scotland, in the financial year 2022/23 Chest, Heart & Stroke were gifted 219,000 bags of donations which were converted into more than £5.5 million. They resold 800 tonnes of materials, which equated to nearly 10 million kg in CO2 savings.

The Charity Retail Association also outlines 10 environmental benefits of charity shops. As well as contributing to the economy, charity shops represent an essential tool to achieve a circular economy.

The unique ability of voluntary organisations to fundraise is crucial to a sustainable and inclusive economy. Individual giving (donations, legacies and fundraised income) was worth £1.13bn to the Scottish charity sector in 2021.

Donated and fundraised income from the general public accounts for over 30% of the income of small charities, double the percentage for medium and large charities.

Partnership working across sectors is key to a thriving economy and voluntary organisations collaborate successfully. A project that is essential to community development is the Tomintoul and Glenlivet Development Trust. 

For the past 10 years, it has been working with Highlands and Islands Enterprise (HIE), the Cairngorms National Park Authority, Crown Estate Scotland, Moray Council and others. Through collaboration they have led the acquisition and development of tourism assets and services, delivered heritage projects, and are on the way to providing a 12 unit, affordable housing complex in Tomintoul.

We are all interdependent. None of the economic and social challenges we are facing today will be solved without partnership working, be it at local or national level.

The voluntary sector contributes to the economy by tackling inequalities and changing people’s lives for the better. An example of this is Thriving Families that is supporting families in the Highlands, empowering them to know their rights. They also help them to get their voices heard so that the lives of families with children with additional needs are improved.

Voluntary organisations are focused on delivering vital services locally and, by doing so, they empower some of Scotland’s most marginalised communities.

Voluntary organisations play a major role in supporting people of all ages accessing employment and training opportunities. Since 2013, Fife Council has funded Fife Voluntary Action to support and grow the work of the voluntary sector in delivering employability services.

Third sector employability services in Fife have continued to deliver outcomes with an estimated 35% employment rate for 3,344 individuals supported in 2020/21. Fife Council also managed Scotland’s Employer Recruitment Incentive, Kickstart and Young Person’s Guarantee monies alongside local spend, coordinated under the banner of Fife Job Contract. The total spend for 2021/22 was expected to reach £1.9m of which approximately 15% (£296,828) has supported jobs with third sector employers.

The Third Sector Employability Forum (TSEF) provides a platform for these organisations and aim to influence public services, how they are funded and how they are commissioned. These organisations play a major role in our economy supporting people and the wider labour market.

Focusing on early intervention and prevention, the voluntary sector encourages new ways of working that contribute to the economy by reaching into the heart of communities. This is well illustrated in the Cyrenians’ 2022 impact report. They highlight the work of their Hospital-in-Reach team that helps people maintain and improve their health.

In 2022 there was a 68.7% reduction in patient readmissions to hospital compared to the 12 months prior to introducing the Hospital In-Reach service. Voluntary organisations develop innovative ways of thinking and solutions to some of the key challenges we face as a society.

By focusing on prevention and support, voluntary organisations tackle societal challenges and help mitigate the impact on public services and the overall economy.

Charities are key players in Research & Development in Scotland. For example, they are a major funder of medical research and development, investing an estimated £122m in 2018.

Charity funded medical research supports more jobs per £1 million spend than many other sectors including food and drink, construction, fishing and the financial services. Every £1 million spent supports 31 jobs, almost double the Scotland average of 17 (Fraser of Allander Institute).

Working in partnership across sectors, voluntary organisations bring investment and foster innovation in key economic areas.

We know that 90% of voluntary organisations are local. Many of them work with small and medium businesses in their area to supply their venues or book local spaces and services to deliver support and events.

A good example of this is The Reuse Consortium that is working with the public sector on developing a circular economy. Over the past six and a half year, they provided more than 29,000 items of furniture to local projects thus helping 13,400 low-income households, and more than 1 million of waste was diverted from landfill. They also purchased about £2.9m from local social enterprises.

The sector's contribution often goes unnoticed in relation to this, but it is significant, bringing additional money into local economies throughout Scotland (Royal Society of Edinburgh).

Organisations within the voluntary sector aim to tackle this and work with partners to support a healthy and productive workforce. Research by the London School of Economics and Political Science notes that mental health problems cost the UK economy almost £118 billion annually.

MHScot Workplace Wellbeing is a social enterprise that promotes mental health and wellbeing in the workplace by providing comprehensive education, resources and support to employees and employers alike.

Mental health and wellbeing can impact productivity and performance and by tackling it, voluntary organisations help sustain and grow the economy.

The voluntary sector is about empowering people, campaigning and strengthening voices.

In Scotland, JustRight Scotland use the law to defend and extend people’s rights, working in collaboration with others to achieve social justice, with the aim to reduce discrimination and disadvantage.

Social and economic justice matters if we want to achieve a sustainable and inclusive economy that does benefit all.