According to the Guidance, subsidies must pursue a clear public policy objective. To ensure that public financial support benefits society, public authorities may only give subsidies that address a market failure – where the market alone does not produce economically efficient outcomes – or that address a social inequity, by helping redistribute resources more fairly between different groups and areas.

### Example: a rural community transport scheme

A regional transport partnership provides financial assistance to a community transport scheme run by a voluntary organisation in a rural area where commercial operators will not run services.

The financial assistance provided is likely to be considered a subsidy because the service is offered on a market meaning the activity is “economic” in nature, and it confers an economic advantage on the voluntary organisation which could have an impact on competition.

However, the market is not providing the service because no operator is incentivised to run routes on a commercial basis. This is not a market failure because the market is responding rationally to the fact that demand is too low to justify the cost of supply. However this is resulting in a social inequity (the under-provision of transport amenities to those in rural areas). Therefore, the subsidy pursues a clear public policy objective: remedying a social inequity in order to ensure access to public transport in rural areas. So, although there is a subsidy here, the authority can give that subsidy in order to remedy this problem.

[Previous: Defining a subsidy](/support/running-your-organisation/finance-business-management/subsidy-control/defining-a-subsidy) [Next: How subsidies can be awarded](/support/running-your-organisation/finance-business-management/subsidy-control/how-subsidies-can-be-awarded)

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## About SCVO

SCVO (Scottish Council for Voluntary Organisations) is the national membership organisation for Scotland's voluntary sector.

Our role is to champion the role of voluntary organisations in Scotland and to support them to do work that has a positive impact.

SCVO supports members and the wider voluntary sector with all aspects of setting up and running a voluntary organisation. SCVO represents the needs and concerns of the voluntary sector to the Scottish government in Holyrood and UK government and Westminster. Through our learning and events programme SCVO offers training and development opportunities to the sector.

Members access an extensive membership benefits package including specialist, in-depth, 1-to-1 guidance from our Information Services team and from professional service partners.

Access to exclusive membership networks (including comms, employers, governance and policy) supports members to grow their connections, stay up to date, exchange ideas and views with peers, and learn through tailored, learning opportunities.

SCVO members enjoy free access to Funding Scotland Premium to stay on top of funding opportunities to support their organisation’s financial resilience.

Discounts and savings savings on SCVO products and services (including our HR service, managed IT support, payroll service and events and training) and partner offers provide members with support to allow them to focus on delivering their organisation’s goals. Further SCVO products and services include [extensive digital support](https://scvo.scot/support/digital), a climate action resource [Growing Climate Confidence](https://climateconfident.scot), a voluntary sector publication [Third Force News](https://tfn.scot) and a voluntary sector jobs and recruitment service [Goodmoves](https://goodmoves.org).

For more information on SCVO membership, visit [SCVO membership](https://scvo.scot/membership)