The economic contribution of the third sector in Scotland

In Scotland, the third sector plays a pivotal role in addressing societal challenges and fostering community well-being. Despite its multifaceted contributions, the economic significance of the third sector is often overlooked and missing in economic strategies and business support programmes. The RSE Economy and Enterprise Committee explored the economic contribution of the third sector in Scotland, shedding light on its substantial impact on employment, purchasing, and commercial activities.


The third sector – which includes charities, community, and voluntary groups and other non-profit distributing organisations – primarily provides services which are important in reducing inequality and disadvantage and improving health, wellbeing, housing, and community cohesion.

Despite the inherent complexity of the third sector highlighted in this report, its economic contribution, through employment, purchasing and commercial activities, remains substantial, with many analyses showing it to be greater than other sectors, including health and life sciences and creative industries, which enjoy considerable Scottish Government support

By contrast, the third sector is often overlooked as a source of wealth generation and seldom included in national or local growth strategies. The RSE believes this could mean opportunities to enhance regional and national economies are missed.

This paper aims to highlight some of the barriers to a wider recognition of the third sector’s economic contribution and to stimulate debate on how these blocks might be overcome.

This report was based on interviews with and contributions from a number of participants in third-sector organisations and followed by a roundtable discussion hosted by the RSE.


The RSE would welcome comments, additions or criticisms of this paper and will actively seek engagement with the Scottish Government, public bodies, MSPs and other interested parties to discuss its contents. If you have any enquiries about this advice paper or if you wish to engage with the RSE, contact Stephanie Webb, Policy Advice Officer ([email protected]).

Debate in Scottish Parliament

Kate Forbes MSP secured cross-party support for a Members’ business motion (S6M-11864) welcoming our recent report on the economic contribution of the third sector in Scotland. Together with the Scottish Council for Voluntary Organisations, we prepared a joint briefing for all MSPs ahead of the debate. Watch the debate which took place in March 2024:


This policy paper is paired with a discussion that showcases the breadth and diversity of the third sector and provides a platform for these unsung heroes to share their stories, lessons, and innovative strategies. This event challenges traditional economic paradigms, aiming to redefine the third sector’s role and supporting a new era of recognition and celebration for these economic champions by sharing their stories.

In the realm of economic strategies and business support programs, there exists a quiet and often overlooked hero – the third sector.


You can read responses to the report below. If you would like to write a response to this report, please get in touch on [email protected].

Richard Simpson sheds light on the disparity between political praise and the actual power dynamics at play, where statutory funders often wield unequal influence.
In response to the RSE report on the economic contribution of the third sector in Scotland, Dave Spencer on fostering a genuine partnership between the third sector and councils.