The emergence of social investment as a mainstay of Scotland’s economy
19 Nov 2025
- About SIS
When Social Investment Scotland (SIS) was first imagined in the late 1990s, social investment was a novel idea that challenged conventional wisdom. The notion that you could lend money to community organisations and social enterprises, prioritising social impact alongside financial returns, was met with scepticism from the third sector and funders. Twenty-five years later, social investment has evolved to become an essential part of Scotland's economic infrastructure.
This transformation didn't happen by accident. It required patient capital, bold vision, and a willingness to prove that financing communities and social enterprises was not just viable, but vital.
In those early days, the landscape was different. Social enterprises struggled to access finance because they didn't fit neatly into existing categories. They weren't charities seeking grants, nor were they businesses pursuing maximum profit. Banks viewed them as too risky. Grant funders questioned why they needed repayable finance. They fell into a gap that nobody was serving.
SIS was founded to fill that gap. With cornerstone investment from banks and the then Scottish Executive, who remain key investors in our Community Finance Fund to this day, we began backing organisations that found it difficult to access finance, such as community businesses in post-industrial areas, social care providers serving vulnerable populations and renewable energy cooperatives in remote island communities. Each loan was a test case, proving that mission-driven organisations could be creditworthy borrowers when they had the right support.
The results spoke for themselves. Organisations created jobs, delivered essential services, improved lives and strengthened communities. They also repaid their loans. This track record gradually changed perceptions. What began as experimental finance became a proven model.
Over twenty-five years, more than £167 million has been deployed by SIS through social investment. This capital has sustained thousands of jobs and supported employment, training and education initiatives. Crucially, over a third of investments have reached Scotland's most deprived areas, channelling resources where they're needed most.
Today, social investment is recognised by government as a policy tool. It is understood by communities as a pathway to self-determination, and it is embraced by investors seeking both returns and impact. What was once viewed as niche is now seen as mainstream.
This evolution mirrors Scotland's own journey towards a wellbeing economy, one where economic success is measured not just by GDP, but by how well communities flourish. Social investment has proven to be the financial infrastructure that makes this vision practical rather than merely aspirational.
Yet even as we celebrate this progress, we must acknowledge the work still ahead. The social challenges facing Scotland, from the cost-of-living crisis to the climate emergency, from childcare shortages to health inequalities, demand capital at a scale we haven't yet achieved. Twenty-five years of experience has shown what's possible. The next twenty-five must focus on what's necessary.
Social investment is already extending into new areas such as increased support for childcare to enable workforce participation, and the expansion of community finance models. SIS has played a central role in the £72 million Community Investment Enterprise Fund which supports businesses in England and Wales's most deprived areas, and we are currently exploring a similar funding vehicle for Scotland. Each represents the next frontier, building on proven foundations while addressing emerging needs.
The pioneers who established SIS took a risk on an untested idea. They bet that communities, when properly supported, could be engines of economic and social renewal. As evidenced by our latest Impact Report, twenty-five years of putting the idea into practice proves they were right.
Social investment has earned its place as infrastructure. Now it's time to build at the scale Scotland's communities deserve.
This article originally appeared in The Scotsman on 19th November 2025.