This glossary has been developed from development work carried out by the Working Group supporting the production of the Scottish Procurement Guide for Social Economy Organisations.
The glossary contains the main terms that the Working Group felt required clarification.
• Added value The distinctive or specialist contribution made by carrying out activities. For example social enterprises can add value to the delivery of public services in terms of their capacity to innovate or their closeness to the needs of their clients or the communities in which they operate.
• Asset lock Under the asset lock provisions, assets and profits must be permanently retained within the community interest company (CIC), and used solely for community benefit, or transferred to another organisation which itself has an asset lock, such as a charity, or to another CIC.
• Balanced scorecard The balanced scorecard is a measurement-based strategic management and learning system. It provides a method of aligning business activities to the strategy, and monitoring performance of strategic goals over time.
• Benchmarks Data that acts as a baseline and is used for before-and-after comparisons.
• Best Value Best Value is a formal requirement for all local authorities. Best Value was introduced to ensure continuous improvement in the performance of public services. It encourages consideration of what services should be delivered according to local need, an options appraisal of the most appropriate way to deliver those services to meet the identified need, sound management of resources (economy, efficiency and effectiveness) while maintaining an appropriate balance between quality, cost, achieving equalities and sustainable development. Although specific guidance and a statutory framework for Best Value is provided by the Local Government in Scotland Act 2003 it is recognised that the principles of Best Value are applicable across the whole of the public sector.
• Commissioning This term is used both within procurement in terms of services being ‘contracted’ and within the grant funding arena where service level agreements are arranged by service commissioners. It can also be used to describe the commissioning of grant-aided projects.
• Community benefit clauses Clauses that can be included in the procurement process that allow social and environmental considerations to be included in the contract specification and used in the selection and award procedures. The European Union has clarified that community benefit clauses (or social and environmental clauses) can be included, provided that suppliers who are not local are not disadvantaged or discriminated against and the contract complies with government procurement policy and Best Value. To comply with the policy and legal framework the community benefit requirements must be part of the core purpose of the contract and must provide a benefit to the agency. Community benefit clauses should be supported by strategic documents such as Community Plans.
• Community development finance A form of socially responsible investment which refers to debt and equity finance in communities or markets where mainstream financial services are weak and which are therefore undercapitalised. These include disadvantaged communities such as those in inner cities, outer estates and in some rural areas and under-served markets such as the social enterprise market.
• Community development finance initiatives (CDFI) CDFIs are the vehicles that deliver community development finance. The UK Social Investment Forum describes CDFIs as “financial service providers whose mission specifically requires them to achieve social objectives”.
• Community interest company (CIC) The community interest company (CIC) is a new type of company. It has been designed for social enterprises that want to use their profits and assets for the public good. Although CICs will be easy to establish they will have to prove that they are working for the benefit of the community they serve. CICs will report to an independent regulator on how they are delivering for the community and how they are involving stakeholders in their activities. The asset lock and reporting on community benefit should make CICs an ideal vehicle for organisations looking to move into the public service delivery market.
• Community regeneration The process of tackling poverty, deprivation and social exclusion within a particular geographical area or within a particular client group.
• Contract A contract is the term used to describe a legally binding agreement between a purchaser and a supplier for the supply of goods, services or works.
• Corporate social responsibility The Government sees CSR as the business contribution to our sustainable development goals. Essentially it is about how business takes account of its economic, social and environmental impacts in the way it operates – maximising the benefits and minimising the downsides. For further information see www.csr.gov.uk.
• Ethical purchasing This is the onus on the public sector to carry out its activities in an ethical manner. This means that all activities should be based on the principle of upholding (directly or indirectly) basic human rights or ensuring the least negative impact on the environment. It is leading the public sector to consider the location of suppliers, the ways in which goods and services are made, the terms and conditions offered by suppliers to their staff. Public sector purchasers and commissioners are increasingly considering the ethical (particularly environmental) issues associated with buying goods and services. Good practice is leading to procurement processes being reviewed to ensure that obtaining goods and services is not associated with the undermining of human rights, unfair trade, undue pollution, unfair or corrupt business practices and environmental degradation.
• Equalities Equality in its wider sense, as in the definition of equal opportunities in the Scotland Act 1998, encompasses gender, race, disability, sexual orientation and also individuals and groups facing discrimination on the grounds of age, language or social origin, or of other personal attributes, including beliefs or opinions, such as religious belief or political opinion. . All opportunities should be genuinely available and accessible to all potential participants and current initiatives must not have a negative impact on any disadvantaged groups.
• Full cost recovery This is the principle that an organisation recovers the full cost associated with providing a service or other output. The principle of full cost recovery is not new, it is a widely accepted accountancy principle. Full cost recovery is broadly interpreted to mean the total cost of all the resources used in supplying a service, including the direct costs of producing the output, a full proportional share of overhead costs and any selling and distribution expenses. Both cash costs and notional (non-cash) costs should be included, including depreciation, inflation and finance charges.
• Impacts The benefits or changes that have come about as a result of the work or activity of a project or the organisation. These include short-term, long-term, intended, unintended, positive and negative effects. Impact is less tangible and therefore harder to measure than inputs and outputs.
• Indicators Specific data that can be measured to determine whether an activity, project or organisation has met a particular outcome.
• Inputs The resources that contribute to a programme or activity including income, staff, volunteers and equipment.
• Investment to save An investment to save strategy is a coherent, planned approach to the development of services to ensure that unnecessary expenditure is avoided and that available resources are used effectively and efficiently for long-term benefit.
• Monitoring The term used to describe assessing whether indicators are being met.
• Not-for-profit A term used to describe an organisation that has been established to reinvest any financial surpluses back into achieving the objectives of the organisation. ‘Not-for-profit’ relates to the motivation of the venture rather than the ability to generate surpluses. The term is often used when referring to the voluntary sector.
• Outcomes The benefits or changes that have come about as a result of the work or activity of a project or the organisation. These include short term, long term, intended, unintended, positive and negative effects.
• Outputs The term is used to describe units or direct products of a project or organisation's activities. For example, they could be classes taught, training courses delivered or people attending workshops.
• Partnership purchasing Partnership purchasing or joint commissioning is a relatively new term to describe joint working arrangements between public agencies specifically related to contracts or commissioning. Public sector partners agree to share the costs of service delivery and jointly work to design service specifications.
• Patient capital (social economy) Patient capital is a relatively new concept with the social economy. Traditionally associated with equity-type investment within the private sector it is being interpreted within the social economy as ‘mezzanine-type’ finance that is a stage between a grant and a loan.
• Procurement The whole process whereby the public sector obtains goods, services and capital projects from third parties. Procurement is about using specialist suppliers who have the expertise or economies of scale to supply the goods or provide the service more effectively, efficiently or economically on the purchaser’s behalf.
• Regeneration The term is used to refer to the development of the social and economic life and the physical environment of a particular neighbourhood. It is worth observing that regeneration at one time referred to the refurbishing of the built environment but increasingly it refers more broadly to physical, economic and social renewal.
• Registered social landlords (RSLs) In Scotland, a registered social landlord is a landlord registered with Communities Scotland. The criteria for registration are set out in the Housing (Scotland) Act 2001. They are organisations that provide housing for let and other associated services but they do not trade for profit. The commonest form of registered social landlord in Scotland is a housing association although it includes housing trusts and housing co-operatives. Their main purpose is to let housing for people in need. In common with the widening role of Communities Scotland, RSLs have adopted a wider role in community regeneration and the promotion of social inclusion.
• Service modernisation Within the public sector there is an on-going emphasis on ‘continuous improvement’ in service delivery. Efficient government focuses on people; ensuring excellence; maximising choice; and getting the best for the public pound.
• Social accounting and audit A method of measuring an organisation’s social and environmental performance taking in stakeholder views and measuring social outcomes against goals to enable an organisation to demonstrate how it delivers these objectives alongside any service or works it carried out as its trade. A social audit is an independently verified account that shows to what extent an organisation is delivering its social goals, values and commitments and can help to manage the process of delivering these better.
• Social added value Social added value describes the benefits a business or organisation provides in terms of its social and environmental impact.
• Social Enterprise A social enterprise is a business that trades in the market for an explicit social purpose. Social enterprises are assumed to have three distinct characteristics: they have a clear social aim; they are socially owned (non-profit-distributing) and they have an enterprise orientation where their turnover is derived from sales or contracts.
• Social enterprise intermediaries Organisations that work with emerging social enterprises to help them get established as social enterprises.
• Social investment Social investment is used to describe investment in an organisation that is focused on the social return rather than the financial return. It is a relatively new term but is gaining common currency describing the type of investment organisations are looking for as they move away from grant aid. The term is used by some to mean investment that builds human or social capital.
• Social Return on Investment (SROI) SROI measures an organisation’s added value by calculating the social, environmental and economic benefits it creates and by attributing a financial value to them. It is based on standard accounting principles and investment appraisal techniques.
• Stakeholder An individual or organisation that has an active interest or a stake in a particular organisation or issue. For example, funders, members, contractors, purchasers, trustees, beneficiaries, volunteers and paid staff are all stakeholders in a voluntary organisation.
• Sustainable development sustainability is about how the economic, social and environmental parts of our lives and society connect. Sustainable development is seen as development which meets the needs of the present without compromising the ability of future generations to meet their own needs.
• Value for money This is defined as the best combination of whole life costs and quality to meet public sector agencies’ needs. When considering value for money agencies are looking to purchase goods at the right price, optimum whole life cost, right quality, appropriate quantity, right time and right place.
• Venture philanthropy Venture philanthropy is the process whereby individuals invest money and time in social and environmental organisations. It takes the principles of venture capitalism and applies them to philanthropy.
• Voluntary organisations Voluntary organisations are non-profit driven, non-statutory, autonomous and run by individuals who do not get paid. Some voluntary organisations are recognised by the Inland Revenue as charities.
• Wider role Activities undertaken by registered social landlords over and above housing which help to improve the economic, social and environmental conditions of individuals and communities.
