Rejuvenating Rural Communities Through Social Enterprise

Rejuvenating Rural Communities Through Social Enterprise

Posted by: Jo Seagrave / 10 December 2018

By Matt Pfahlert

The inaugural Social Enterprise Rural Symposium was held recently on the Isles of Lewis and Harris in the Outer Hebrides of Scotland. This was an adjunct to the 10th Social Enterprise World Forum, hosted by Edinburgh.

This breathtakingly beautiful and remote location played host to 45 rural policymakers and practitioners from across the world with a lens on the role social enterprise is playing to rejuvenate struggling rural economies.

The forum combined workshop style lectures and discussion with field trips to Isle of Lewis and Harris social enterprises and rural businesses focussed on sustainable local employment.

I’m keen to share my reflections and learnings with you, in the hope that we can further the conversation around social enterprise in Australia.

Highlands and Islands Enterprise

  • The symposium was hosted by the Highlands and Islands Enterprise (HIE), a Scottish government agency dedicated to building community capacity as a means to fostering inclusive economic development. A community development approach to economic development if you like. After 50 years of determined effort, their success in re-populating rural communities is now a world-leading model, from which we can learn so much.
  • As the key agency for economic development in the north of Scotland, HIE has invested in their people, basing them in the rural communities serviced by HIE. When I asked about the key reason for their success, all suggested it was the time they’ve spent in community, the trust built and the ability to be genuinely responsive to community needs. Their Case Managers work with communities to provide planning and capacity building and provide funding to support community-led projects to achieve sustainability.
  • All staff I spoke to had been with HIE for 10 years or more (some over 20). They’re experienced and savvy in their understanding of the community and the economic drivers of their region. They all feel humbled by the role they’re able to play to support sustainable growth in their communities. When asked about political interference, there wasn’t a department restructure in sight (unfortunately Australian public servants seem to have their departments restructured every 18 months, often having to re-apply for their positions, making concerted, long-term change almost impossible to achieve).

 

Scotland’s 10 Year Strategy for Social Enterprise

Scotland has a long-term approach providing the stability necessary for the conversion of ‘policy to practice’, including real outcomes and impacts. This is a dramatic contrast to Australia, where Victoria is the only state with a social enterprise strategy. This strategy was created in 2017. Scotland’s Social Enterprise Strategy has been in existence for over 15 years.

The Australian Federal Government so far has taken little notice of the opportunity social enterprise provides to many destinations and sectors of the economy. I can say this following recent meetings in Canberra with federal government ministers and their advisors, on both sides of politics. It is clear they are taking little notice of social enterprise as a lever for rejuvenating communities.

The long-term and bi-partisan Scottish strategy goes way beyond the ‘policy by announceables’ approach many Australian politicians so keenly employ. Both of Australia’s major parties are without a policy for regional Australia, which makes policy creation for social enterprise in rural Australia feel like a very distant dream.

Big business is not the answer

  • Scotland courted large national and multi-national companies up until 2007. The Scots said this approach failed, with millions of pounds spent on courting investment to drive economic growth in rural areas. The result most often was a ‘Leaky Bucket Economy’, where the money that flows into the community flows right back out again – thereby creating limited local employment or sustainable long-term economic benefit to the community.
  • Social enterprises in the Highlands and Islands of Scotland employ more people than the combined sectors of Forestry, Fisheries and Agriculture.

Leveraging Assets

  • Rural businesses that are thriving in the Outer Hebrides and other global locations, all have an authenticity about them. They have a strong and obvious connection to the place, its people, culture and heritage. If we use a wine analogy, the businesses are like ‘terroir’ – they are the product of their location and have a sense of place.
  • My favourite example is Harris Tweed (Isle of Harris) where a ‘Scottish Act of Parliament’ ensures that a rigid quality regime is upheld, where local artisans weave tweed in their homes on the island as part of a production system that guarantees both local employment and a stamp of authenticity. This business deliberately honours local people being able to live on the Crofts (engage in a traditional Crofting lifestyle) whilst supplementing their income through on-farm weaving. Harris Tweed is sold globally.
  • Successful social enterprises build on existing, emerging or remnant knowhow. They seek to offer value-added products and services to the marketplace, utilising local markets as well as global markets through web-enabled platforms.
  • People who are connected to a place by birth, experience, ancestry or interests are people who may want to invest in rural economies. These are people who already care about a destination, town or location. They have means and may have grown up in the area and moved away or, they have a special connection with your community through holidays, family, friends or pursuit. ‘Connected investors’ are paving the way for many new and exciting rural social enterprises.
  • An outstanding example is Harris Distillery, a new business that is proud of the role its playing in building employment for the island. Musicologist Anderson Blakewell, with an affinity for the Isle of Harris, founded the distillery with a view to providing economic regeneration for the fragile local community.

 

There is a deep belief that the Island’s natural assets can best be harnessed to address our acute economic problems through ambitious projects like our own, bringing this special place and its qualities to the attention of a wider audience’.

 

The capital to fund this enterprise (now employing 68 local people), has been a combination of local investment, public grants from the Scottish government and private investors with an affinity for rural life and an interest in the vision of the project. Over 20 million pounds was contributed by ‘connected investors’.

Access to Capital

  • The Scottish Government recognises the need to provide communities with access to finance, through grants and patient loans. They recognise the barriers to finance for projects outside the major cities.
The Scottish Land fund provides 10 million pounds per annum in grant funding alone to support local communities own their own assets.
  • The Big Lottery Fund in the UK dedicates a percentage of its profits to community and heritage projects in the form of grants. Their plaque is on many preserved buildings across the UK.
  • Big Issue Invest is a spin-off of the Big Issue, a global social enterprise magazine tackling homelessness. They provide patient finance to projects of community benefit, that wouldn’t ordinarily be able to secure commercial finance.

Community Owned Assets

  • There is a recognition by the Scottish Government that local communities are best at owning and managing their own assets sustainably. In fact, there is legislation that allows communities ‘the right to buy’ their valued assets when they come onto the open market, whether in public or private ownership.
  • The Development Trusts Association of Scotland (DTAS) provides advice and support to local communities embarking on their community asset ownership journey. In rural communities, this often starts with the retention of a valued local service. Over time, and with the confidence success brings, these groups often extend their interests to bold and ambitious community renewal enterprises.
  • The Callanish Standing Stones on the Isle of Lewis are second only in fame to Stonehenge, for their links to the late Neolithic era, where they were a focus for ritualistic activity during the bronze age. The local people have built a community café and visitor centre, close to the site. It provides a hub for local meetings and functions as well as a thriving tourism driver for local employment. The young self-taught local chef, who runs the café, is building a great local business focussed on the best of regional produce, blending contemporary and traditional cuisine. The site is providing sustainable local employment and Gregor has just started a cooking show on Gaelic TV. A global star in the making!

The next generation, or a place to retire

  • All countries represented at the symposium have a very real challenge in common. New ideas, technology-enabled business models, changing tourism expectations and globalised economies are megatrends often at odds with the views of how retirees see the future.
  • With a lifetime of education and resources at their disposal, a common theme was vocal recent or soon-to-be retirees often resistant to change in the rural communities they inhabit, many wanting a ‘quiet life’ in their later years.
  • Our Scottish, Canadian and New Zealand counterparts cited examples where entrepreneurial and ambitious endeavours required to lead rural communities out of depopulation were often thwarted. Families and young people not able to find the necessary support for new ideas and eventually moving away or back to metropolitan locations. This issue is not helped by the average age of local elected officials.
  • Interestingly, the opposition to these projects rarely came from multi-generational inhabitants, as these residents have an investment in the next generation being able to forge a local future.
  • Symposium delegates all concurred that the next generation of social enterprise practitioners are incredibly bright, capable and willing to lead the change required to navigate a complex and uncertain future in rural economies. The majority of under 35’s are unwilling to pursue a career that doesn’t consider people and the planet at the centre of all their future decision making. This provides great hope for the change our global society desperately needs.

State of Play

Scotland
  • HIE and its relationship with rural communities represents a genuine partnership model that has trust, mutual benefit and low political interference at its heart. Australia could benefit greatly from taking a community development approach to achieving inclusive economic development.
  • Scottish social enterprise practitioners enjoy a mature ecosystem of national support.
Canada
  • At least five provinces across Canada have social enterprise strategies. A national strategy is currently being developed with $1 Billion being suggested as the initial investment, half into a social enterprise capital fund, the other half into capacity building activities.
New Zealand
  • After hosting the Social Enterprise World Forum in Christchurch 2017, the New Zealand government is highly engaged in the development of a national strategy. Senior ministers in the NZ government attended the Social Enterprise World Forum in Edinburgh 2018 to gather intelligence and learn from existing and emerging best practice. They have already launched a Social Enterprise Investment Fund.
Australia
  • To my knowledge, apart from the Independent member for Indi, Cathy McGowan, there are few federal politicians who have taken an interest in the social enterprise sector in Australia, despite there being an estimated 20,000 social enterprises operating in Australia.
  • Victoria is leading the way with the recent development of a Victorian Strategy 2017-20. This strategy has a modest budget but still represents real effort with some good thinking behind it. The Social Procurement Framework, for example, is world class. Hopefully, there are some political champions emerging to build on a good start!

 

Next Steps

The Inaugural Rural Symposium for Social Enterprise provided an incredible vehicle for practitioners and policymakers to learn from each other and the experience of HIE. The growing movement of social enterprise recognises that the drivers present in rural areas are often quite different to those in the urban areas.

This symposium reinforced that there are a number of universal issues and opportunities. Through learning from and actively supporting each other, we can advance the policy and practice for rejuvenating rural communities.

I’m looking forward to the role we can play in building momentum for rural rejuvenation through social enterprise, as well as supporting the next generation of rural enthusiasts in complex, uncertain yet exciting times.

 

Acknowledgement

I’d like to acknowledge the support of the Dal Zotto family and their commitment to rural economic development. They provided me with a fellowship to attend the Rural Symposium through the International Specialised Skills Institute Fellowship.

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