The term social economy is used to cover those organisations in the ‘not for personal profit’ sector and is located between the public and private sector but is distinct from both. Organisations operating within the social economy are often linked to wider economic and social regeneration whereby the wider community benefit from the success of an organisation. Any financial surpluses that organisations make are channelled back into furthering the aims of the organisation and the community it serves as opposed to personal or shareholder gain. It is perhaps useful to think of the term ‘social economy’ in terms of local economic and social regeneration as opposed to trying to define it.

In their Review of the Social Economy published in 2003 the Scottish Executive noted that, ‘in the same way that there is no absolute definition of the public and private sectors as there are increasingly hybrid organisations that do not fit with any traditional view so there is no generally agreed definition of the social economy.’ In many ways exact definitions could prove counter productive by trying to ‘impose certainty on what is a dynamic area of economic activity’.