What is community wealth building?
Community wealth building is an economic development approach that redirects wealth and resources back into local economies. Rather than extracting value through external supply chains or shareholders, it prioritises local employment, procurement from local suppliers, investing in community assets, and building financial resilience within communities.
The approach is already established in several Scottish local authorities, including North Ayrshire, which has pioneered community wealth building principles since 2016. The Bill will make these principles a legislative requirement across Scotland’s public sector.
What the Bill requires
The Community Wealth Building (Scotland) Bill places new duties on public bodies to consider and report on community wealth building in their procurement and economic development activities. Whilst the final legislative text is still being refined, the core requirements are expected to include:
- Procurement strategies that prioritise local economic benefit, fair work practices, and community ownership where appropriate
- Annual reporting on community wealth building outcomes, including local spend, employment outcomes, and community engagement
- Strategic alignment between procurement decisions and local economic development plans
- Fair work criteria embedded in contract specifications and evaluation
For third sector organisations, this means contracts will increasingly require evidence of how your work contributes to community wealth building outcomes, not just service delivery outputs.
The connection to social value
Community wealth building and social value measurement are closely aligned. Both frameworks require organisations to demonstrate impact beyond their core service, considering economic, social, and environmental outcomes for communities.
However, community wealth building places particular emphasis on:
- Local economic multipliers – how money circulates within the local economy
- Wealth retention – keeping resources within communities rather than extracting them
- Democratic ownership – involving communities in economic decision-making
- Fair work – quality employment, living wages, and workforce development
If your organisation already measures social value, you have a foundation to build on. The challenge will be ensuring your measurement framework captures the specific outcomes that community wealth building prioritises.
What third sector organisations should do now
- Review your supply chain and procurement practices
Examine where you currently spend money. How much goes to local suppliers? What employment practices do your suppliers follow? Can you shift procurement to support local businesses or social enterprises?
This isn’t about performative localism – it’s about understanding whether your spending patterns genuinely support local economic resilience.
- Map your workforce and employment practices
Community wealth building places significant weight on fair work. Review your employment practices:
- Do you pay the real Living Wage?
- What apprenticeship or training opportunities do you offer?
- How do you support workforce development and progression?
- What is your approach to flexible working and employee ownership?
These factors will increasingly appear in contract evaluation criteria.
- Establish baseline measurement for community wealth building outcomes
You need to know where you are before you can demonstrate progress. Establish baseline data for:
- Local spend as a percentage of total procurement
- Number of local jobs created or sustained
- Training and skills development provided
- Community engagement and co-production activities
- Fair work indicators across your workforce
- Align your Theory of Change with community wealth building principles
If you use a Theory of Change or logic model for your work, review whether it explicitly addresses community wealth building outcomes. Consider:
- How does your service contribute to local economic resilience?
- What multiplier effects does your spending create?
- How does your work support fair work and quality employment?
- What role do you play in building community assets or capabilities?
- Build relationships with local anchor institutions
Community wealth building works through collaboration between anchor institutions – large organisations like councils, health boards, housing associations, and universities that are rooted in place. Third sector organisations that position themselves as part of this anchor network, rather than peripheral service providers, will be better placed as the legislation takes effect.
Practical measurement considerations
The challenge with community wealth building is that many of its outcomes are harder to measure than traditional service delivery metrics. Local economic multipliers, wealth retention, and community ownership are conceptually clear but methodologically complex.
This is where social value measurement becomes essential. SROI-based approaches allow you to:
- Quantify economic outcomes using recognised proxy values
- Demonstrate additionality – what wouldn’t have happened without your work
- Test assumptions through sensitivity analysis
- Provide evidence that withstands scrutiny in procurement evaluation
However, measurement must be proportionate. Not every third sector organisation needs a full SROI analysis. What you do need is a clear line of sight between your activities, your outcomes, and the community wealth building principles the Bill prioritises.
Common pitfalls to avoid
Treating this as a communications exercise
Community wealth building requires operational change, not just better storytelling. Procurement strategies, employment policies, and strategic planning all need to reflect these principles.
Assuming social value and community wealth building are identical
They overlap significantly, but community wealth building has specific priorities around local economic control and democratic ownership. Your existing social value work may need refocusing.
Waiting for detailed guidance before acting
Legislative detail will develop over time, but the direction is clear. Organisations that start now will have an advantage over those waiting for prescriptive frameworks.
Measuring everything, evidencing nothing
More data does not equal better evidence. Focus on outcomes that matter to decision-makers: local economic benefit, fair work, and community resilience.
What happens next
The Bill is progressing through the Scottish Parliament, with implementation expected to begin in 2026. Public bodies will be required to publish community wealth building strategies and annual reports, which will create transparency around how public money is being used to support local economies.
For third sector organisations, this represents both a challenge and an opportunity. The challenge is adapting to new procurement requirements and reporting expectations. The opportunity is positioning your organisation as a strategic partner in building community wealth, not just a service deliverer.
Organisations that take community wealth building seriously – operationally, not just rhetorically – will be better positioned for the procurement landscape that is emerging across Scotland.
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We’ll be at SCVO The Gathering on 10 & 11 February at Stand 49. If you have questions about measuring community wealth building outcomes or want to see how Social Value Engine can support your organisation’s approach, come and talk to us.
