There is a growing interest in the role of social enterprises and third sector organisations in delivering a range of services and many claims made about their innovative potential. There is therefore a need to examine the approaches to innovation. This paper examines the different sources of innovation amongst third sector organisations that are involved in social enterprise activity. Drawing on three case studies of charities with a majority of their income from social enterprise activity, the paper explores what innovation can mean in the current policy environment and also identifies the diverse sources of innovation. These can relate to the products or services and to the process of delivering these. Social enterprise activity can also create a space for innovation in terms of positioning services for new users/funders, and can reflect a changing paradigm of delivering services. The paper concludes by raising questions regarding the extent of innovative activity and the extent to which innovation is encouraged or hindered by current political and institutional context
