Why NCVO is wrong to oppose lottery deregulation

Over the past few years there has been a growing interest in society, or charity, lotteries. The Health Lottery brought the complex regulatory situation into wider consciousness. Our own report, A Chance to Give, researched sector and public views. Most recently the Centre for Economics and Business Research report looked at the economic case for deregulation. All this has resulted in an inquiry by the Culture, Media and Sport Committee and a soon-to-be-announced UK government consultation.

Alongside this background is the fact that lotteries have been a consistently strong fundraiser for charities through the recession. This is despite the fact that they are the most regulated fundraising technique in the UK.

Let me give just a few examples of this regulation:

  • The size of a single lottery is capped, the size of prizes is capped and the total turnover that an organisation can generate from lotteries is capped (at £10m a year).
  • It is more bureaucratic to start a lottery than to start a charity. It requires completing a form spanning more than 60 pages.
  • Each lottery that a charity runs has to provide a minimum contribution of 20 per cent to its respective cause. No averaging over a year, no grace period for new starters. Imagine that profit requirement being inflicted on a company.
  • Any organisation that runs a charity lottery of more than £20,000 has to register with the Gambling Commission.
  • Any lottery that is run both online and on paper has to register twice.

There are two main proposals that the fundraising community is agreed upon.

First, to increase the turnover, draw and prize limits imposed on society lotteries. In the past five years, it has become increasingly apparent that many organisations are, or will be, restrained by these caps, which only create additional costs and hassle. In our research with the public, only 12 per cent of respondents thought that the size of a charity lottery should be capped, while 68 per cent thought it shouldn’t. Similarly just 12 per cent of the public were against charity lotteries competing with the National Lottery.

Second, there is agreement that rather than each individual lottery having to achieve a contribution of 20 per cent, this should be averaged over a year or longer. Nobody as far as I am aware is arguing for the 20 per cent to be lowered, though some such as Camelot have argued for it to be higher to 28 per cent to match the National Lottery.

In its evidence to the select committee, the National Council for Voluntary Organisations opposed lifting the caps, and did not support averaging the 20 per cent contribution. The NCVO’s position is ideological and not evidence-based. Its worry is about public trust.

It argues for greater transparency by printing the contribution rate on every ticket. Not only would this increase bureaucracy, but it is impossible for most lotteries to predict the future and know precisely how many tickets they might sell and therefore the percentage of ticket sales given to good. It seems far less bureaucratic to support the Lotteries Council’s proposal for a public register that will provide details of its members’ operational costs, prizes and money to good causes on an annual basis.

The last points to address are whether society lotteries in some way cannibalise other giving, or impact on public trust. Both these worries run counter to the evidence.  On other giving being undermined, if you speak to any hospice, they will quite clearly tell you that their lottery is a very effective way of introducing people to their cause who then go on to give in other ways, such as direct debits and, in many cases, leaving a legacy.  And on public trust, as somebody who has researched and written more about public trust than almost anyone else in the sector, I have seen no evidence that lotteries are a specific source of concern. Indeed, the evidence suggets that other forms of fundraising are of much greater concern.

The fundraising community has come out in strength in favour of deregulation: the Institute of Fundraising, the Lotteries Council, the Hospice Lotteries Association, Macmillan Cancer Support, and RNIB to name but a few. There are a few organisations that oppose gambling on moral grounds, but the NCVO is the only major organisation that either runs a lottery, or plans to run a lottery, that has publicly said it doesn’t think deregulation is a good idea.

But we need NCVO’s support because of its stature. We really need it to look at the evidence for and against, look at the weight of fundraising support for change, and support the calls for change.

Joe Saxton is co-founder of nfpSynergy

  • Karl Wilding

    Hey Joe
    There’s much for us to agree about: lotteries generate valuable income for charities and NCVO members want us to champion the value they bring and the need to resource this. Lotteries are a way of contributing to charities so that they can make a bigger difference. It’s the reason NCVO is currently setting up its own society lottery to support our members.

    But we’ve also got a role in protecting public trust and confidence in charity. As other stories on Third Sector this week highlight, not everyone thinks lotteries are a good way to raise money as they are a form of gambling. Our response therefore has taken into consideration the views of members who think public trust and confidence could be damaged by an increase in gambling resulting from the substantial deregulation proposed by some. This may well be ‘a few organisations’, but they are nevertheless NCVO members and we rightly listen to them as well as those who support lotteries.

    Therefore, we took the reasonable position that it is incumbent upon any organisation proposing substantial deregulation to show that this will not impact on public trust and confidence in charity. Should that case be evidenced, we presume the CMS select committee will recommend deregulation.

    On the point regarding transparency, if the charity brand is being used to sell lottery tickets, it seems reasonable to us that the public know how much of the ticket price goes to the good cause. The public can then decide what to do. If there are better ways of helping purchasers make an informed choice than in our proposal we would of course be happy to listen to them.

    In summary, we have counselled caution before undertaking radical change, which is not the same as being opposed to deregulation. To quote a recent speaker at NCVO’s annual conference, one person’s red tape is another person’s safety net. Any changes in regulation need to take these opposing views into account.

    • Stephen Pidgeon

      Do I understand this right Karl? You have ‘a few organisations’ which object to lotteries because they are a form of gambling and on the basis of that, you have announced to Government that you are opposed to changes to the current regulatory regime. Perhaps these organisations are attempting to force their Christian views on secular charities. But how is it that you are, at the same time, setting up your own society lottery?

      Seems to me like you are using your powerful and influential position in the sector to launch a new product that is potentially highly profitable to you. So it suits you well that the regulations continue to inhibit charities. Will we, in the future, speak of the National Lottery, the Health Lottery and the NCVO Lottery in the same breathe.

      • Karl Wilding

        Hello Stephen,
        No, you do not understand this right.

        • Stephen Pidgeon

          Could I ask perhaps, which bit I don’t get right?