Charities face more bad news as lottery revenues tumble

16 Jun 2017 Nick Garbutt    Last updated: 16 Jun 2017

HMS Caroline lovingly restored thanks to the Heritage Lottery Fund, picture: Wikipedia

Lottery operator Camelot has just ordered a review of its operations after ticket sales slumped by 8.8% in the last financial year. 

This is very bad news for charities, already grappling with reduced investment from public bodies, and especially bad news for those based in Northern Ireland. Here we already face a perfect storm for funding with the double uncertainties around Stormont’s budget and the implications of Brexit.

 It has translated into a 14.4% drop in monies available for Good Causes. The best known distributors of Good Causes monies are the Big Lottery Fund, Heritage Lottery Fund and the Sports Lottery.

Big Lottery is the fund most accessed by charities. It does not give year-by-year figures for its funding here but based on four-year reports previously published the figure is probably between £17 - £20 million. Contingencies are built in to the planning process to mitigate the impact of downturns in sales but the impact will be felt. Given Camelot’s downbeat future predictions there is no immediate prospect for recovery. The situation will be similar for the Heritage Lottery Fund.

The reason why Good Causes suffer what appears to be a disproportionate loss is as a result of three factors: it gets more money from draw based games like Lotto and these have seen significant downturns in sales; the second is the mix of sales between shops and online, with retailers entitled to a cut of sales in their stores, and monies redistributed as a result of unclaimed prizes.

Camelot are clearly concerned. The slump is significant: 8.8% is a big number, particularly when you bear in mind the number of lost tickets that involves. The investigation is to be led by the incoming chief executive Nigel Railton. When business reviews are led personally by the boss you know that they are serious.

We cannot anticipate any immediate upsurge. The company believes that this current financial year will be just as challenging.

Some of the shortfall is explained by the rise of alternatives like the Health Lottery and various Postcode Lotteries which we have previously analysed. As these do not operate in Northern Ireland we cannot expect additional funding to find its way here from those sources. Furthermore whilst Big targets money at the most vulnerable, the insurgents, for marketing purposes, tend to plump for more populist causes. They also have significantly higher overheads than Camelot, which means that less money ends up supporting causes, more going to the operator.

Doubtless the review will be far-reaching and effective remedies will be found to turn the situation around. However this will take time.

There is a way in which short term problems for funders might be addressed. At Westminster charities are beneficiaries of dormant bank accounts. To date £360 million has been redistributed. The government is currently considering proposals to expand the scheme to include dormant stocks and shares and other investments. This would boost the pot to £2 billion.

In Northern Ireland a fund has been created and currently sits at around £7 million. However this dormant account is itself dormant with no monies redistributed. Unlocking it to bridge the shortfall until lottery revenues recover would be a simple and effective means of resolving the problem. We will explore this issue in more detail in a future Scope article.

There is another imperative as well. Many organisations are quick to publicise the good work they do and to acknowledge the source of the funding. This is important. Lottery players are entitled to know how their money is spent and seeing it put to good use is important.

British Olympic success, to take just one example, is a direct result of lottery funding and therefore directly attributable to lottery players.

However there are other recipients who are happy to take the money but not so proactive in celebrating or even acknowledging its source. This is not just ungracious it is ultimately self-destructive.

 

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