Money for good causes can be increased if stifling legislation and regulation are changed, say researchers nfpSynergy

New nfpSynergy report calls for win/win on charity lottery regulation

Charities are missing out on vital funds because their lotteries are being stifled, a new report argues. ‘A Chance to Give’, published by research consultancy nfpSynergy, is calling for an overhaul of unnecessary legislation they say “has not kept up with the real world” and is hurting a vital fundraising tool. The report argues for specific changes they say could increase the money raised for good causes. It also details how the public and charities see lotteries and sets out the key areas where regulation affects lottery fundraising.

The key recommendations are:

  • Keep the 20% minimum contribution rule, but average it over 3 years. Currently each and every charity lottery must make a minimum contribution to the cause (i.e. make a profit) of 20%. The report suggests that this should be averaged over a three year period. This would allow charities to recruit more players, meaning they could raise more money in the long term and still stick to the 80:20 rule over time
  • Let lottery ticket purchases quality for Gift Aid. HMRC rules say that any benefits received for a donation must be less than 25% of the total value of the amount given. The report suggests that if prizes were less than 25% of turnover, tickets would be eligible for Gift Aid, collectively keeping to HMRC regulations. Alternatively, once a prize is drawn, the tickets of those who didn’t win prizes could qualify for Gift Aid
  • Make it easier to register and run a charity lottery. Currently, it is as difficult to register a lottery above £20,000 as it is to run a casino. Worse still, a lottery run online and on paper needs to be registered twice. The report recommends one simple registration process.
  • Remove the limits on turnover and prizes as the National Lottery doesn’t need protecting. There is a cap on charity lottery turnover of £10 million, but the National Lottery takes in £6.5 billion a year. Even the Health Lottery is only around 1% of the size of the National Lottery. Therefore, we see no reason to the limit size and turnover of charity lotteries.
  • Make lottery regulation proportionate to a lottery’s size. The smallest lotteries should have little regulation, increasing proportionally with size. If a lottery reaches the £1b income mark, only then should it be regulated the same way as the National Lottery.

We found that, of the charities running lotteries that responded to our survey, half (52%) think lotteries are more regulated than any other form of fundraising. Two in five said their income from lotteries had increased over the last two years, with a third (32%) expecting an increase in the next two.

Joe Saxton, nfpSynergy’s Driver of Ideas, said:

“There is more regulation for setting up a charity lottery than setting up the charity itself. Lotteries are not tax-effective and regulation is hindering their growth. They are also highly regulated, as if they create problem gambling, yet the government’s own research shows there’s negligible evidence that they do.

The current setup is a win/lose in favour of the National Lottery because charity lotteries are deliberately restricted to stop them competing. As a result, charities are losing out in favour of protecting the National Lottery, a lottery with prizes in the millions and over £6 billion in annual sales. It’s like protecting the U.S military from the threat of Iceland.

We want to see a win/win where the amount raised for good causes from all lotteries is increased by reducing the regulatory burden and restrictive legislation. We’re proposing the changes because we think the goal of all lottery regulation should be to maximise income for good causes.”

For further comment from nfpSynergy’s Joe Saxton, please contact him directly on 07976 329 212 or joe.saxton@nfpsynergy.net

SOURCE: A Chance to Give, a report written by nfpSynergy. The full report can be downloaded at http://nfpsynergy.net/chance-give

- ends –

 

MEDIA COMMENT:

To interview nfpSynergy’s Joe Saxton about these findings, please contact him directly on 07976 329212 or joe.saxton@nfpsynergy.net. If you cannot contact Joe, please contact Rob White (07512 709140; E: rob.white@nfpsynergy.net) for further assistance.

Note to editors:

nfpSynergy (www.nfpsynergy.net) is a research consultancy dedicated to the not-for-profit sector. They aim to provide the ideas, the insights and the information to help non-profits thrive. They provide a unique insight into the social and charity-related views of everyone from public and parliament to media and business, not to mention not-for-profit organisations themselves. nfpSynergy has a vast and ever-growing knowledge pool and shares this with the non-profit sector, through both paid work and regular free reports and seminars.

 

Subscribe

Subscribe to our newsletter.