Posted By Alex Le Vey on October 3, 2011

A number of charities run lotteries, and they have proved to be a safe source of income for them, with their popularity remaining robust even throughout the economic downturn. Interestingly, people that participate in charity lotteries are often new supporters, therefore adding to an existing supporter base rather than taking away from already established income streams, such as regular giving. More interestingly still though, once signed up to play the lottery, participants do not tend to want to become involved in other activities to support the charity . Lottery players are…… lottery players!

Lotteries are not the most effective way to give to charity, but the best run lotteries do retain a fantastic proportion of every pound (around 75 pence, with the remainder used to fund administrative costs, prizes and so on), but many lotteries, especially those run by third parties, are far less lucrative for charities. Running a successful lottery takes time, effort and a lot of resource, meaning that the majority of charities starting a new lottery operate at a loss for the first few months, and struggle to see any significant return on investment for the first few years of operating. Therefore, only charities in a very strong financial position are to take the lottery leap, others are forced to look at other options.

Whilst some third party lotteries are not very lucrative for charities at all, some provide a very reasonable return. On top of being fairly profitable third party lottery organisations absorb all of the risk which a charity would be faced with if they decided to ‘go it alone’. This makes the proposition of a third party lottery very attractive, especially for those in a less than perfect financial situation. In light of this, I was very disappointed to read about a new lottery product which was launched last week. The ‘Health Lottery’ was rightfully condemned by the Hospice Lotteries Association (HLA), as it poses a serious threat to the profitability of all other lotteries operating in the Health Sector. Moreover, positive publicity around the Health Lottery fails to recognise that only 20 pence of every pound will be passed on to charitable causes (the lowest legal requirement), with the other 80 pence disappearing into the unknown!

Lotteries have a key role in the charity sector, they encourage a different group of people to support charities, increasing giving and providing sustainability to a wide range of causes. They must though, be made as accessible and profitable to as many charities as possible.

Categories: Charity sector commentary
Tags: charity income, lotteries, Lottery sustainability, retention