Examination of Witnesses (Questions 427
THURSDAY 14 DECEMBER 2000
Chairman: Ladies and gentlemen, I would
like to welcome you here today. Thank you for attending. Could
I just make the point that if on this side of the table you regard
the attendance as being thin, it is not out of discourtesy. Some
of our colleagues do have overriding obligations. For example,
one is a member of the War Graves Commission, which is meeting
today; but, as I repeat, no discourtesy whatever is intended.
I will ask Mr Fearn to open the batting.
427. Good morning. There is a concept that when
the Lottery came in, that all charities were affected. I can think
of certain charities in my own constituency of Southport, who
immediately threw their hands up in dismay and said, "This
is going to affect our lottery. Some of them will go out of existence."
None of them have up to now. Is this a concept which is not founded
(Ms Bolton) It is the case that some charity lotteries
have gone out of business. We know, for example, of an organisation
called Tenovus, which was a charity lottery operation raising
money for cancer research. That has gone bust. I understand that
UK charity lotteries have actually gone under so there has been
some effect. However, over all, we think that the impact has been
very mixed. That probably, the income from charity lotteries or
raffles, has stabilised after a certain period of decline.
428. Is it the case that because of the Lottery,
many charities have got more money than they would have normally,
and it has not affected them at all? Or is that not a fact?
(Ms Bolton) Again, we would have to say that there
has been a differential impact. We have done a lot of work looking
at the voluntary sector economy during the 1990s. We have not
been able to do the sort of work that would actually tease out
a causal connection between the Lottery and charitable giving,
but we do believe that there must be a correlation and that the
Lottery must be one factor which would help to explain the quite
dramatic decline in charitable giving that occurred between 1993
and 1996. This is because during those years there was a real
terms decline of 30 per cent. Now, luckily for us, charitable
giving is steadily increasing, although we are nowhere near the
level that it was at the beginning of the 1990s.
429. Mr Buse, do you have something to say?
(Mr Buse) No, I think my colleague is master of the
facts on the giving side. There is a very full report that has
been recently published which identifies, as Margaret has just
said, that it is very difficult to demonstrate the causal relationship.
However, some of the underlying numbers are as Margaret has described.
430. Do people think that the Lottery is gambling
and that this would affect any monies that charities would receive
from the lotteries? Does gambling come into this?
(Mr Etherington) Some charities have refused Lottery
funds because it has been associated with gambling, particularly
some Christian charities. The NCH Action for Children, which is
Methodist based, refused Lottery money, but there has been some
evidence that others have accepted Lottery money. It is worth
expanding on what Margaret was saying in terms of where charities
seem to have suffered. Larger charities, those with over a ten
million pound income, seem to have done remarkably well during
this period. They have bigger brands; more effective fund raising.
Smaller charities seem to have done reasonably well, although
not quite as good as the large ones, and we think there is a Lottery
effect. The National Lottery Charities Board has been succeeding
in giving its money to quite small community organisations. As
a result, there has been an increase there. The ones which seem
to have suffered are those between £200,000 income and £10
million. We are not quite sure why that is. There might be a number
of factors. There is no doubt that charitable income, particularly
spontaneous givingputting money in a tin, buying a charity
lottery ticketdeclined, as Margaret said, from 1994, when
the Lottery started, to about 1997, although it is picking up
431. Is the National Lottery Charities Board
fair in its distribution?
(Mr Etherington) They could do with more money but
in terms of the way they distribute
432. What is the total sum?
(Mr Etherington) The total sum of LCB distribution?
(Mr Buse) We have numbers which would demonstrate
that there are bids for Lottery charity money to the extent of
£10.6 billion and that the distribution is £1.8 billion;
so some of the concerns we have is that the demand seems significantly
to exceed the supply. The particular concern we have there is
that we are working with beneficiaries, whose hopes and aspirations
are somewhat raised when these bids go forward, which can be somewhat
demanding in the nature of the process, the paper work in advance.
Therefore, there are beneficiaries now who are asking some serious
questions about the process of applying, given that difference
between the amount bid for and the available monies for distribution.
433. Is the process affected by the application
form? You mentioned that the smaller charities are the ones who
(Mr Etherington) The medium sized.
434. Is that because they do not know how to
fill in the forms? Or are the forms too long?
(Mr Etherington) Boards vary in their ability to get
money to smaller groups. The National Lottery Charities Board
and Sport and some of the Arts funding has gone to smaller groups,
particularly from the Charities Board. What we are discovering
is that with some of the partnership bidding processes under the
new distribution board, the New Opportunities Fund, it is quite
difficult for small groups to get engaged in that process. It
is not a level playing field. They do not have the capacity to
make particularly large bids. If they do not have the capacity,
they will not be able to make bids. I know that all the boards
are aware of that and are trying to develop mechanisms for giving
to smaller community groups, with variable success.
435. When we think of the Instants prize
money tickets, things like that, there is a difference between
hard gambling and soft gambling. How do you consider that? Is
it hard or is it soft? A lot of people do pick up these Instants
tickets, which ordinary charities now have as well.
(Mr Etherington) When the Lottery was first devised,
there was a lot of discussion about heart stoppers and the Instants.
In fact, the Instants tickets never went up to very large
amounts of money at that time. I do not know that it is necessarily
hard gambling. The evidence about addictive behaviour of gambling
is quite mixed.
(Ms Bolton) That is right.
436. So in general terms you are quite satisfied,
from what I gather, about the way in which the Lottery charities
(Mr Etherington) Our concerns about the decline of
charitable income have not gone away. We think there is a need
to continue to monitor this because we need to understand what
the dynamics of this is. Charitable giving began to recover in
the late 1990s, although it had begun to decline in the mid 1990s.
We think that some of the boards are better than others at distributing
to smaller community groups and need to improve their performance.
We are particularly concerned that any monies which come through
the Lottery are additional to public spending. Charities signed
up to the Lottery because they believed that would be the case.
(Ms Bush) We also have concerns about the sustainability
of the funding that is provided from the Lottery: whether or not
it is contributing to creating a sustainable voluntary sector.
We do have concerns that at the moment it is not. Maybe more could
be done to increase the sustainability of funding provided through
the Lottery and to help build the sustainability of voluntary
437. What dialogue do you have with the boards?
You are here today and we are giving you a voice, as it were,
and you can say whatever you wish. But what dialogue do you have
with the boards themselves?
(Mr Etherington) We have a pretty reasonable dialogue
with the boards, particularly in discussions about their priorities.
This is particularly true of the NLCB where we have the most dialogue.
We put forward a number of points about sustainability. I think
this worries the boards as much as it worries us, frankly. There
are a number of ways in which it could be done. Grants could be
extended for longer and some grants take the form of loans. Some
grants could take the form of endowments. There needs to be some
capacity to equip the managers of small organisations into how
to do this. There are ways in which it can be done. Arts have
been quite significant in relation to this in terms of the stability
fund: helping arts managers to understand how to diversify their
funding sources. So they vary. The dialogue with the Charities
Board has been an interesting one, in that they recognise that
charities are a key stakeholder in what they are doing. They involve
them in discussions about their strategic priorities. Questions
arise around the newest board as to whether they can, in fact,
discuss with stakeholders not how the money will be distributed
but where it should go, because the policy guidelines they receive
from the Government are much more restrictive policy guidelines
than the other boards receive. Perhaps a little more flexibility
in that might be useful to them.
438. So you think they are too restrictive?
(Mr Etherington) The guidelines for the New Opportunities
Fund are too restrictive, yes.
439. You all think that?
(Mr Buse) Yes.