Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 427 - 439)



  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.

Mr Fearn

  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 at all?
  (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 giving—putting money in a tin, buying a charity lottery ticket—declined, as Margaret said, from 1994, when the Lottery started, to about 1997, although it is picking up now.

  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 have suffered.
  (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 operate?
  (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 organisations.

  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.

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