£71 million reduction in charitable donations. If that trend continued, the
voluntary sector was expected to lose £212 million by the end of 1995. The
percentage of people donating was also seen to fall, from 81 per cent in
November 1994 to 67 per cent in March 1995. However, the Lottery does
redistribute funds back to charities, although the allocation is fixed at 5.6
per cent of each ticket sold. This means they are due to receive only £155
million, leaving a shortfall of £57 million in 1995.
There also appears to be confusion amongst the general public on how
much of the money they spend on the Lottery is actually going to charity.
Research by the Charities Aid Foundation found that people on average
thought 20–22 pence went to charities. This view was encouraged by the
first saturation advertisements, which promoted the Lottery as benefiting
‘good causes’ by 28 pence per ticket. This, in fact, refers not only to chari-
ties but to sports, the arts, National Heritage and the Millennium fund.
The board which distributes the funds also can determine the type of
charity to which the funds are attributed. The first payments in October
1995 were restricted to ‘causes to help the poor’. This prompted a reply
from Stuart Etherington, Chief Executive of the NCVO, who said in May
1995, ‘while helping disadvantaged people is clearly worthwhile’ it would
have been helpful if the board had ‘given some indication as to when
other causes, like animal welfare and medical research, would be eligible
to apply’.
Street collections and the purchase of raffle tickets are the biggest
source of income that has been affected. These forms of fund-raising are
used by large and small charities and did account for 10 per cent of the
total value of charitable donations by the general public. Charities that
run lotteries themselves have been severely affected. Many of them, such
as Tenovus, the cancer charity, and Arthritis Care, were forced to
abandon their lotteries in 1995 despite revenue running into millions of
pounds in previous years. The RSPB has also been affected to a degree, as
their raffle revenue has been reduced since the launch of the National
Lottery. In financial terms this amounted to just over £100 000, which is
less than 1 per cent of their total income. Thus the effect of the Lottery is
less profound on charities that rely on memberships, bequests and sub-
scriptions.
However, latest figures show that the gloomy prophecy of 1995 appears
to be premature as the total revenue taken by charities in 1995 was up by 2
per cent on 1994. The study by the Charities Aid Foundation in May 1997
reported that the public have in fact increased donations over that time,
despite a drop in corporate donations and revenue from charity shops. One
theory proposed for this increase is that the huge publicity generated by
the Lottery has had a beneficial effect and has raised charity profiles in the
UK.
The study also showed that a large percentage of the growth has come
144 Relationship Marketing