​Philip Rinn on lotto betting, which could be the future of charity fundraising

UK charities are being squeezed from all sides. They’ve lost more than £3.8bn in grants from government over the last decade, and this is set to fall further. There is an increasing public backlash against traditional fundraising with more than one-in-four people complaining about intrusive tactics. And competition for donors has now reached fever pitch.

So where do charities go from here? Many have just closed their doors. Others have diversified, moving into commercial enterprise, selling products or services to the public to supplement their income. And some are throwing everything they have at traditional Victorian fundraising methods such as canvassing door to door, or going all out to woo those illusive high-net-worth donors who can sign a cheque and meet all their funding requirements in one go.

Supporters want to give – possibly more so than ever before – but they want to donate on their own terms

Philip Rinn

A number of charities have chosen a different path. They’ve put all their efforts into digital fundraising, and according to the Lloyds Bank UK Business Digital Index 2016, the number of charities accepting online donations has more than doubled to 53% in the last year. But in an age where still fewer than three in five charities have their own website, not all are embracing the digital challenge: 78% are investing no money in digital skills in 2016 – down from 88% 12 months ago.

But there is one other option that’s rapidly gaining ground with smaller organisations: lotto betting. And it’s a smart move. Every single charity is sitting on an incredibly valuable resource: their supporter base. And this supporter base is slowly changing in a way that opens up a whole new world of fundraising opportunities.

Supporters want to give – possibly more so than ever before – but they want to donate on their own terms. They want to choose the context themselves and using the technology that’s so much a part of their lives and lifestyles. Digital fundraising gives them what they want. And lotto betting means they have the chance to win something too!

Lotto betting is not the same as a lottery. When a customer places a bet, they are not taking part in a lottery, but rather placing bets on the outcome of a lottery. It’s a system that has been popular in Europe for decades and it’s now starting to gain traction here in the UK.

A number of charity and voluntary sector organisations have seen big fundraising gains through lotteries and lotto betting, and the list of organisations using the system to fundraise is growing fast. Currently organisations including The Arsenal Foundation, Leicester City Football Club, Foxes Foundation and Hampshire County Cricket in the Community have an online lotto betting offering.

And increasing numbers of charities including Marie Curie, Age UK and the North West Air Ambulance are opting for online lotteries or raffles, too. North West Air Ambulance’s £3.3m income from its society lottery accounted for 41% of its total 2014/2015 turnover.

This slow move to lottery is no surprise when research by the Charities Aid Foundation found that from 2005 to 2009, annual public donations to the sector averaged £11.9bn, but from 2010-2013 fell to an average of £11.3bn. The hard facts are that donations by individuals are not growing at a sufficient rate to mitigate the fall in grant income.

But why lotto betting? First, because it works. Take The Arsenal Foundation, the charity arm of Arsenal Football Club – the fifth most-valuable football club in the world. The Foundation’s projects range from programmes encouraging participation in disabled sports in London, to football camps reaching more than 400 children in Zimbabwean townships.

Partnering with Lotto Network, the Arsenal Foundation launched the Arsenal Lotto in 2013. For the last three financial years, income from lotto betting through Arsenal Lotto has accounted for a steady 10% to 14% of the Arsenal Foundation’s income.

The second reason why organisations choose lotto betting is because it’s free for the charity. There are zero set-up costs, all marketing and website design costs are covered, and the prize money is guaranteed. All highly attractive extras for a small charity in today’s climate.

But what about the brand considerations? Is it right to add lotto betting for more funding? There is concern in the industry that raising money through lottery mechanisms could have a harmful impact on a charity's brand. But in my view, and that of our charity partners, the positives far outweigh any negatives. Lotto mechanisms have played a critical role in funding big social projects for a long time.

In addition, it’s worth remembering that over the last 20 years the Big Lottery Fund has grown to become one of the largest ongoing sources of income for UK charities. The fund consists entirely of the money raised by people playing the UK National Lottery. Lotto betting is an effective way to bet on an established foreign lottery and raise money for UK charities in the process.

For many charities, the transition to digital fundraising is not easy. But lotto betting stands out from other methods precisely because it’s quick, easy and cheap – or even free - to implement. Plus, it incentivises giving: existing customers are rewarded for the donations they want to make with the chances of winning cash prizes, therefore boosting retention, and the prospect of prizes is also an effective customer acquisition tool. That’s a powerful and appealing combination.

As well-respected UK charities continue to suffer, and in many cases close, in my view, the answer is not to invest further money in the income sources that failed them in the first place, but to use new technologies to innovate and create a new way to tap into the lives of the next generation of donors. The technology and appetite is there – ready and waiting to help charities survive through the 21st Century.

Philip Rinn is managing director of Lotto Network.