It’s birthday time. The national Lottery started life on 14th November 1994. Two years on, camelot is celebrating with a new and separate charitable foundation as the primary channel for its community involvement activity.
Achievements
Love it or loathe it, the National Lottery has in those two short years chalked up some remarkable achievements: the largest lottery in the world, it is regularly played by 30 million people – nearly two-thirds of the UK adult population; it is the most efficient world-wide at generating contributions to tax and good causes as a proportion of sales, so far yielding ?2.5 billion for the five causes set by the UK government (sports, arts, heritage, charities and Millennium) and a further £1.1 billion to the government itself.
Currently weekly sales average around £70 million, earning nearly £7 billion in the first two years. Sales income splits as follows:
50% to winners;
28% to good causes;
13% to the government in lottery duty, tax and VAT;
5% to some 30,000 retailers as commission;
3% spent running the lottery;
1% in profit to Camelot.
That one percent as profits amounted to £51.1 million in the first full year, £77.5 million before tax, causing a predictable fuss in the media. In May, the House of Commons National Heritage Committee called on the Lottery operator to donate more to charity. The declared community contribution of £550,000 represents 0.7%, comfortably ahead of the Per Cent Club minimum. Camelot says its contribution is now accelerating, with donations of £850,000 in first half of the current financial year alone.
Initial activities
In the first two years, the company concentrated on small community and charitable projects, consciously seeking a nationwide spread, but without a defined policy focus. It recruited as programme manager Alethia Gentle, who previously ran Capital Radio’s Help a London Child and prior to that worked at ITV Telethon. A Board sub-committee for community support oversaw activity, chaired by a non-executive director, Mary Baker, who is vice-president of Opportunities for People with Disabilities, a former chairman of London Tourist Board and a non-executive director of Barclays Bank.
Most donations were under £5,000, with few restrictions and only broad exclusions such as capital projects, individual beneficiaries and overseas ventures. Among the limited number of larger projects were:
£50,000 for Radio Lollipop, the hospital radio station for children;
£100,000 for the Media Trust to produce materials on running a voluntary group;
£27,000 for the Employers’ Forum on Disability.
New foundation
In November the Camelot Foundation was announced, with Mary Baker as chair of trustees and Alethia Gentle transferring across as director. Other trustees include Usha Prashar, deputy chairman of National Literacy Trust and formerly director of NCVO, and Sir Clive Whitmore, Chancellor of De Montfort University and a trustee of the British Heart Foundation, along with thee Camelot main board directors. Henceforth, the trustees will nominate replacements, not Camelot itself.
The Foundation will soon be housed in separate premises with its own staff. The aim is for clear separation and independence, with those knowledgeable about the needs of the community setting policy – although in the final analysis Camelot could withhold funding. The initial policy is to concentrate on disabled and disadvantaged people, helping them to play a fuller part in the workplace and the community. More detailed policy guidance is expected after a period of consultation.
The initial promised donation is ?5 million in the first year, equivalent to more than 6% of Camelot’s pre-tax profit last year, which would certainly make it among the most generous corporate donors. While the company is careful not to promise a fixed amount or a direct link to profits thereafter, it is hard to see how Camelot could cut the sum significantly without enormous media controversy.
Responsibilities
In seeking to be a socially responsible company while running what is in essence a gambling business, Camelot’s concerns need to go wider than community contributions alone. The introduction of Instants, the scratchcard scheme, and now a second, mid-week, draw, due in early 1997, provoked some critical comments. Inevitably more new products will be needed to maintain interest over the years ahead. Many of the concerns are similar to those faced by drinks and tobacco companies – worries about addiction, the effect on young people and the diversion of spending by people on poverty-line incomes.
Camelot argues that only a tiny minority of the public are in danger of addiction to gambling. It liaises with single issue and pressure groups and takes steps to restrict young people from playing, investing much effort in educating retailers over whom it has not direct management control as they are agents not employees. As with tobacco and alcohol, any research on these issues directly commissioned by the company is automatically questioned, however professionally undertaken.
Another concern is the environment, especially problems with litter. Camelot has devised an action plan with the Keep Britain Tidy campaign and this is included in the training programme for retailers.
Assessment
At first sight, a separate and largely independent foundation runs contrary to general trends in corporate community involvement: other companies are seeking stronger links with the business and devising strategies for contributions that meet clear commercial objectives too. But Camelot does not need the publicity; as the monopoly supplier of the national lottery, it does not need to attract or retain customers to Camelot as such; the community involvement is emphatically not intended to encourage people to buy lottery tickets. With 650 staff at present, internal considerations are also not paramount.
It does need to worry about its general reputation, but is always open to the accusation that not enough is done. Indeed those calling for a non-profit making operator (including the Labour Party) are effectively arguing for all profits to be donated. But therein lie two dangers.
The first is the likely effect on ordinary charitable donations if the Lottery itself was marketed as and by a charity. At present the evidence about reduced normal charity donations is mixed and government research is underway. Some adverse effect seems inevitable, if only just from the amount of discretionary spending absorbed by the £2.50 average weekly purchase. What would happen if people saw buying a ticket as a donation itself?
Second, a more ideological worry: if a non-profit operator was any more than 2% less efficient than Camelot, the cost in lost revenue to the ‘good causes’ and national exchequer would exceed profits currently made anyway. Is £300 million in profits a fair price to pay for raising £9 billion for good causes and ?4 billion in tax over the seven year licence period? Ultimately that’s a matter of judgement and opinion.
Indeed to focus on Camelot’s profits under the licence is to miss a wider point. The five owners – Cadbury Schweppes, De La Rue, GTECH UK, ICL and Racal Electronics – make money from selling their services to Camelot and using the expertise gained for activities outside the scrutiny of the OFLOT regulator, perhaps overseas. So those examining the Lottery’s contribution to the community would do well to praise Camelot but put the spotlight its owners: some of them are recognisable as good corporate citizens, others not.
FactFile
Camelot Group plc
Year ended March 31, 1996
Chairman: Sir George Russell
Chief executive: Tim Holley
Main business: the operation and promotion of the National Lottery under a seven year licence from the Director General of the National Lottery; company owned by Cadbury Schweppes, De La Rue, GTECH UK, ICL and Racal Electronics
Turnover: £5.2 billion
Pre-tax profit: £77.5 million
Employees: 591
FT UK Top 500 ranking: not applicable
Community contribution: £550,000
Percentage of pre-tax profit: 0.7%
Memberships: BITC
Contact: Louise White, Head of Public Affairs, or Alethia Gentle, Director Camelot Foundation
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