Tuesday, January 21, 2014

The Real Numbers Behind Irish Charity Scratchcards

Tonight Minister for Justice Alan Shatter revealed that Rehab lottery scratch card sales of almost €4m in 2010 yielded profits of only €9,452.

Obviously the press and the Internet reacted with shock and horror. But the story is essentially not true. There are a few key facts missing:
  1. Charity scratchcards make their actual money from the Charitable Lotteries Fund - the government pays compensation to the charities based on how much they sell.
  2. Rehab brought in an additional €4 million a year because of their sales, so their actual profit was way higher than €9,452.
    For example, my charity might spend €1 to sell a €1 scratchcard. But the Government gives me an extra €1 compensation. So I've actually got a 2:1 ROI even though the actual 'sale' didn't make a profit. To me that's a sound investment.
  3. The Fund is being wound down, so this will no longer be the case, and so what you'll see is charities not bothering to sell scratchcards anymore.
  4. The Fund was never really a great idea. But something had to be done because charity scratchcard prizes are capped at €20k. Nobody buys them because the prizes on the National Lottery scratchcards are so much higher. Theoretically, charities could make much more profit themselves if they could offer higher prizes and be competitive.
  5. The fair thing to do would be to remove the cap, but the Government won't do this.
  6. If you were really cynical you might speculate the facts have been presented in this way because Rehab is suing the State.
For the record, I'm not a big fan of charity scratchcards. It's hardly altruistic, is it? And do certain charities not see the hypocrisy of encouraging people to gamble so that they can fight addiction?

[I wrote this very quickly so please excuse any initial errors.]


  1. I disagree vehemently on point 2.
    Spending a € to raise a € is obscene. It suggests that half of all money raised goes on overheads - and that's before we factor in Angela's depraved remuneration. No 'charity' that admitted to such a spend would collect a penny from the public.

    NO real charity has 'overheads' of more than 20%.

    1. There's a cost involved in every form of fundraising. Scratch cards are reasonably inefficient and are only going to get worse.
      The average 'charity event' cost a € to raise a € but there doesn't seem to be as much objection to that.

      The point is..yes of course a charity spending money to raise money is undesirable. But unfortunately people don't just donate - they need to be enticed with scratch cards, events, etc. If you want to have the most impact and be the most charitable then just give.

    2. The average 'charity event' cost a € to raise a € but there doesn't seem to be as much objection to that.
      Not true. Any event masquerading as a charity event that costs a € to raise a € is run by either crooks or incompetents. Or possibly incompetent crooks.

    3. Here's some research by 2into3: http://www.2into3.com/_fileupload/Third%20Annual%20Fundraising%20Report%202013.pdf

      On average an event costs €0.48 to raise €1.

    4. Interesting read Simon thanks. I think we are at cross purposes though, as the 20% overhead I'm talking about is referred to in the above report (Greenfield 1999), and more recent data from England (Charities Aid Foundation 2011) shows that the average spend per £ raised there is 12p. Those are numbers any charity could be proud of. A one off event might have higher costs than that, but in total 20% is what a charity should be aiming for.

      I was once involved in a (c̶o̶n̶s̶p̶i̶r̶a̶c̶y̶) charity that had overheads of 79%. What a pack of crooks they were (still are). Oddly enough, very few cared, with most involved happy enough as long as they got a slice of the action.

      The corruption in Irish society starts at the very top, and goes all the way to the very bottom. :-(

  2. I've really enjoyed reading this article, thanks for sharing. I have recently discovered Tony Charalambides fundraising blog, you should check it out!