Littlewoods’ review cleans out charities

Littlewoods Lotteries is “reviewing” its scratchcard business (MW May 8) in what is effectively a spring-clean of charity scratchcard games.

Some games will be withdrawn, launch plans for others are being scrapped while some charities, including The Samaritans and Help the Aged, are now being forced to look for fresh sources of fundraising.

Littlewoods’ acquisition of UKCL in December brought the number of charities on its books to 56. And it is this acquisition which is given as the reason for the rationalisation.

But the collapse of the scratchcard market – sales have fallen from a weekly 1995 high of 44 million when Camelot launched Instants, which still account for 90 per cent of sales, to about 14 million – is the background to the Littlewoods cull.

“The number of charities we will be able to help [in the future] will not be as many as in the past,” says a Littlewoods spokesman who insists that the “charities are quite happy about everything that is going on”.

A written statement from the company says: “It is anticipated that over the next few months some of the remaining games will be withdrawn because they have reached the end of their natural life and are no longer achieving sales.”

By “natural life” Littlewoods means consumer appeal for scratchcard games. On average, a batch of 1 million tickets enjoys up to 15 weeks of success before people lose interest. Charities receive 24p from the 1 price. It is therefore “common practice”, claims Littlewoods, to “rotate games to achieve maximum sales”.

But if it is just about rotation why do some charities appear to be more favoured than others? Help the Aged, which has already received 500,000 from the success of two games, claims Littlewoods made a verbal agreement with it to run five games a year, starting this year, over the next three years. Help the Aged was expecting to receive 3m income from the 15 games.

But Fiona Halten, the charity’s account manager, has now been told that, when the two current games expire, in October 1997 and March 1998 respectively, no more will be launched. The deal, which was dependent on the well-being of the market, has been called off.

Help the Aged, the UK’s tenth largest charity with income of more than 34m, will have to look elsewhere for funding of the project it is currently focusing on – the HandyVan scheme to supply home security for vulnerable elderly people. Halten admits the lack of future games will mean the development of the scheme will be “slower than we had hoped”.

The Samaritans’ Las Vegas initiative was withdrawn mid-game – something which Help the Aged, which describes Littlewoods decision as a “setback”, was spared. But Halten predicts that for smaller charities it could be a crippling blow. “Some will find it very, very difficult,” she says.

Age Concern, which has raised over 1m from Littlewoods’ scratchcard sales, claims it entered a similar verbal agreement to Help the Aged. But the planned future launches no longer look likely.

Corporate fundraising manager Paul Finnis believes the move is one which was only to be expected in a struggling market and is confident that if the market picks up again, Littlewoods will be more than happy to launch more games.

“All charities are being affected,” says Finnis. “The lottery market is one where you are relying on the general public to buy something and we have never said [to ourselves] that the money is definitely coming in.”

Age Concern has three games on the market, all of which are due to expire within the next four months. “We’ve not been told that the games will be withdrawn but what’s the point of withdrawing a game a few months before the closing date?” says Finnis. “No charity could have predicted that it [the market] would collapse as badly as it has.”

All of which leaves the charities wondering what to do next? Research by the National Council for Voluntary Organisations (NCVO) shows that in the first year of the National Lottery, the charity sector lost 340m – a near seven per cent drop – in personal donations.

It has led to charities investigating non-traditional fundraising. Affinity credit cards have not worked and independent research has revealed the majority of people gambling on scratchcards give little thought to what they are contributing to.

“The bulk of charities will be unaffected,” says Vicki Pulman of the Charity Aid Foundation. “It depends on whether the charity had allocated the funds. If they know the income is coming in, it allows them the luxury of planning ahead.”

She continues to stress that charities are “incredibly innovative” and will “automatically look elsewhere” for funding. “Their resistance to this type of thing is very high. It has to be,” she adds. But with the Lottery absorbing a substantial amount of personal charity donations, scratchcards, which appeared to offer a good alternative income, have now dried up.