Definition of a charity lottery


In different parts of the world state- or private lotteries donate part of their profits to good causes. This varies among countries from a relatively low contribution to one specific sector, often the sports sector, to larger shares for a much wider range of organisations. Many state lotteries or commercial operators could be considered charity lotteries because of their contributions to the public benefit. 

How do we get from a regular lottery to a fundraising mechanism for good causes? When can we speak of a charity lottery?

  1. A charity lottery is privately operated, with a license from the national government of course, but not operated nor owned by the government. This is to ensure that funding is additional to government subsidies, instead of replacing them.
  2. Following from 1), there is no political interference in the distribution of the funds – funding decisions are made by an independent board. After all, when politics are involved distribution funds can change, especially after elections, in order to match government policies.
  3. The primary aim of a charity lottery is to raise funds for charitable organisations (the lottery is just a tool). The fundraising efforts are not used as a mere excuse for organising the lottery, but are indeed the main reason. Therefore, no private profits should be made.
  4. Following from 3), a substantial part should go to the benefiting organisations. Ideally, the operational costs of the lottery do not exceed 20% of turnover, with the remaining 80% equally divided between donations to charities (40%) and prize money (40%). We have to take into account however that these percentages depend on the maturity of the lottery, the legal national requirements and the market situation.
  5. A charity lottery provides institutional support - beneficiaries can spend the money as they see fit. A charity lottery supports the objectives of an organisation rather than specific projects or activities.
  6. A charity lottery should be a reliable partner to the organisations it supports, therefore funding should be long-term.