Today the Fundraising Regulator has launched a consultation on introducing registration thresholds for charitable contributions from free draw and prize competition operators.
Free draws and prize competitions which benefit charities have become increasingly prominent in recent years, with some operators advertising nationally and on television. Free draws are distinct from other forms of charitable games, such as society lotteries, and so are not subject to the same legal requirements or expectations around levels of charitable contributions. This can cause some confusion for the general public about how much money goes to charities.
Free draws can provide a valuable source of income for charitable organisations and increase awareness of good causes. By registering with the Fundraising Regulator and displaying the Fundraising Badge in their marketing, free draw operators can show their commitment to responsible fundraising under our Code of Fundraising Practice. We’ve seen an increase in operators showing an interest in registering with the Fundraising Regulator. As a result, our board has decided that only those who conduct regular charitable draws and can demonstrate a suitable level of charitable contribution should be permitted to sign up and use our badge.
If an operator promotes their draws on the basis of a charitable contribution – regardless of whether or not they are registered with the Fundraising Regulator – they are subject to the requirements in the code, in particular Section 11 Prize competitions and free draws. The code sets out our expectations for ensuring draws are conducted fairly and transparently and that prizes are awarded appropriately. Free draw operators may also be subject to the Advertising Standards Authority’s rules on Promotional Marketing.
In November, the Department for Digital, Culture, Media & Sport (DCMS) published a Voluntary Code of Good Practice for Prize Draw Operators which comes into effect on 20 May. The DCMS code covers a wider range of operators across the free draws and prize competitions sector, but it also requires that signatories agree to meet the standards of the Code of Fundraising Practice where it applies to their draws.
Ahead of the full implementation of the DCMS voluntary code, we think it would be beneficial to clarify our own expectations for operators seeking to register with the Fundraising Regulator. Our short consultation asks respondents to comment on our two main proposals:
- That the Fundraising Regulator should introduce thresholds for charitable contributions from free draw operators who seek to register with us. The threshold will eventually rise to 20% of ticket sales (in line with the levels expected of society lotteries).
- That operators will be required to demonstrate their levels of charitable contribution for the last 12 months when they first register and when their registration comes up for renewal.
Operators who are registered with the Fundraising Regulator will be entitled to display our badge in promotions for their charitable draws. Operators who fail to meet the requirements or cannot provide evidence of their charitable contributions will not be eligible for registration. However, those operators can still demonstrate their commitment to responsible free draws by signing up to the DCMS voluntary code.
We’re inviting interested parties, particularly operators who run charitable draws, to respond to these proposals in our short consultation. The consultation will be open for four weeks until Easter (3 April).
We’ll then consider the responses and publish our final position on the contribution thresholds. We have suspended registration of new operators until the consultation has concluded, but will reopen registration in September.