Written evidence submitted by People’s Postcode Lottery

Submission to the Digital, Culture, Media & Sport Select Committee inquiry on the Impact of COVID-19 on the DCMS sectors.

18 June 2020

1. About People’s Postcode Lottery

1.1   People’s Postcode Lottery is a not for commercial gain External Lottery Manager owned by a social enterprise and licensed by the Gambling Commission. [1]  We operate with the sole purpose of helping to raise funds for good causes. Charities are at the heart of everything we do, and our players now raise approximately £12 million for good causes every month.

1.2   Since People’s Postcode Lottery launched in 2005, players have raised over £580 million for over 7,500 good causes, including many local community organisations across Britain. We have worked with many Parliamentarians to raise awareness of our Community Programmes funding.

1.3   A minimum of 32%[2] of the value of each ticket goes to good causes, well above the statutory 20%. This compares to the return of 21.1% from the National Lottery, according to the latest industry statistics published by the Gambling Commission.[3]

1.4   The type of funding provided is very important to charities, with the majority focused on long term, unrestricted funding.  This means that charities can use funding for core costs or indeed for further fundraising – using these funds to leverage more income.  This flexibility can complement project-based funding such as that from the National Lottery Community Fund.

2. Introduction

2.1   In preparing this submission People’s Postcode Lottery has consulted with the charities which our players help to support.  We have received feedback and input from charities operating across DCMS sectors and areas of interest.

2.2   Charity lotteries are an important source of charity funding. The charity sector estimates it will lose £4 billion[4] in income as a result of the Covid-19 pandemic. With charity shops closed and fundraising events and activities cancelled, many charities are experiencing an increase in demand at the same time as a reduction in income.  It is therefore extremely welcome at this time that recent legislation[5] to increase charity lottery limits, which will see the annual sales limit rise from £10m to £50m, will come into force in July.  There is a concern that the wider economic difficulties arising from COVID-19 could potentially impact charity lottery ticket sales in the future, which in turn could affect the ability of charity lotteries, like People’s Postcode Lottery, to continue to raise money for good causes. These measures will help protect the vital income flow for charities, from charity lotteries.

2.3   Several charities have expressed their appreciation for the role which the funds raised by the players of People’s Postcode Lottery is making at this time.  Yorkshire Dales Millennium Trust stated: “It is extremely comforting to know we have the long term flexible support of PPL and would like to thank you for your support especially over this difficult time.” Responding to the flexible approach taken towards small community charities that had received funding – where recipients were informed that they could use their grant in an ‘unrestricted’ way to respond to the needs of their communities at this difficult time, Dundee Contemporary Arts stated: “That is a brilliant and majorly helpful approach to supporting organisations at this time. Well done, and a big ' thank you' for such generosity of spirit.” 

3         How People’s Postcode Lottery and the Postcode Trusts are responding

3.1 People’s Postcode Lottery has taken specific measures to support charities: 

• National charities - National charities which are supported by the players of People’s Postcode Lottery already benefit from unrestricted and regular funding. In addition to this we will support our charities further with potential early payment of grants to help ease cashflow challenges.

• COVID-19 Response Funding  - Covid 19 funding has been set up through Postcode Innovation Trust. The first of two funding rounds has been completed. This funding prioritises current regular beneficiaries.  This is essentially to support those in the People’s Postcode Lottery family of charities at this time of crisis. Just under one million pounds has been distributed among 13 charities with a further £1.5 million being made available in round two later this year. The charities which have received COVID-19 Response Funding to date are:

• Local Good Causes - For those local charities and good causes who are in receipt of project funding from one of the Community Programmes Trusts funded by our players, the Trusts are being flexible in allowing the recipients of local grant funding to use their most recent awards as they see fit at this time.  An extension was also given to organisations that were part way through the application process for community grants, offering them an extra two weeks to submit their application or, they could also withdraw and automatically go in at the same stage in the next funding round later in the year.  The community grants are project based so staff have specifically contacted all organisations with active projects funded in 2018/2019 to say that any unspent funds could be used however they saw fit. 

• New Neighbourhood Postcode Trust - In August 2020, a new community grants trust, Postcode Neighbourhood Trust will be launched.  It will focus on funding good causes that have been impacted by COVID-19. It is expected that funding of £2.5 million, in the first year of operation, will support the resilience of community organisations and help them to keep delivering their vital services. Funding is also available to enable organisations to adapt or expand their services to meet new challenges.  It will go live for applications, along with the other three community programmes trusts in August. 

• Social Enterprises – The Postcode Innovation Trust has taken the decision to allow interest free repayment holidays to social enterprises funded by loans from this Trust.

4         What has been the immediate impact of Covid-19 on the sector?

4.1   The Impact of Covid-19 on People’s Postcode Lottery - It is necessary to distinguish between the impact of Covid-19 on People’s Postcode Lottery operating within one of the DCMS sectors, as distinct from the impact of Covid-19 on the charities which our players support.  People’s Postcode Lottery’s operations are continuing with all staff able to work safely from home. The resilience of the subscription model means revenue and amounts raised for good causes this year have been largely protected so far. Points to note are that:

• People’s Postcode Lottery haven’t taken any furlough funds or taken advantage of any other government assistance schemes;
• People’s Postcode Lottery expect all trusts and promoting societies to receive at least the budgeted level of funding for 2020 and 2021; and
• People’s Postcode Lottery have seen some moderate impact from the economic situation so far and that the ongoing impact of COVID-19 on the wider economy and any rise in unemployment could potentially impact on ticket sales and our ability to support good causes in the future.

4.2   The Impact of Covid-19 on the DCMS sectors. The charities operating across the DCMS sectors, which are supported by the players of People’s Postcode Lottery have reported to us on the impact which Covid-19 has had on their incomes and funding streams, the increasing demand for their services and the need for them to adapt the way in which they deliver those services at this time of crisis. Some of the charities who are supported by players of have provided detailed feedback on the impact which Covid-19 is having.  We set out below some examples of this, as well as some of the work player supported charities are doing to respond to the crisis.

4.3   Potential Loss of Income. Charities are potentially facing a loss of income at precisely the moment when the demand and need for their services is greater than ever because of the crisis.  Charities reported that they expected to see a shortfall in their income with concerns expressed about short term cash flow as well as overall income over the year.  Some charities will already be making redundancies.  In addition, there is a concern that with the ability of charities to fundraise already severely curtailed, that those charities who rely on income from Foundations or Trusts funded by endowment /investment related funds, may also face particular financial  challenges in the short to longer term arising from the economic downturn.

• Girlguiding  - According to Girlguiding the economic impacts are significant in the short and longer term. Girlguiding runs 27,000 Rainbows, Brownies, Guides and Rangers units for nearly 400,000 girls and young women across the UK. They estimate losses of £3-5 million at a national level by the end of 2020 as a result of cancelling weekly unit meetings and events at their activity centres, a decline in trading and reduced fundraising.
• Street League exists to help young people aged 14 to 30 in the UK’s most disadvantaged communities move into jobs, education and training. They use the power of sport to bring young people together and help them develop their skills and work readiness.  As a charity with a turnover of £5.5m they reported that they have a total cashflow risk for Q1 of circa £500k (9% of annual income)[6].  
• National Museums Scotland reported that: “we are clear that during the period our museums are closed, loss of income from a whole range of sources is a key concern”. They normally rely on earned income from exhibition ticket sales, corporate hires, and trading through their retail and catering outlets, and none of these is currently in operation. 
• Sistema Scotland highlight the implications on both public and private sector funding for charities.  They anticipate that vulnerable children and families will need the third sector more than ever.  They are concerned to ensure continued funding so that “the demonstrable positive impacts we have worked so hard to deliver over the last decade and more will continue to support current and future generations”.
• Youth Music - Youth Music have highlighted the fact that so many charities will rely on income from a traditional fundraising model, which will have been hit hard. Earned income has also been lost due to the inability to provide services as a result of COVID-19.

4.4   Adapting the way services are delivered. The feedback we received suggests that never has the need for emotional and practical support delivered by charities been greater. Charities have had to adapt the way in which they deliver services and have looked to develop innovative and creative solutions to address the restrictions which are in place.

• Street League.  Their award-winning ‘Academy’ programmes typically take place in leisure centres, youth and community centres – located in the heart of the communities they support. Since the lockdown, they have had to move its programmes to being offered online, working with young people remotely. This has ensured the progress young people had made with their qualifications, fitness and confidence is not lost. 
• Yorkshire Dales Millennium Trust report that they are continuing to support the people, landscape and wildlife of the dales by expanding their grants programme.  
• Youth Music - Youth Music have highlighted that the beneficiaries of charities will often face barriers to a whole range of services. These barriers will have increased as a result of COVID-19 making an already challenging situation harder. For example, digital disadvantage due to poverty in terms of not having access to IT facilities.
• Greenhouse Sports - Greenhouse Sports works with 7,000 young Londoners from almost 50 schools. Its team of coaches run a range of sports programmes. Since schools closed, its coaches have been keeping in touch with children and young people over video apps, holding sports lessons over Instagram Live and uploading training demos to YouTube. 

5.              How effectively has the support provided by DCMS, other Government department and arms-length bodies addressed the sector’s needs?

5.1  People’s Postcode Lottery welcomes the steps which the Government overall has taken to address the impact which the COVID-19 crisis has had on society and the wider economy including DCMS sectors.  Based on the extensive feedback we have received we draw attention to the call by charities for the Government to:

• Adopt a flexible approach - COVID-19 is affecting charities’ ability to deliver Government contracts and hit key targets. Charities are calling on the Government to exercise flexibility in its approach to dealing with this and agree to reasonable extensions and modifications to contracts. This would be in line with existing Government advice[7] about responding to COVID-19. Where additional funding is required to support contract extensions for charities, the charity sector believes that Departments should explore whether some of the £750m for charities announced by the Chancellor can be allocated towards this purpose.

• Establish a Charities Job Retention Scheme - One of the most beneficial things the charity sector believes the government could do to support the sector is a Charities Job Retention Scheme offering core grants and allowing charities to maintain staff and core support services ahead of starting up again post-lockdown. Charities could take advantage of the financial support available and allow staff to continue working. We note the recent call to establish such a scheme from 28 organisations including the Small Charities Coalition[8].  A number of existing schemes are not designed for or meet the needs of the charity sector e.g. the Business Interruption Loan scheme is only available to charities that generate at least 50% of their income from trading, thereby ruling out the vast majority of charities. The feedback we have received from suggests that the furlough scheme isn't as helpful to charities in that they face a choice of keeping staff on to provide essential services when they can't afford it or furloughing them when they are needed most. We note that this call was adopted by the DCMS Committee in its report on the Impact of Covid-19 on the Charity Sector[9] but has yet to be adopted by Government.

• Establish an Employment Support Programme in line with the Institute of Employment Studies’ recommendations, proactively invest in such a support programme that helps those affected by Coronavirus as quickly as possible. [10]

• Extend the Coronavirus Job Retention Scheme until the end of 2020 for providers of outdoor educational and residential experiences in line with the calls from Girlguiding and the Access Unlimited coalition which seeks to draw attention to the longer-term impacts of the Coronavirus crisis on learning opportunities outside of the classroom.

6. What will the likely long-term impacts of Covid-19 be on the sector, and what support is needed to deal with those?

6.1   Some of the long-term impacts and possible solutions have been identified by our supported            

charities.  These include:

• Reduction in Income for charities – Charities have drawn attention to the fact that the likely long-term impacts will be reduced income for charities across the board (and more competition for what is available), cuts in staff numbers and, ultimately, reduced support for a charity’s beneficiaries.

Response: Establish a Stabilisation Fund for charities to help sustain charities and the voluntary sector and to ensure that they have a viable future, by providing long-term support beyond the temporary time-limited schemes currently available.

• Increase in Inequality – Charities have highlighted that during these months, inequality is increasing, as young people in poorer and disadvantaged areas, excluded from full time education, see themselves slip further behind their better-off peers.

Response: Support the most marginalised and disadvantaged young people by ensuring that there is continued support for those charities delivering front line services to young people in greatest need.

• Disproportionate Impact of Covid-19 crisis on girls and young women – Charities such as Girlguiding have highlighted there is already evidence showing a disproportionate impact on girls and women of the crisis so far – relating to violence against women and girls, reduction of income, loss of employment and increased unpaid caring responsibilities. Girls and young women face entering a post-crisis labour market that may be less gender equitable than before.

Response: A strong government commitment to promote and prioritise gender equality across all plans for recovery.

7. What lessons can be learnt from how DCMS, arms-length bodies and the sector have dealt with Covid-19?

7.1 Suggestions from our supported charities have included calls for Government to:

• Listen to Young People - an increased commitment from all government departments, including DCMS, to listen to young people and take their views into account in decisions that will affect their lives and futures. 
• Earlier planning – a need for greater anticipation of what is likely to happen (a government wide issue).  This should involve: a greater coordinated approach across government departments and arm’s length bodies; greater simplicity in how any emergency funds are distributed; greater simplicity and clarity for any application processes to apply for funds; and greater flexibility in the use of new funds and also funds from existing grants.

8. How might the sector evolve after Covid-19, and how can DCMS support such innovation to deal with future challenges ?

8.1   One of our supported charities Girlguiding has stated: “a thriving civil society will be a key part of our economic as well as social recovery and that the government should invest in both business and voluntary sectors proportionately”.

8.2   Another of our supported charities Youth Music has stated: “there is both a need and potential for greater collaboration between charities to remove duplication. This would apply for both delivery of services and fundraising collaborations”.

8.3   These two views are indicative of the debate which is getting underway about how the sector might evolve after Covid-19.  People’s Postcode Lottery believes that DCMS has an important leadership and facilitation role to play in taking forward this agenda. We endorse the call by our supported charities for DCMS to ensure that membership of the culture taskforce and any other equivalent bodies reflects the diversity of the communities which it is intended to represent.