1. Progress on the distribution of lottery funds
Portfolio Committee for
Trade and Industry
16 October 2002

2. Introduction
the dti is satisfied with the performance of the National Lottery and the National Lottery Distribution Trust Fund (NLDTF)
To summarise progress to date:
The National Lottery was only launched in March 2000, but by January 2001 R4.1 million was made available to 80 organisations.
The Distributing Agencies in their first year of operation distributed over R220 million by March 2002 to 1240 organisations, and the amount allocated has to date grown to over R½ billion.
Especially, when one considers that in the five years private lotteries were operating in South Africa only an estimated R30 million went to good causes.
Despite these huge successes there is still room for a process of continuous improvement.

3. Background How does the NLDTF function?
NGOs
CBOs
Applications
Monitors activities
& approves games
NLB
Central
Applications
Office
Uthingo
NLDTF
Weekly transfer 5%
22%
36%
22%
15% DA
Art & Culture DA
Charities DA
Sport DA
RDP DA
Misc
Allocation and distribution of funds (average turnaround time is 6 months)

4. Background How much is allocated to the NLDTF?
The allocation to Good Causes varies with the number of tickets sold.
For every Rand spent on a lottery ticket:
Between 10% and 40% goes to the NLDTF, with average of 30% over the 7 year License period
50c goes back to players
14c goes to SARS
23c goes to NLDTF
2c goes to profits
11c goes to operating costs

5. Highlights from The dti review of the financial period 1 April 2001 to 31 March 2002

6. Allocations: 1 April 2001 to 31 March 2002
Category
Available
Allocated %
Charities
R158m
R106m
67%
Sport & Recreation
R96.6m
R70m
71%
Arts, Culture & Heritage
R46m
48%
Sub-total
R351.2m
R222m
63%
RDP & Miscellaneous
R87.8m -
Total
R439m
51%

7. Analysis
Charities and Sports & Recreation categories both allocated more than 60% of funds available.
Arts, Culture and Heritage was lower than other categories, but has picked up this year.
RDP categories has not been used but forms part of a proposed amendment.
Miscellaneous category is for emergency funding and its use is under review.
Surplus in NLDTF will grow over time and will assist with the sustainability of fund over time e.g. the KwaZulu-Natal Lotto is still able to distribute funds, through Project Jumpstart, even though it no longer operates, because it built up a large surplus.
A surplus will be held at the end of the licence period as a reserve.

8. Assessment The progress made is good.
Need to increase awareness of criteria and application process through a more active media and education campaign to increase number of applications.
Longer term grant system to be developed with reliable organisations considered.
Need to consider different review processes for small and large grants.
Review juristic person requirement.
Inactive status of RDP category will be addressed.

9. Applications: 1 April 2001 to 31 March 2002
Category
Received
Approved %
Charities
2254
853
38%
Sport & Recreation
535
250
47%
Arts, Culture & Heritage
742
139
19%
RDP 0%
Miscellaneous
Total
3,531
1,242
35%

10. Analysis
Overall approval rate appears low (35%), but due to identifiable problems.
Arts, Culture and Heritage had a 81% rejection rate, but is now picking up.
Reasons for rejections
15% did not meet the criteria in the Act and
were disqualified
40% did not complete the application forms
correctly, did not submit financial statements
or did not meet the requirements
10% are rejected on merit

11. Assessment
Disqualification can be reduced by giving organisations 21 days to supply missing information and by providing more information and assistance to complete application forms
Financial requirements may be too strict for small amounts – need to introduce differential requirements for small and large grants
Legislation to be amended to allow for natural persons to receive funds (soup kitchens)

12. Geographical Spread Beneficiaries 1 April 01 to 31 March 02

13. Geographical Spread for 3 Categories (April 2001 to March 2002)

14. Analysis
Gauteng, Western Cape, KwaZulu Natal and Eastern Cape received 82% of allocations. The remaining provinces received 5% and less.
Gauteng figure high, but also includes National Bodies with provincial presences.
Possible reasons for high allocations for 4 provinces
NGOs in 4 provinces experienced in fund raising.
Low number of applications from other provinces
or high rejection rates from other provinces.
Lack of awareness of funding opportunity.
No access to application forms as Central Applications
Office is Pretoria-based.

15. Assessment
Increase public awareness of the NLDTF in rural areas through radio “spots” and “talk shows” on community radio stations and other local media. We are getting applications from deep rural areas.
Provide assistance to complete applications forms through helpline and radio shows.
Give Distributing Agencies’ the ability to solicit applications.
Develop a network of partners in rural areas who can provide assistance with the distribution and completion of applications.

16. Latest Statistics NLDTF Allocations from 1 April to 17 September 2002

17. Total Allocation: 1 April to 17 September 2002

18. Charities: Areas of Funding

19. Arts, Culture & Natural Heritage: Area of Funding

20. Sports & Recreation: Area of Funding

21. Conclusions and matters currently being addressed
We will be in a better position to assess disbursements at the end of this year, given the much higher levels of allocation in the first 6 months of this year.
There is a need to be more proactive in reaching out and forming partnerships to facilitate applications.
Certain amendments to the Act will be proposed to deal with the RDP and Miscelaneous categories and juristic persons restriction.
Work will be done to stabilise the cycle of disbursements to assist NGOs and to reach out to all provinces.
Consideration is being given to speeding up the smaller grant category..

22. There has been an increase in disbursements in the current financial year and the implication is that as familiarity with criteria and application processes increases both internally and externally, the resultant impact will be an increase in the distribution of funds.
The NLB and the dti have been analysing the patterns of the past financial year to identify gaps or short-comings that need to be addressed. This has led to a number of pro-active solutions being generated, including:
Communication plan to enhance awareness and accessibility
Plans to increase capacity at NLB to handle applications
Introduction of new and differentiated application and review processes