Charities warn lottery will hit donations

Research funding charities are predicting a big drop in income starting this week when the national lottery is launched.

The National Kidney Research Fund and the Kidney Foundation, which between them gave Pounds 2.7 million to research last year, are predicting a 25 per cent drop in gross income. They make Pounds 500,000 a year from their own lotteries. The kidney charities have launched a Pounds 5 million appeal partly to offset the loss of money.

Tenovus, the Cancer Charity, whose research funding includes two cancer research centres, has an income of Pounds 3 million a year of which Pounds 1 million comes from lotteries. It is predicting a downturn of Pounds 300,000 in its income. "It's a couple of good research projects," said executive director Michael Downs. He said the charity will be drawing on reserves rather than cutting its research in the short term.

Michael Roberts, director of fundraising at the British Heart Foundation, said: "The indications are that it will affect us although not to a great extent. It's the use of spare cash. We're in the market of disposable income."

But Mr Downs suggested that in the long term the national lottery might have a spin-off for charities because of improved public perception of lotteries: "Some people are loath to use them and we remain optimistic that this attitude could change and there may be a spin-off for us."

Market surveys suggest that charity income will drop by Pounds 232 million as a result of the lottery.

Other larger charities such as the Cancer Research Campaign say they have no idea how the lottery will affect them. "The type of fund-raising that we do -- legacies and second-hand shops, for example -- means that the lottery is not going to make a lot of difference," said Wendy McDougall, director of the appeals department of the Cancer Research Campaign. "But it's certainly not going to improve the situation. Other fund-raising sources such as putting 50p in a tin are just something that we'll have to wait and see about."

Many charities hope to benefit from some of the proceeds of the National Lottery, which is expected to make Pounds 5.5 billion a year, of which Pounds 1.9 billion will go to good causes. The National Lottery Charities Board estimates that 700,000 organisations will be eligible to apply.