Allied Charities of Minnesota

ACM Update

15 Aug 2019 16:18 | Allen Lund (Administrator)

What choices does a charity conducting gaming really have?

Another charity shared their numbers with me. Their past five fiscal years to be exact. They more than doubled their sales over that time period, going from $1 million to $2.3 million. For all of their efforts they netted $8,000 more this past fiscal year than they made five years ago. They made one sixth of a cent on every dollar sold on the $1.3 million dollar increase in sales. The state made $50,000 more over that same time period or 3.8 cents per dollar wagered. Their expenses were not broken down into specifics such as wages, rent, cost of paper games and electronic revenue share.

Our detractors would have others believe that what a charity gets to the bottom line is totally up to the charity. That it is only the charity that decides where the money goes. If the charity is getting little to the bottom line it is their choice, not anyone else’s. Let’s see about that:

Sites: The charity can chose to go into a site or leave a site.

Bar op/machine/booth op: Staffing a booth op takes people; machine and bar ops have costs as well. As word spreads among site owners of the money being made from having a bar op, more and more sites are taking that step. The charity has two options, go along or leave the site.

Payout: One of the choices a charity does have. Competition is a factor, but at the end of day the charity decides what percentage games to play. The MN Lottery pays out on average 61% and at the end of the day they have the same money left that we do after we pay prizes and expenses (prior to taxes and donations) with less than half of our volume.

Posting: Same as payout. Competition is a factor, but it is still your decision. Overall, payout is 4 to 6 percent higher if you post.

Staffing: Charity decides at what level to staff i.e., booth op, site managers, assistants, etc., with the knowledge that the site may insist on the hours of operation of a booth thus impacting costs if the charity agrees.  

Pay: Mandated by government for those not volunteering. Do I wish that nobody had to be concerned with paying bills and such? I wish that each and every one of us was independently wealthy and had no need for making money. The reality today is that very few of us can devote the time required to be a GM and do it for nothing. Our detractors in state government love pointing out that some GM’s are paid (taking money away from mission), but when I asked for help in coming up with guidelines for GM pay state government said that it was not their job.

Forms to Offer (Tabs/Raffles/Bingo/Tipboards/Paddlewheels/Sports Boards): A choice made by the charity, but with conditions. If a site wants a particular form offered the charity needs to decide to agree, negotiate or leave the site.

Games: The charity decides what games to play. Those that say that charities can save money by regularly price shopping distributors for savings are not our friends. If you play 60 paper tab games a month and saved $2 dollars a game by shopping around you would save $1,440 per year. Not making light of that amount, but it is penny wise and pound foolish thinking. Service was equally important to me when I was a GM. Our detractors want everyone focusing on the small potatoes and not the elephants in the room.

External Annual Audits: Mandated by statute. $750,000 in sales in a given fiscal year and you are required to have one. At 85% payout that is $112,500 that you actually got to the bank to pay expenses and taxes.

Monthly Reporting: Charities that are able to do their own monthly reporting without paying outside help are fortunate and small in number.

Taxes: Even though it is lawful purpose there is nothing optional about it. Pay it or go to jail.

Bottom line: In reality a charity has few (albeit important) areas under their control.

Expenses and taxes go up each and every year. Our profit per dollar wagered declines each year. As we have seen the past several years, any increase in yearly sales has meant that the charity benefits the least on the increase. Payout, wages, cost of paper games, electronic revenue share, external audit, rent and taxes comprise 97% of our outflow. As an organization you should know what kind of bite each of those takes out of every dollar that your patrons impart to you. Send me your figures and I will be happy to review them.  

Regards,

Al Lund

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