Choosenick. Notes and observations on service design, as well as other interesting things/thinking. By Nick Marsh.

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Models for financing social innovation. #1 – Community lotteries

I posted this on the Sidekick blog a few days ago.


In order to create genuinely sustainable social change it isn’t enough to have a clear need, a really great idea and lots of enthusiasm (although that’s a great start!). In order to make sure solutions really stick, and the people involved in delivering them stick around, organisations must be on a genuinely sustainable financial footing.

From the local level of the community right up to the international, highly networked level of the internets, financing social innovations, be they new services and programmes, new facilities (or both), in a sustainable fashion, is hard work. At Sidekick we know this because we’re trying to do it ourselves. In this occasional series we’re going to explore some clever models for financing good ideas that social innovators looking to make change happen might find useful.

From a commercial perspective this series is essentially profiling innovative business models. It’s true that there are quite a few people doing that already (and many also saying don’t bother). What makes this different is that we’re going to focus on models that are specifically designed to maximise the social return on in investment, because, well, frankly that’s much more interesting than models that just maximise return on capital.

For this first instalment we’re looking at a model that already finances positive socially progressive projects at a national level – a lottery.

Lotteries are a very simple idea that appeal to people’s desire to get rich quick, and their belief that they’re luckier/more deserving than everyone else. It’s a simple formula; Pay into a communal money pot, buy a ticket, and then hope your ticket gets picked at a random draw. If it does, you get the pot.

The good thing about the national lottery (and why the government monopolises it nationally) is that a chunk of the pot is not given away as prize money, but instead diverted into supporting more useful things than creating instant millionaires. Stuff like art galleries, tennis courts, the Olympics – that sort of stuff.

The weird thing about the national lottery though is that it actually acts kind of like a regressive culture tax – it’s generally played by poorer people, and the stuff it funds are generally the kinds of things that richer people like to use. Not exclusively, sure, but it’s probably fair to say that giving £78million to the National Opera isn’t front of mind when you’re buying your tickets for the mega-euro-millions-roll-over draw. The allure is in the big prize, not the big society.

However, in community lotteries the connection between the people paying (playing) and the cause that the lottery supports is much more important. In a community lottery the whole point is that its a way of financing good, useful stuff for your community, like trips to the zoo for people who can't afford it, community centres and bowling clubs. Anyone can set one up (you have to get a lottery license) and then you can then start getting the cash together to start paying for that social innovation itch you have to scratch.

Essentially, a community lottery is a way of investing in your community, with the chance that you might get much more than your investment back. Kind of like tiny, local premium bonds. The combination of very local philanthropy, and the idea that you might win, creates a powerful incentive.

Beyond the local financing of local projects, another core benefit of community lotteries is that a lot the tickets are sold door to door, which means that ticket sellers get to explain the benefits face to face, and at the same time start making real, personal connections between themselves, the players and the wider community. Ace.

Harnessing playing and winning as engines of social innovation is something we’re fascinated by at Sidekick (and that we use in a lot of our work), and here we see it in action locally, and nationally. Another thing we really like is the internet, and its intriguing to think of the potential of small online lotteries to support specific community projects. That’s probably another blog post (or maybe we should just get on with making the App).

So, in summary, community lotteries use the same basic mechanisms and psychological motivators to help people part with their cash as larger national lotteries, but they do so in a way that directly improves communities and networks within them. If you’re using a community lottery to finance your local social innovation we’d love to hear about it in the comments or via our typewriter!

Next time: Community Development Trusts (basically ways for communities to own the stuff that matters to them)
July 9th, 2010 / Tags: socialinnovation, finance, businessmodel, innovation / Trackback / Comments