Omaze, which conducts prize draws where customers can win million-pound houses, has raised £11.15m from the general public for charity since its UK launch just over two years ago.
The funds have gone to charities including Teenage Cancer Trust, British Heart Foundation, Dogs Trust and GOSH Charity.
Its prize draws give people a chance to win million-pound houses across the UK plus thousands of pounds to settle in. It also runs prize draws for cars, cash and more.
While many charities have spoken positively about their relationships with Omaze, some organisations such as the Lotteries Council have expressed concerns over how its prize draws are regulated.
80% of net proceeds to charity from each draw
The company began in the United States in 2012. James Oakes, chief international officer at Omaze, told Civil Society News it has paused its operations in the US and is currently operating solely in the UK.
The company states that 80% of net proceeds go to its chosen charity partner with a minimum donation of £100,000 for a charity from each campaign.
It retains 20% of the net proceeds for its day-to-day running costs, salaries and overheads.
Most recently, Omaze’s Victorian London townhouse draw for a house worth £3m raised £2m for British Heart Foundation.
Winning construction worker Kevin Johnson paid £50 to enter.
How does the for-profit company raise money for charity?
Omaze is a private limited company, which Oakes said allows it to make potentially risky investments that charities cannot.
“By being a for-profit company, we can make investments in houses to drive donations. It’s a big risk buying something like a £4m property. It’s the risk that a for-profit company with investors can take, that a charity can’t take.
“It also enables Omaze to invest in marketing to drive awareness. Charities benefit from the draw’s marketing campaign – helping them to reach new audiences that would otherwise be out of reach.”
Oakes says that the company is guided by customers on what the most desirable houses and locations are.
“We then use this information to brief a buying agent who sources properties with Omaze potential for review through a network of major real estate firms,” he said.
“After 13 draws, we have a good idea what kind of properties incentivise people to enter, so we can raise more money for our charity partners.”
The company is not yet in profit, Oakes said, despite it being a for-profit company. It would not disclose how much it has made from the public overall at this time.
However, its latest unaudited accounts filed with Companies House show administrative expenses of £423,983 from 2020 to 2021.
Accounts for the years after are yet to be filed due to its accounting period being extended.
How Omaze is regulated
Omaze is a prize draw as opposed to a lottery, meaning it is not regulated by the Gambling Commission. Oakes said this is because its draws are not “lotteries, gaming or gambling”.
“The introduction of a prominent and fair free entry route distinguishes prize draws from those activities. Entrants are able to enter Omaze prize draws via a paid-for-route online or for the cost of a stamp by post,” he said.
Omaze is regulated by the Fundraising Regulator, but it cannot regulate all of its business activity, the regulator clarified.
A spokesperson for the Fundraising Regulator said: “Omaze UK Limited is registered with the Fundraising Regulator as a non-charity, and therefore has committed to follow the UK-wide Code of Fundraising Practice. There is a fundraising element to Omaze’s overall business model, but this does not mean we can regulate all its business activity. We can only consider matters within the scope of the code.”
As per the Code of Fundraising Practice, the regulator sets out that to be a prize competition: “You must make sure that anyone taking part has a level of knowledge or judgement or displays an element of skill that will prevent a significant proportion of people from entering or from winning a prize. To be a free draw the arrangement must either be completely free to enter or have a free method of entry.”
The code goes on to state that the system for prize allocation should not distinguish between free or paid methods of entry.
“We recognise that prize competitions and free draws, which are not lotteries, are sometimes used by fundraisers. These arrangements are distinct from lotteries, which are regulated by the Gambling Commission”, the spokesperson said.
Last year, the Lotteries Council raised concerns in Parliament about the lack of legally binding regulation for draws such as those run by Omaze.
“Omaze declares that for prize draws, 80% of “net proceeds” (ie proceeds after the deduction of the cost of prizes and marketing) is given to the nominated charity – but this is not legally binding and there is no regulator to ensure that this happens,” its briefing read.
Charities applying to work with Omaze
Oakes said that when Omaze launched in the UK during the Covid-19 pandemic, it pitched to charities to work with it, but it now has an “extensive” list of charity applicants.
“We’re looking forward to launching more incredible house draws and raising more money for amazing charity partners,” Oakes said.
“We’re assessing applications from charities across the UK, all of which are very keen to work with Omaze on these future campaigns.”
Charmaine Griffiths, chief executive at British Heart Foundation, said she was delighted by the £3m Omaze has given to the charity so far.
“We’re delighted for the Johnson family and are absolutely blown away by the £2m raised by the Omaze London House Draw.
“This incredible amount of money will help fund ground-breaking research, which will transform the lives of people living with heart and circulatory diseases in the UK for generations to come.
“At the BHF, we could not do what we do without the incredible support from the public and fantastic partnerships like Omaze.
“Combined with our first successful partnership, the Omaze community have surpassed all our expectations by raising a tremendous £3m for the BHF.”
Editor's note: This article has been updated to reflect the amount Omaze has raised for charity so far is £11.15m, not £11.5m as previously stated.
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