What’s the deal with Omaze?

It’s no doubt that Britons are generous. According to Statista for their study in 2021/22, the average amount British people gave to charity the month prior was £27. This has increased since 2014/15, when the average was £20.

But why do people give to charity? There’s a whole plethora of reasons. Some people may feel compelled due to a sense of moral duty. Others give to a specific

cause because of the relatability of the cause, or they trust that the cause can help to alleviate or inform others about the issue. Additionally, there are some who give because they feel the recipient is worthy or has earned the donation because of their actions, or simply because they give since they are also able to receive something from it.

However, many charities are struggling to keep afloat. Research from the National Council for Voluntary Organisations (NCVO) reveals that there is a Cost of Giving Crisis, with 1 in 5 charities risking closure if they don’t urgently receive the financial support they need. As a result, many charities are choosing to turn to popular fundraising methods to bring in more donations. This includes working with companies such as Omaze.

Omaze is an American fundraising corporation formed in 2012. Its business model relies on creating fundraising events in partnership with charities, usually in the form of sweepstakes. Omaze launched its UK subsidiary in 2020 and has worked with some major names in the charity sector including the RNLI, BHF, RSPCA, and NSPCC. It advertises its sweepstakes via social media, often accompanying these posts with photos of lofty homes in impressive locations.

Despite all the work it does for good causes, it is particularly interesting that its history isn’t completely clean. In 2019, it was investigated by Californian authorities about whether its activities could be considered an “illegal lottery” under Californian law. In the US state, lotteries are only allowed if “at least 90% of gross receipts go to charity”. Omaze settled the case by paying $120,000 in fees and penalties. It is interesting to see, then, that on Omaze’s UK website FAQs, they state that they give their partner charities “80% of the net proceeds” after the deductions have already been made. For their most recent draw, they note that they can “guarantee 17% of sales [...] will go to the charity” and that a guaranteed minimum of £1m will be paid to them regardless of sales. 

Moreover, Omaze doesn’t publish what the odds are of actually winning. On their website in their FAQ section, they only state that it “depends on the number of entries received” which is mathematically true. The odds only get lower as more people enter the competition. Yet that doesn’t stop many from entering anyway. But what happens when the odds fall in your favour? 

How does it affect the winners?

The Daily Mail recently ran a comprehensive follow-up on what happened with the winners and their prizes after the draws. They found that many of the houses were uninhabitable or too costly to live in. While beautiful to look at, many winners find themselves racked with a host of problems such as flooding, coastal erosion, and utilities that are just too expensive to upkeep. Many of these winners ultimately put their homes up for sale. Even then, they are often difficult to sell because of these issues. 

Image showing a flooded property. Image credit: The Telegraph.

To wrap up their article on a more positive note, David Leafe ended it the with the ‘uplifting’ story of winner Oceanne Belle. She had to move out of her flat after her landlord increased her rent and was having to sleep on her friend’s sofa when she was notified of her win. Her prize included a £5m Chelsea townhouse and £100,000 in cash. But doesn’t this take into consideration the reasons behind why Oceanne’s rent was increased and why she couldn’t afford to pay her rent. Why did she have to enter a competition in order to have her own place to call home? 

What impact does this have on the housing crisis?
Competitions such as these sweep all the issues of the housing crisis under the rug. It is clear that housing policy is failing not only renters but those who want to buy their own home. With a case like Oceanne’s, it’s not a heartwarming story to me. It’s just too on the nose of what living as a renter is like in real life.    

As Vicky Spratt says in her opinion piece for the i, “[h]omeownership in Britain today is quite literally a lottery, which you can often only win by the age of 30 if you have wealthy parents.”  London’s renting market has become obscene, and the prospect of buying is fading further into the distance for many. For others, getting on the property ladder was already completely out of reach from the get-go. 

Schroders, an investment management company, crunched the numbers from 175 years’ worth of housing data. They found that housing has become less affordable in recent years. with “the average house in the UK currently cost[ing] around nine-times average earnings, based on data as [of] 30 November 2022”. This is roughly equal to how it was nearly 150 years ago. As a result, millennials are “likely to be renting into retirement” if they haven’t already bought a house. For Gen Z, even renting is no longer an option. According to the 2021 Census, 51% of 20- to 24-year-olds in England and Wales moved back home. This increased from 44% from the 2011 Census.

In the case of Oceanne, how was she ever going to buy her own home eventually if she couldn’t afford to pay her rent, let alone save for a deposit? In this manner, Omaze is clearly exploiting the housing crisis. It gives those in power a pass to ignore the very tangible issues caused by both the Cost of Living and the housing crises playing out in tandem. As a result, people are turning to competitions like these to solve their problems. Consequently, many people enter with the intent to sell, as Omaze’s FAQs note that winners can do what they want with the property. It’s unsurprising then that only 4 properties out of a total of 20 where the winners were in residence, according to the Daily Mail. 

Not only that, but it also allows those who have power to ignore the fact that many crucial services to the most vulnerable communities in our country are severely underfunded. Charities should not have to outsource their fundraising efforts to for-profit companies, who will eventually take a huge slice of the proceeds. Yet ultimately, there is nothing to legally bind Omaze to its aforementioned commitment of 80% of proceeds being given to their partner charity.  

Additionally, it is not actually regulated by the Gambling Commission. This is because its sweepstakes are not considered “lotteries, gaming or gambling”, and therefore its activities cannot be fully regulated. This contrasts with the National Lottery, which has its own Community Fund. Through this fund, it gives out grants to various charities and organisations across the country, including ours. It, instead, can cause a whole host of issues surrounding gambling addictions. 

Conclusion 
While it looks as if the benefits can offset the drawbacks, these benefits are often usually reaped by larger and more well-known charities. In the same written evidence to the DCMS Committee Inquiry, Omaze highlight that they have raised over £15m for “some of the biggest and most loved British charities”. It is unlikely that smaller and more local charities would be able to benefit from such a fundraiser, as it partially relies on the status of the charity to bring in the donations/entries.   

It's also interesting to note that Omaze are yet to work with a large charities advocating for tenants’ rights and those experiencing homelessness. Perhaps there are myriad reasons for this lack of engagement. But one likely factor is perhaps the way in which these draws rely on the exploitation of an already broken housing system. 

For many charities, this method of fundraising can seem to be a major benefit. The amount of revenue that can be generated from one huge event such as an auction can eliminate the need for other forms of fundraising. However, it’s unlikely that many smaller charities such as ours, which rely on an engaged community for support, will end up using property sweepstakes. It could undo all the work in fostering all these connections and the trust that has been built over the decades when there is such a lack of transparency to Omaze’s operations and how much they give compared to the profit they make. 

Housing should not be commodified. By putting up homes as a prize to win, Omaze is doing exactly that. The commodification of housing has led not only to a decrease in social housing, but also the worsening of affordability. Charities should instead use their platforms and status to advocate for concrete policy changes to demand better for everyone, including backing the Renters’ Reform Bill, stepping up to support rent caps, and encouraging our next Government to build more social homes.