Allied Charities of Minnesota

11-24-2017 letter

24 Nov 2017 06:29 | Allen Lund (Administrator)

Members and Associates,

I have posted the FY2017 GCB Annual Report and a one page recap of that report on the ACM website www.alliedcharitiesmn.org

There is only one message that I need you take away from the report and my recap:  When prizes+expenses+taxes+fees (cost of doing business) equal sales (income), charitable gaming will cease to exist. 

There will be no lengthy internal debates or votes on whether or not to continue operating charitable gaming.  It will be over.  PERIOD.

Our overall prize payout is now at 83.9% due to all forms combined, but paper tabs are now paying out at 84.6% and will most likely go over 85% in FY2018.  E-tabs are now paying out at 85.7% and will most likely go over 86% in FY2018.  These two forms account for over 93% of our total sales.  Where they go, we go. 

Our average cost of doing business is now 96.16 cents on every dollar sold: $1.00-83.9 cents prize payout =16.1 cents - 8.06 cents expenses (50.07% of 16.1) = 8.04 cents - 4.2 cents taxes/fees (26% of 16.1) = 3.84 cents to missions.  If we cannot effect any reductions in payout/expenses/taxes/fees our overall cost of doing business will be over 97 cents by 2020, 98 cents by 2022.  Right now we are averaging 3.14 cents to missions on paper tabs and 2.4 cents on e-tabs. 

By 2020 we will be netting less than 2 cents on both paper and e tabs, less than 1 cent by 2022 is not impossible.  Think about it, we are only 1.84 cents away from making less than two cents on every dollar that we touch.  Any combined increase of 1.85 cents in payout/expenses/taxes/fees will be our undoing.  Last fiscal year those four items combined for just shy of a half cent increase in our cost of doing business. 

In FY2013 we netted 6.47 cents on every dollar sold.  We have lost 2.63 cents in four fiscal years.  At that rate of decline we will be down to 1.21 cents by the end of FY2021. 

Last fiscal year we increased our sales by $206 million and netted $1 million for our efforts.  Our cost of doing business on every dollar of that $206 million was 99.5 cents, netting us one half of one cent on every dollar sold. 

To those of you that derive income from us, we are not out to harm you.  Our only goal is to keep charities contributing to their missions and communities.  If we accomplish that, then by extension and necessity, you will be needed.  But, we need your help in convincing the legislature and Governor that things need to change and change soon.  Act before it is too late for either of us.  I am not crying wolf, I am asking you to face the facts.  My instincts tell me that dropping below 2 cents for missions will be the breaking point for hundreds of organizations.  Do you really want to see if my predictions are correct before you act?  At that time it will be too late. 

You can say whatever you want about me or Allied Charities, but you cannot ignore the numbers and trends.  With no changes to the current prize payout/expense/tax/fee structure we are on a collision course to zero profit.  When charities are done, everyone connected to us will be too. 

Al         


fy2017 11192017.pdf

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