It's Never Easy When Trying to Raise Money for Charities

By Ben Hamill - February 17 2016

Royalty Fees

Two massive class action lawsuits have been filed in an attempt to recoup monies paid by charitable organizations for bingo licences in Windsor and Tecumseh. The lawsuit charges that the two cities overcharged for bingo licences from at least 1993 and is trying to get that money back in the name of all the charitable organizations that paid the licencing fee since that time.

The lawsuits have been formally filed by the ALS Society of Essex County and the Belle River District Minor Hockey Association. In Tecumseh, the Essex County Dancers are also listed as plaintiffs.

If the cities lose the case they could have to pay as much as $70,000,000 total to over 1000 charitable organizations.

One Suit Fits All

The nature of this type of class action suit is that all organizations that paid bingo licence fees to Windsor and Tecumseh in the years covered in the suit are automatically included in the suit unless they formally opt out of the suit. So the cities have launched a campaign to get charitable organizations to opt out of the suit.

– Games Fit All at Wink bingo –

Let's See Now….

There are two elements here that I simply don't understand. First, why should a group have to opt out to remove its name from the lawsuit? Shouldn't an interested party have to opt in to be included in the suit?

Secondly, the enormous sum of money that Windsor and Tecumseh could be forced to pay out forces them to mount an aggressive, almost belligerent, campaign to coerce, even shame, organizations to opt out.

Licence Fees

The lawsuit claims that the licence fees are an illegal tax and that all the money should be returned to the charities. On first look, it seems that some licence fee is justified. The question is how much. But should every penny of the licence fees since 1993 be returned to the charities?

In theory, this means that every community that has a fixed licence fee as a function of prize money offered will also have to return those fees eventually. If the lawsuit prevails in Windsor and Tecumseh, every municipality that collects bingo licence fees will be at risk. Every community that collects any kind of licence fee will be at risk.

Windsor has received bingo licence fees from some 1000 organizations since 1993 and could be liable for more than $67,000,000 if they lose the lawsuit. A little arithmetic reveals that the average charity in Windsor stands to win $67,000.

Even if an organization believes the licence fees were fair and reasonable, at least in part, it would be very hard to resist a chance to recoup $67,000!

Little Lasting Good Will Come of This

The bad feelings that will linger long after the suit is settled will work against everything positive that comes from charitable bingo. Already, talk backs to articles written in the newspaper and online are indicating a burgeoning divide between the supporters of the suit and the defenders of the city.

Many people blame the city managers, the politicians and bureaucrats. They claim that the city knew all along that the fees were too high and should now return the money to the charities.

Others are placing the blame on the organizations themselves and are threatening to withhold charitable giving from these organizations.

If people don't give to these organizations, they may have to fold when their share of the booty runs out.

Even charitable organizations that opt out may lose in the long run. There could come a tipping point where charitable bingo ends altogether because people, in their anger at the organizations that continued he suit, simply refuse to play.

How Much Does a Bingo Licence Cost?

I looked up the cost of a bingo licence for Windsor. For $165 per event an organization has to provide a good deal of information to the city's Licencing and Enforcement Department. Much of this information is repeated from event to event so the organization doesn't have to do busy work each time it holds an event.

This also means that the Licencing and Enforcement Department doesn't have to research an organization over again and again.

Is $165 Per Event Fair?

It is clear that, in order to be in compliance with every bit of information the city wants to see, requires the organization to gather much information together. Once the organization has done so it seems that the city has little additional research to do. Every organization must submit a report every month of its charitable activities and disbursements.

I also understand that if the city goes over these reports every month it would likely need a full-time staff member. The cost per event would be used, amongst other things, to defray the employment costs for said employee.

In most locations the licence is 3% of the total prize money. So, if a bingo event awards $5000 in prize money, the licence fee would be $150. The licencing boards generally award licences for up to $5500 in prizes, 3% of which is $165. The big difference between the common practice and the practice in Windsor and Tecumseh is that in the latter cities if an event guarantees say $2000 in prizes, it would still have to pay $165 as a licencing fee. This amounts to over 8% of total prize money.

– Play at Wink Bingo–

So, Who's Right?

I've never done any research into the behind the scenes costs of running a bingo event. I'm basically just a player. On first look it seems that the plaintiffs have a point but I am leery of jumping headfirst into erroneous conclusions.

More on this imbroglio in the future.