Despite last week's resignation of the Lottery regulator, and calls for tighter control of the game, the Lottery remains an enticing source of funding. But tapping it is far from simple. Barbara Millar reports

It took Isabel Walker the best part of two weeks to complete the National Lottery Charities Board grant application form. Ms Walker is director of the charity Action on Pre-Eclampsia, which she set up in 1991 after her first baby died as a result of the condition and she herself became very ill. She applied for a grant of pounds130,000 to expand the service her charity offers. 'We needed a full-time member of staff to operate the telephone helpline in office hours. We also needed more office space, equipment and furniture,' she explains.

Her charity may be small, but the work it does is valuable, raising awareness and providing information on pre-eclampsia to pregnant women and health professionals, organising conferences for midwives, and giving support to sufferers of the condition and their families. Pre-eclampsia affects 70,000 women a year in the UK and causes the death of up to 500 babies. 'We wanted to be able to professionalise our services further,' says Ms Walker. 'Our telephone helpline was operated by volunteers, working from their homes. This was an adequate service, but we were not able to monitor or control the quality of the service provided.'

At the time, in 1996, the National Lottery Charities Board had launched its health, disability and care grants with an allocation of pounds9m for health and social research projects. The programme was designed 'to support projects which work towards the prevention of ill health and which promote a healthier way of life; projects which enable people with disabilities to have maximum control over their lives and which promote and include people with disabilities in everyday life; and projects which support carers and enable those needing care to take greater control of their lives'.

Ms Walker sent for the 20-page application form and diligently filled it in. 'It was the most challenging fundraising form I have ever had to complete. The questions went into a great deal of detail, wanting to know exactly what we would spend, down to the last penny. There were pages and pages of questions on budgets.'

While she has no quibbles with the rigorous questions that were asked, she does feel that the application form's complexity discriminates against small charities. 'It is difficult for a small charity like ours to be able to allocate the amount of time needed to fill in the form correctly,' says Ms Walker. 'A charity with a full-time fundraising department clearly has a real advantage here.'

The form duly completed and sent off, Ms Walker sat back and waited for the next stage in the process, assessment. Every grant application is assessed, either over the phone or by a personal visit. Ms Walker had a lengthy phone conversation with her assessor and was, again, quizzed for more than 45 minutes on the minutiae of the budgets. 'I had to account for every line of it,' she recalls. 'But, at the end, I was heartened when I was told by the assessor that our application was a good one.'

But four months later she received a standard letter from the Charities Board to say her application had been unsuccessful. 'That was it. There was no explanation, no reason given as to why we had failed. We weren't able to learn from the experience because we have not been told why we didn't get the grant. There were no pointers to help us in the future. We were left feeling the whole exercise had been a complete waste of time. And, given that the assessor had been so encouraging, we felt even more disappointed about the outcome.'

She contrasts this experience with applying for grants from other organisations. 'I applied for a grant last year from a government department and did not get it. I had invested lots of time in this so I wrote and asked why. In response I got a full explanation and this has allowed me to re-think my approach before I apply to them again.'

The National Lottery raised the hopes of lots of small, struggling charities, says Ms Walker. 'We also had to wait a long time for the health, disability and care grants programme to be launched. Surely we deserve some feedback, otherwise people have to operate in a vacuum.'

Ros Jenkins, chief executive of the Leeds-based National Heart Research Fund, which was successful in obtaining a pounds152,000 grant from the National Lottery Charities Board in 1996, also believes feedback is essential. 'We involved 10 people in completing our application form,' says Ms Jenkins. 'These included the professionals who would be carrying out the research, the finance department, even our solicitors who were able to look at the project with a fresh eye and made a couple of small but important suggestions which did enhance our application.'

Ms Jenkins also met people in organisations which had previously been successful in applying for a Lottery grant, and they offered to help if she ran into difficulties. 'We are familiar with completing grant application forms as our researchers do it all the time,' she adds. 'But this did take a team effort. It is not something one or two people can knock off.'

Anthea Hare, life president and founder of the Richard House Hospice, which was awarded pounds616,000 under the health, disability and care programme, also found the application form enormously time-consuming.

'Our fundraising manager and I gave up six weeks of our summer, working evenings and weekends, to do it,' she says. 'On two occasions the fundraising manager stayed up all night to work on it. To give the detail we believed was expected took a lot of time. It isn't something you can dash off over a weekend.'

But it was worthwhile because it represented the charity's best opportunity of gaining major funding, she adds. 'We were bowled over when we received the amount we had asked for. We will now be able to start building London's first children's hospice later this year.'

Usk House Day Hospice in Powys was also the successful recipient of a Lottery grant - for pounds86,000 - to fund three community nurses for three years. Although they were successful, it was still a game of chance, says the organisation's chair, Michael Dyer. 'There are thousands of deserving causes applying for grants so I am grateful we got what we applied for. But it was a complex procedure. Some of the questions were very wide-ranging, rather than focusing on specifics. But the forms have to be catholic in the way they are produced.'

Completing the application form took 'an enormous amount of time and involved our co-ordinator, chief nurse, members of the board and myself', Mr Dyer adds. 'It was a collation of a lot of people's efforts. We then had a very long phone call, lasting over an hour, with the assessor. The whole process was extremely rigorous.'

Ruth Jones, spokeswoman for the National Lottery Charities Board, maintains the system does not discriminate against small organisations. 'Just the opposite,' she says. 'We fund about one in five of the applications we receive and, because we have a limited amount of money to go round, we want to spread it as widely as possible, so we fund many smaller charities. Some 45 per cent of our grants are for less than pounds20,000.' The National Lottery Charities Board has received 60,000 applications, of which it has funded 12,200.

The application form was designed so that an organisation without fundraising experience could work through every aspect of its project from equal opportunities issues through financial management to what happens to the project once the grant runs out, she says. 'It forces you to think hard and plan ahead. Lots of people have said it really helped them to organise their thoughts about their proposed project. We believe it helps organisations which don't have full-time fundraisers.

'You can tell whether the form has been completed by someone who is passionate about the project, rather than filled in using bland fundraising terms. We favour the former because we need to know that the project is fully understood.'

The enormous numbers of applications for grants under the health, disability and care programme made opportunities for feedback to unsuccessful applications impossible, Ms Jones says. 'We were only able to outline vague reasons why organisations were not awarded a grant and we recognise this was not satisfactory.'

Anne Faulkner, honorary director of the Persistent Virus Disease Research Foundation, dismisses Ms Jones' assertion that small charities benefit most from the Lottery.

'Under the 1996 health, disability and care grants programme, 43 grants worth pounds6.7m were awarded for medical research and 13 grants worth pounds1.9m for social research. These grants went to organisations such as the Cancer Research Campaign and the British Diabetic Association,' she says. 'One of the largest grants, for pounds542,000, went to the Mental Health Foundation, which is hardly a small charity.'

Ms Faulkner, whose charity funds research into ME, says she spent weeks completing the application form to apply for a pounds268,000 Lottery grant but was not successful. 'I am experienced in charity work but I found it a daunting undertaking,' she says.

She believes that the small medical research charities which do not have the resources to mount expensive fundraising campaigns in national newspapers should receive more help from the Lottery.

The Charities Board's grants programmes have just been revamped so, instead of the succession of themed grants programmes with fixed application periods, in 1998 there will be two main grants programmes, which will run together. The two programmes will have broader themes, and health projects will be included in the types of grants made under them. There will also be no closing date for applications.

The two main grants programmes are community involvement and poverty. 'We are keen to fund projects which help those at greatest disadvantage and those excluded from the community,' says Ms Jones

In addition, there will be three other grants programmes - the small grants scheme, which has been piloted in four areas, will be extended across the UK and will be open all the time; the international grants programme; and a new health and social research grants programme will be open for limited periods.

Information leaflets and application packs for the new health and social research grants programme will be available from 27 April until 9 October this year by calling 0345-919191. Completed applications must be received, together with a full research proposal, by 30 October 1998. Grants will be announced in spring 1999.

'There will be more than one grants programme running at the same time so people can choose to apply to the most appropriate programme for their project,' says Ms Jones. The rules are also being changed so that more organisations can hold a number of grants at the same time. Unsuccessful applicants will be given feedback.

Once the continuous grants programmes are up and running, applications will come back to the board in a more even flow and the pressures on grants staff should lift, she adds. 'This will allow us to produce better feedback for organisations at the time of rejection and should result in better quality applications in the future.'

The Charities Board (for membership see box) has also now brought the assessment of projects in house. In the past, external assessors were used, and this resulted in a number of discrepancies between individual assessors' views of a project and the board's ultimate decision on whether to award a grant.

But, in the future, there may be less money for the Charities Board to distribute. Later this year the New Opportunities Fund will become a sixth 'good cause' and will receive a pounds1bn Lottery cash handout to support a range of health and education projects, including the healthy living centres for which pounds300m of Lottery money has been earmarked. Healthy living centres, according to public health minister Tessa Jowell, will serve about 20 per cent of the population.

Called the first big idea from the National Lottery on health, healthy living centres are meant to stimulate local innovation and persuade lots of partners, including GPs, health authorities, local authorities, trusts, voluntary organisations, businesses and schools to work together to offer a range of services such as health promotion, healthy eating, stress management and relaxation, physical activity, education, equipment, advice and support and self-help groups.

Their common objective will be to help people improve their health and well being, and they are likely to be located in the most deprived areas of the country.

But the bill to get the new Lottery 'good cause' up and running is still going through Parliament and bids to the fund are unlikely to be invited before the summer.

'Organisations are already getting together and preparing bids now,' says Malcolm McClean, a director of MJM Healthcare Solutions, which is running a series of 'concept development workshops' to help people do just that.

Mr McClean also suggests another 'arm' of the New Opportunities Fund, the National Endowment for Science, Technology and the Arts, could provide further funds for health organisations to tap.

'Just because health doesn't feature in the title doesn't mean health organisations cannot apply for grants,' he says. 'Science and technology are, after all, natural areas of health.'

The Charities Board seeks to avoid funding activities which would otherwise be funded by government. Grants, therefore, are not made to HAs, local authorities or local education authorities. Ms Jones says it is not policy, other than in exceptional circumstances, to make grants to NHS trusts, appeals or charities set up to support statutory bodies or bodies where the end user or beneficiary is a statutory body. But what might the 'exceptional circumstances' be?

Ms Jones says this clause was added 'so that excellent projects we felt were worth funding weren't excluded even though they might be in areas we would not normally fund'. However, she admits that the Charities Board has never, so far, funded anything outside its eligibility criteria (see box above).

In 1996, under the health, disability and care grants programme, several grants were made to charities which intended the research work to be carried out in hospital or university laboratories. For instance, the British Lung Foundation received pounds94,000 to carry out research intended to benefit people with severe lung disease through technicians based at King's College Hospital, London, while Action Research won a pounds105,000 grant to develop a pain assessment strategy for children with profound disabilities through research partly carried out at The Great Ormond Street Hospital for Children trust.

'These grants were for charities which fund research which may take place in a hospital or university laboratory because the charity has no labs of its own,' says Ms Jones. 'We are not giving money directly to the hospitals.'

By the time National Lottery operator Camelot's licence expires in 2001, around pounds9bn is expected to have been raised for the 'good causes' which benefit. So far around pounds4.2bn has been raised for the five 'good causes' - the arts councils, the sports councils, the National Lottery Charities Board, the National Heritage Memorial Fund and the Millennium Commission.

These will be joined later this year by the New Opportunities Fund which will support a range of health and education projects. Roughly 28 per cent of each pounds1 stake goes to the 'good causes'.