The report said that although London receives 24 per cent of all lottery good cause money despite having a UK population share of only 14 per cent, its share of lottery grants worth £10,000 or less is only 10 per cent.
It added that voluntary organisations in receipt of grants of £10,000 or less already had a poor record of attracting lottery money, and were less likely to have alternative sources of funding available.
“London’s small voluntary and community organisations need to be shielded from the harm that diverting lottery money to pay for them can cause,” the report said. “We therefore recommend that the proportion of lottery good cause money spent on grants worth less than £10,000 should be monitored and protected from the effects of the diversion by lottery distributors.”
The decline in funding for small organisations will also make it less likely that the Olympic Games will fulfil some of its key objectives, according to the report.
“We are also concerned about the effect that the diversion will have on the 2012 games themselves,” it said. “Two key promises made in London’s bid were that the 2012 games would include a participatory cultural festival, the Cultural Olympiad, and would be used as a catalyst to increase grass-roots sport participation. Small community and voluntary organisations will be needed to deliver both of these promises.”
The report added that with such organisations short of funding, the diversion of lottery money was jeopardising the prospect of fulfilling these objectives.
Dee Doocey, chair of economic development, culture, sport and tourism committee at the London Assembly, said: “Many of the promises London made in its bid, for example about increasing participation in sports, cannot be realised if the local organisations that support these goals are no longer able to deliver – or are even forced to close down completely.”