Lotto funds were not distributed to charities owing to legislative and procedural issues, the National Lotteries Board (NLB) said on Monday.

However, the NLB did not have the authority to make grants, CEO Vevek Ram said in a statement.

"Distributing agencies, which are committees appointed by the Minister of Trade and Industry in consultation with the other relevant ministers, are the entities entrusted with the making of grants," he said.

"The Board does not have the authority to make grants in respect of arts and culture, sports and recreation and charities," he emphasised.

The NLB was the trustee of the National Lotteries Distribution Trust Fund and had a fiduciary duty to ensure that monies from the fund were distributed honestly, impartially and with the proper due process, Ram said.

The NLB had made recommendations to the Department of Trade and Industry to amend the Lotteries Act to remove certain restrictions which hamper the effective distribution of funds.

The recommendations included creating two new grant categories, namely health and education, which would allow the fund to distribute more money which was not likely to be used by the existing three categories of arts and culture, sports and charities.

The two new categories would replace the defunct RDP category and had been proposed as early as 2004, Ram said.

The NLB also proposed the removal of the restrictions that only juridical persons were allowed to apply for grants and also called for an expansion of the application-based funding model to include targeted, impact-based funding.

The NLB also proposed that members of distributing agencies be appointed on a full-time rather than a part-time basis.

"In the past year, the board has moved into bigger premises, doubled its staff and completely re-engineered the business processes relating to grants.

"Despite these efforts however, the reduction of the average turnaround time of 12 months is unlikely in the short term given the legislative constraints," Ram said.

However, claims by the NLB that they could not pay needy organisations on time because distribution agencies did not work full-time were untrue, the Sowetan newspaper reported on Monday.

Deputy DG of consumer and corporate regulation at the Trade and Industry Ministry, Zodwa Ntuli, told the newspaper that the board had enough staff to process applications.

Ntuli could not be reached on Monday to confirm the report.

It emerged in Parliament last week that only 28% of lottery funds - R948-million out of the available R3,3-billion ¬- had been paid out to beneficiaries in 2009.

On Thursday Ntuli told Sapa that one of the main problems preventing speedy distribution of funds was the strict requirements for charity organisations.

"Firstly, one of the requirements for an application is to provide an audited financial statement for two years.

"Some of the non-governmental organisations are very small and cannot afford to get audited financial statements, which means they can't qualify for funds."

Ntuli said it had been decided that the requirement for audited financial statements would be scrapped.

However, there would still be strict monitoring of how the funds were used after the money had been paid to a beneficiary.

Also, she said the time between an application being approved and the beneficiary getting the money, was too long.

"If you look at it on average, it takes over three months. There are some cases that will take six months and there are some that will take even longer.

"That process needs to be shortened," said Ntuli, adding that it would be dealt with internally.

Ntuli said the department would also look at the current legislation to check if any amendments needed to be made to ensure a smoother payment distribution process.