A published report says one of the country's biggest charities is in serious trouble. The Toronto Star says the Canadian Diabetes Association is running a deficit after losing more than $7 million in an ill-timed lottery.

The CDA lottery sold tickets for $100 each and offered car and cash prizes. The charity had hoped to sell 180,000 tickets, but when tickets went on sale just three days after Sept. 11th, 2001, sales stalled. Only 40,000 tickets were sold and the charity lost $7 million in the venture. The CDA blames the poor timing of the lottery start and competition from another lottery with a better prize pool for the loss.

But the lottery loss is only one of the charity's problems. The Star also says many volunteers are leaving the organization. Top volunteers reportedly complain two-thirds of the charity's $62-million expenditure goes to bureaucracy. They say executives are well-paid, but there is no money for grassroots programs.

The volunteers say the national charity seems to have plenty of money to pay 65 "fund development officers" but no money to help them hold seminars for diabetes patients on such things as diet concerns.

CDA chief operating officer Lyn McDonell told The Star that they recognize the charity has had its problems. But she says things are turning around with a renewed commitment to volunteerism and to figuring out the best ways to use specific volunteers.

The Star looked at the Canadian Diabetes Association's records for last four years. It found that of each dollar spent, it devoted an average of 37 cents to diabetes-related charitable works. Using last year as an example, $24 million went to charitable works, $6.3 million went to administration and $31.5 million was spent on various types of fundraising.

Charity watchdogs suggest that a well-managed charity should devote at least 60 per cent of its total expenditure to charitable works.

Asked about the charity's performance, Alexis Mantell, senior manager for strategic communications and media relations, told the paper the CDA's own calculations put its contribution to charitable works at 61 per cent.

That's because, Mantell explained, the charity does a different calculation, which includes the benefits but not the costs of two major fundraising initiatives: gaming and the charity's clothing collection program.

The Canadian Diabetes Association is Canada's main diabetes charity and was founded almost 50 years ago. It promotes the health of Canadians through diabetes research, education and offers services to Canada's two million diabetes sufferers.

The Star's investigation of Canadian charities found that 12,000 of the 79,000 charities spend more on fundraising and administration than they do on charitable works. One in six annually spend less than 50 per cent of their total expenditure on good works, the paper says.