The Nonprofit FAQ

Should we conduct a raffle?

For some considerations, see Michael Wyland's notes on this question at http://www.sumptionandwyland.com/faq/FAQ-Raffles%20&%20Charitable%20Lotteries.htm Susan D. Smith, the ED of the Utica Symphony Orchestra, posted to CharityLaw on July 18, 2003, in response to a question about a fundraiser involving raffling a car: Many states consider charity raffles, bell jar games and such as games of chance and they are regulated by the state wagering and gaming board. So, you will need a permit to conduct such a raffle in NY and many other states. Once you have a state permit, you will need a license from the jurisdiction[s] in which raffle tickets are to be sold -- city, town, village. There can be a lot of paperwork to both these processes, so allow for time -- ideally 30-60 days before you wish to conduct the raffle. In some place, the license may include a police check of all people who will sell tickets, so you can't just hand a bunch of tickets to people and ask them to sell them. If your raffle will gross more than $30,000, NY State (and maybe others) requires additional paperwork after the raffle concludes. It is extensive. Be sure to keep good records of income, expenses gross/net proceeds. When we conducted our first raffle, I opened a separate bank account into which all raffle proceeds went and from which all raffle expenses were paid. It made it much easier. As to the car itself -- you will need to pay for the title, insurance for the time during which it is to be raffled [and especially if the car will be on display during the raffle period]. Wherever you sell raffle tix, your permit must be displayed. Your raffle rules should make it clear who may purchase tix -- over 18 or 21 [depending on the state], whether or not people affiliated with the organization may purchase or not [think about this one: if there is only one winner, do you want it to be the spouse of the Board president, a volunteer for your agency or an employee?], that your organization is required to file a 1099 with the IRS [the vehicle is considered income to the winner], that only "X" number of tickets will be sold [people like to know odds], that the purchase of a raffle tix is not considered a charitable gift and is not tax deductible (see http://www.nonprofits.org/npofaq/11/06.html). State when and where the tix will be drawn and whether or not you need to be present to win. Will there be a limit on the # of tix that any one person may buy? State the value of the vehicle. And make sure your literature is given to every person who buys a ticket and that it has your permit # on it. I've done this before -- last year the Symphony I work for sold 2000 $25 tix on a Ford Explorer. We netted $49,000. This year, we're raffling a 2003 Centennial Edition Ford Mustang Convertible [black] for $25 a tix and we're selling 2500. Last year the car was donated to us. This year we have to pay $8300 for it [dealer consortium we're working with is paying the other $20,000]. Raffles are labor intensive. Raffle ticket buyers do NOT translate into donors of other types. A raffle tix bought at the mall or through a telethon is an impulse purchase. You will not realize new members or museum-goers as a result of the raffle. But, if you've got the right vehicle, you'll make money. Oh, and be sure that your raffle isn't going on at the same time as another group's. Posted 7/25/03 -- PB