Conducting a charity raffle may be an ingenious cash flow solution for your non-profit organization. Especially if a generous supporter has donated an item of value such as real estate, a vehicle, or vacation package, the cause and work supported by your 501(c)(3) or 501(c)(4) non-profit organization could stand to benefit substantially from ticket sales.
However, before you start making fliers and planning a gala event to feature the drawing of the winner, you should investigate the particular state and federal laws that dictate rules on charity raffles.
Here are 5 steps you can take to plan a charity raffle:
1. Understand what a raffle is in your state. Each state defines what a raffle is a little differently. So, find out your state's definition of a raffle by visiting the state's government website or calling city hall to look up the applicable definition of a raffle. Generally, raffles are characterized by requiring purchase of tickets or exchanging something of value to participate in a random drawing in which a prize is awarded.
2. Check the state's raffle requirements. The majority of states allow non-profit organizations to conduct charity raffles, but there are a few that do not. Read your state's raffle laws to find out if a raffle is a possible fundraiser.
3. Apply for a raffle license or permit. Once you've figured what a charity raffle is and gained an idea of the state law governing raffle and you are still on track to organize one, it is time for your non-profit organization to apply for a raffle license or permit in states that require it. The application may take weeks or months to be processed, so plan your charity raffle timeline accordingly. Many applications are available online, so check your state's government website or search online for the application.
4. Talk to an attorney. Raffle laws are complex and even a little quirky about what is allowed and what is prohibited. Once you have done the ground research and been approved for a raffle license, your next step may well be to speak to an attorney about the legalities of how the raffle is organized, publicized, and how the money is collected and the prize distributed. The attorney will not only be able to guide you on how to carry out the event, but will also be familiar with your organization and situation in case any issues come up along the way.
Once you've jumped through the initial hoops with success, your non-profit organization can turn its attention to planning and executing a successful raffle. Think about timeline, when potential participants can purchase tickets, and how the winner will be drawn. Speak to your attorney about any aspect that is unclear or confusing.
Planning a raffle as a non-profit fundraiser involves a number of requirements, however by tackling the process step-wise you stand to set your non-profit up for continued success.
- Gaming Publication for Tax-Exempt Organizations [PDF] (IRS.gov)
- How to Organize a Raffle Fundraiser (Step By Step Fundraising)
- What are the raffle laws of each state? (Rafflefaq.com)
- News & Know-How: Conducting a Raffle (ASAE & the Center for Association Leadership)
- Nonprofit Basics (FindLaw)
- Pros and Cons of Non-Profit 501(c)3 Incorporation (FindLaw's Free Enterprise)