Prior to COVID-19 had you ever attended a virtual fundraising event? I hadn’t. When the Nonprofit Association of Oregon offered a webinar on how the Dougy Center transitioned their largest in-person fundraising event to a virtual event, I registered.
My family became aware of the Dougy Center when we lived in Oregon. They provide support for children and young adults dealing with grief. A fantastic organization that has loads of community support. For 23 years one sponsor has made the raffle of a Porsche Boxster possible.
Taking that raffle online required navigating bumps in the road.
To buy a raffle ticket online, the purchaser had to check a box verifying that they were in the state of Oregon. Why?
Raffles are gambling. A raffle involves pay-to-play, a prize, and a random drawing. Gambling is illegal, however most states and localities allow nonprofits, 501(c)(3), to conduct raffles for fundraising purposes. The rules governing raffles are determined by the state and locality where the nonprofit is located.
Usually it is only legal to sell raffle tickets in the state the nonprofit is located in. So even though the Dougy Center is just across the Columbia River from Washington state, it is not legal to sell tickets in Washington. Selling tickets online can be problematic and some states ban it. Many nonprofits avoid it or do as the Dougy Center did and require the purchaser to verify that they are physically located in the same state as the nonprofit.
If you are considering holding a raffle and want to avoid the bumps in the road then here are some things to consider:
- Raffle are not allowed on Service-managed property (633 FW4)
- Adhere to the local and state laws
- Acquire the necessary permits
- Follow the IRS regulations on Charitable Gaming
- Ensure proper records are kept
- File appropriate taxes that might include: excise, UBIT, and withholding
- Ensure proceeds are used according to state regulations
Understanding the rules your nonprofit has to operate within will make your raffle successful. For us, we’ll have to take a trip to Oregon to purchase a raffle ticket for the Porsche Boxster.
Resources for nonprofits on raffles:
National Council of Nonprofits
Guide Through the Legal Jungle