Category Archives: Fundraising Raffles

Remember my recent blog about how California’s weird raffle laws require either that your nonprofit register its raffle and comply with a bunch of rules, or give away tickets for free?

The perfect example of when it’s NOT worth giving your raffle tickets away has come along: It’s the fifth annual “Dream House Raffle,” a benefit for the Yerba Buena Center for the Arts, which is indeed a 501(c)(3) charity.

The first prize (among many) is either a house in San Francisco (and a nice one, by the look of it) or $4 million dollars in cash. Nope, they won’t be giving any of these tickets away. They’ll cost you $150 a pop.

This is pretty much the opposite of a grassroots raffle. Riding on BART today, I saw ad signs for it lining the walls by the train tracks. The mail just brought me a four-page glossy brochure with details on entry and prizes. (It’s hard not to look . . . and to wonder, “If I won a vacation, would I take it or the $5,000 cash?”)

But sometimes, you’ve got to plan big in order to get big returns. They assure us that no more than 90,000 tickets will be sold — but that with all the smaller prizes, the odds of winning are actually 1 in 50. Better get shopping!

I was listening to one of my local public radio stations recently, and heard an announcement for a raffle — accompanied by an assurance that I need not donate to win. Huh? That sounds like a lousy way to raise money. Doesn’t a raffle ordinarily mean that you and others buy tickets, and the collective amount raised not only covers the valuable prize in question, but results in a profit to whoever runs the raffle?

Then I remembered: California law contains some unusual provisions governing raffles. In essence, they’re illegal unless run by a nonprofit, and even if they are run by a nonprofit, the organization must either:

• register the raffle with the state and comply with a bunch of difficult provisions, such as not conducting the raffle over the Internet, arranging for supervision by an adult, and ensuring that 90% of the gross receipts go toward benefiting or supporting beneficial or charitable purposes, or else
• offer tickets for free.

No wonder said radio station decided on the latter approach — though I bet they’re hoping not many people take them up on it. If your nonprofit is in California and thinking of running a raffle, you can find more information on the “Raffles” page of the state’s website.

If your nonprofit is in some other state, this particular rule probably does not apply — but others will, if raffles are legal there at all. Check for a similar source of information from your state or consult an attorney well-versed in nonprofit law.