Raffles: A Fundraising Guide For California Nonprofits

Raffles can be an exciting and effective way for nonprofit organizations to raise funds for their causes. However, in California, there are specific legal requirements that must be followed to ensure your raffle is both compliant and successful. This guide will walk you through the process of holding a raffle that adheres to California law while maximizing your fundraising potential.

Step 1: Determining Eligibility

Before planning your raffle, ensure your organization is eligible. Under California Penal Code Section 320.5, your nonprofit must:

1. Be a private, nonprofit organization qualified to do business in California for at least one year prior to conducting the raffle.
2. Have tax-exempt status, such as 501(c)(3), under specific sections of the California Revenue and Taxation Code.

If you are unsure about your eligibility, consult with a legal professional or contact the California Attorney General’s office for clarification.

Step 2: Registering Your Raffle

Once you have confirmed your eligibility, you need to register with the Attorney General’s Registry of Charitable Trusts. Here is what you need to do:

1. Complete the Application for Registration (Form CT-NRP-1).
2. Submit the form at least 60 days before your planned raffle date.
3. Include a $30 registration fee with your application.
4. Provide a Franchise Tax Board “entity status letter” confirming your tax-exempt status.

After your application is approved, you will receive a confirmation letter with a raffle permit number. This permit is valid for one year, from September 1 to August 31.

Step 3: Planning Your Raffle

Now that you are registered, it is time to plan your raffle. Remember these key points:

1. Appoint a supervisor who is at least 18 years old.
2. Choose prizes that will attract ticket buyers while keeping costs reasonable.
3. Set your ticket price: Consider your fundraising goal and the value of your prizes when determining ticket prices.
4. Print paper tickets: California law requires paper-based tickets with detachable coupons or stubs.
5. Plan your drawing, which must take place in California.

Step 4: Promoting and Conducting the Raffle

While online ticket sales are prohibited, you can advertise your raffle on the internet. Use your website, social media channels, and email lists to spread the word. Emphasize that the proceeds will benefit a charitable cause!

California law requires that you maintain a detailed record of all sales as you sell tickets. On drawing day:

1. Ensure your designated supervisor is present.
2. Use a transparent method for selecting winners.
3. Document each winner and his or her prize.

Keep records of the raffle’s date, location, total funds received, expenses, and proceeds distribution. Be sure to retain this information for at least one year post-raffle.

Step 5: Distributing and Reporting Funds

California law requires that at least 90% of the gross receipts from ticket sales go towards your charitable purposes. This means you can use up to 10% for raffle expenses and administration costs. Ensure you have a clear plan for how the funds will be used to support your mission. Be sure to file an annual aggregate financial disclosure report (Form CT-NRP-2) for all raffles held during the year by October 1.

Best Practices for Success

To maximize the success of your raffle, implement these best practices throughout the process:

1. Plan well in advance, allowing time for registration, organization, and promotion.
2. Select enticing prizes and think about collaborating with local businesses for donations.
3. Train your ticket sellers thoroughly on raffle rules and your organization’s mission.
4. Do not sell tickets online.
5. Be transparent about how funds will be used and ensure no more than 10% of gross receipts are used for raffle costs.
6. Consider a festive drawing ceremony to engage your community.
7. Express gratitude to all participants and volunteers.
8. File your annual report to maintain eligibility.
9. Conduct a post-raffle evaluation to improve future raffles.

Conclusion

Holding a raffle can be an excellent way to raise funds and engage your community. By following these guidelines, you can ensure your raffle is legal and successful. Remember, compliance with California law is crucial, but it does not have to be a barrier to a fun and effective fundraising event.

If you have any questions about the raffle process or need assistance ensuring compliance, do not hesitate to reach out to our legal team. We are here to help you navigate the complexities of nonprofit law and make your fundraising efforts a resounding success.