The Rules of Raffling Responsibly

By Julie A. Davis, CPA

Non-profit organizations are often looking for different ways to raise the funds they need. One of the most popular methods to help raise some cash is through a raffle.

Before you start sending people home with luxury vacations and cash like you’re “The Price Is Right,” there are some rules to keep in mind both from the state of Florida, as well as the IRS:

1. Required Disclosures

In order to be in financial compliance with all the proper rules and regulations surrounding raffles, you’ll need to make sure participants are aware of the following information:

  • The rules governing the operations of the drawing.
  • The full name of the organization and its primary place of business.
  • The originating source of the funds used to provide cash as a prize or purchased prizes.
  • The exact time and location (date, hour, and address/place) where the winner will be chosen and the prizes awarded (unless the raffle tickets are not publicly offered three days prior to the drawing).
  • That no purchase/contribution is required (although they are HIGHLY encouraged).

2. Donations vs. Payments

Any organization that conducts a raffle by chance cannot require a fee/donation/proof of payment to enter or win. Keep in mind, this does not restrict that group from suggesting a donation.

3. Dealing With The IRS

The winner will receive a W-G form, depending on the type of prize won. The organization will also have to place the number of the W-G form on their IRS Form 990.

Raffles have been performed in one form or another since the 1600’s, and their effectiveness at raising funds will continue to be a draw to organizations wanting to generate cash. Raffle fundraisers aren’t just all fun and games, so be sure to do your research and contact our friendly tax and accounting experts to ensure you raffle responsibly!

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