Raffles have been effective for fundraising and generating enthusiasm since biblical times. The Old Testament notes that Moses used a lottery to distribute the land west of the Jordan River. The Hun Dynasty, circa 1000 BC, developed a lottery game in which players picked numbers 1–80 to fund public works, including the Great Wall of China.
Community groups and local nonprofits have raised funds with raffles while winning public support for project goals for generations. The usual scenario goes like this: The group receives donated prizes from sponsoring businesses, sells tickets, then draws the winning matches. Usually, the drawing is a big gathering, and from start to finish, it’s a person-to-person operation, entirely offline.
The COVID-19 pandemic has made that sort of raffle impossible — at least for the time being. Charities and community groups, however, need funding at least as much, and probably more, than they did before the pandemic. Raffles, like so much else about our daily lives, have to move online to adapt.
Just so you know
Organizing an online raffle
The magic of a raffle is the combination of altruism (players buy tickets to support a worthy cause) and aspiration (players are genuinely excited to win the prizes). The first element of a successful raffle is offering prizes worth far more than the price of the ticket. Ask each business that already supports your organization to donate a prize (it may be tax deductible) and help sell tickets via their online presence.
Once the prizes are lined up, start selling tickets. Before the pandemic, raffle ticket sales were customarily cash based, but that has to change to work online. Research a simple online payment processing solution to help you collect money for the tickets.
Nonprofits and community groups seldom have large marketing budgets. Start with a compelling email campaign to motivate your supporters to buy tickets for themselves and sell to their friends.
You can easily customize this JotForm raffle registration form template to suit your needs. It’s easy for ticket purchasers to complete, and it captures all of a purchaser’s contact information to build your email list for future fundraising. And with the JotForm raffle ticket PDF template, you can quickly create raffle tickets with the information from the registration form.
Taxes and regulations
Offline raffles are generally so small and local that they fly entirely under the radar in terms of regulations and taxes. Who knew your softball team’s raffle to pay for new uniforms is subject to state anti-gambling laws and federal taxes?
An online raffle obviously has a much greater chance of being noticed by authorities, so it’s best to do your homework. Raffles are entirely illegal in Alabama, Hawaii, and Utah, and Georgia requires you to register your raffle with the sheriff. Each state has an association of nonprofits that can counsel you on your relevant state laws.
As for federal taxes, let’s simply say it gets very complicated very fast. Businesses that donate prizes might be able to deduct the cost of tangible prizes but not services. If your raffle is for a few pizzas, you probably don’t have any tax worries, but with substantial prizes it gets more complex.
Nonprofits must report any raffle prizes valued at 300 times or more the price of the winning wager if the prize value is more than $600 (less the amount paid for the ticket). If the prize value exceeds $5,000 (think island vacation or new car), the nonprofit must withhold 25 percent from the winnings. If the charity does not obtain the winner’s Social Security number on a taxable raffle prize, it must withhold 28 percent of its own raffle income as backup withholding.
If your organization is registered as a section 501 nonprofit, you should review this comprehensive guidance from the IRS.
While an online raffle is potentially more complicated than what your organization is accustomed to, it does offer more potential benefit. Even a rudimentary online marketing campaign is likely to reach a much larger audience. This increases your general community support — and it boosts your chances of winning the support of larger benefactors.