Learn more about IRS regulations for running raffle fundraisers.
Charity raffles can be an excellent way to raise money for your organization or cause, but they do come with some legal guidelines and rules. Discover the eligibility requirements for running raffle-style fundraisers below.
Who is eligible to run a raffle?
The IRS considers raffles a form of gambling but does allow them to be run by qualified 501(c) nonprofit organizations.
This means that all funds raised from a raffle must be sent directly to a 501(c) organization, and that organization must agree to take responsibility for the legal compliance of the raffle fundraiser.
How do I find out if I can run a raffle?
The laws for raffles vary from state to state and even within states themselves. Since we are not qualified to provide legal advice, we suggest starting with a Google search on the raffle laws in your area, as some states do require a license or permit to run a raffle. This should give you the information you need to get started. You can also consult your legal counsel to ensure you are in compliance with federal, state, and local laws.
What if I can't run a raffle in my state?
A sweepstakes fundraiser is often a good alternative when you can't run a raffle in your area. The two are similar in many ways, but there are a few key differences that make sweepstakes eligible to be run in areas where a raffle cannot be.
Charity sweepstakes have fewer geographic regulatory restrictions than raffles, and entries can usually be sold nationally or even internationally. This enables organizations to run charity drawings that have a much wider reach, when that’s a goal.
Please note: Online raffles are prohibited in Alabama, California, Hawaii, Kansas, Utah, Washington, Iowa and Minnesota, New Jersey and Montana. (*Montana prohibits raffle ticket purchases by credit card, so Montana organizations are unable run raffles on MemberHub Fundraisers.) If the organization you're fundraising for is in one of these states, you'll want to consider running a sweepstakes instead.