Fund-raising Food For Thought

In working with another organization I was compelled to pull out the handy dandy Ipad and research raffle law in Texas. Though I knew there was a statute governing raffling activities, I  would never have imagined it being as restrictive as it was.

It”s so easy to get wrapped up in the ethics of fund-raising, that the laws governing how an organization may fund-raise, and by what means an organization may fund-raise, are often forgotten.   Without going into too much of a diatribe, I wanted to quickly address things organizations should be thinking about during a fund-raising campaign.

What Type of Fund-raising Are You Doing?

It it paramount that an organization is clear on the type of fund-raising it wants to conduct. Capital campaigns and other types of solicitation/donation drives have their own set of issues. But when the element of chance is added in the mix things can begin to get a little more difficult.

For example, in Texas 1) the offering of a prize; 2) By chance; 3) with consideration paid for the opportunity to win a chance constitutes as a lottery, which are illegal. Not just “oh darn, we”ve gotten a fine” illegal but criminal charges can be imposed type of illegal.

There are, however, three exceptions; those being bingo games conducted by certain qualified organizations, raffles by qualified organizations and state lotteries. That”s it. If your activity doesn”t fall within one of these you”re engaging in an illegal activity.

Moral of this story is if I hadn”t have honed in on the fact that the fund-raiser was being conducted like a raffle, I might have looked into laws addressing fund-raising as a whole (such as charitable solicitation laws) but not gone much further. I certainly never would have thought that raffles fell under such a broad definition. But you can”t possibly understand what rules you”re responsible for adhering to unless you fully understand what it is you”re doing. Take the time to clearly determine what type of fund-raising is involved and go from there.


Are There Operational Issues?

Interesting enough,  once a Texas organization thinks its squeezed itself into one of the three categories above there are still a host of caveats. Using raffles again, there are rules governing what type of groups may conduct a raffle, how many times a raffle may be conducted, what type of prizes may be offered, what the tickets must say and the list goes on. There are even rules governing the geographic reach a raffle online casino may have and where the raffle may be advertised. Conducting a bingo game is equally restrictive.

So once an organization determines what type of fund-raising it wants to do, the meat and potatoes will be determining whether that fund-raising can be done legally. Are there any special disclaimers that must be made, permits applied for or authorities notified? Are there any special zoning considerations? Because most raffles involves consumers, nonprofits and money you can bet there will be some type of statute that you”ll need to familiar with.


Federal Law Considerations

In addition to state law, there are likely federal regulations that need to be in the back of your mind as well. The Federal Trade Commission is one department that serves as a watch-dog over fund-raising efforts. Should someone allege your practices are “deceptive” you might be getting a call from them.  If using email there are laws such as CAN-SPAM  that must be thought about. If using the postal mail there are certain things under the postal code that may or may not be mailed. And if giving away  prizes the IRS (and likely the state) may require certain filings  or withholdings to be made.

Because there are dozens of different federal organizations the list could go on for a while. The key is to sit down and reflect on how your fund-raising is supposed to go. Then research into the different areas that may come into play, or consult with a professional who is proficient with the issues.


Social Media

As I mentioned above  Texas law places a couple restrictions on the way raffles may be advertised. One of them prohibits directly or indirectly, using paid advertising or promoting a raffle through a medium of mass communication, including television, radio, or newspaper. The question is, does this apply to internet as well? Many experts say no. But the issue hasn”t been definitively addressed yet. Perhaps an organization may advertise the raffle on their website but may they do so over a medium such as Facebook? These questions remain to be answered (I know some help I am). But these are things  an organization should at least be aware of. Until cleared up, they at at least give direction to what an organization might want to avoid doing. If the raffle is tied to an event, perhaps you just play up the event alone when posted on Facebook.