State Statute of Florida on Raffles & Charities

By Wayne Thomas

Fundraising is critical to the success of charities and other nonprofits. Games of chance, such as lotteries and raffles, can be an easy way to entice potential donors by offering the prospect of winning a prize. However, most lotteries and raffles are considered gambling and are illegal in Florida. But, the state has carved out an exception for qualifying nonprofits, provided specific rules are followed and no fees are required to participate. Even with this exception, however, nonprofit organizations must still comply with all state and federal laws governing the solicitation of funds.

Qualifying Nonprofits

As a general matter, raffles, lotteries and other "drawings by chance" are considered a form of gambling and prohibited by law in Florida. This is based on the assumption that money is exchanged for participation in these contests. However, an exception to this rule applies to certain nonprofits that have obtained federal 501(c)(3) status from the Internal Revenue Service. This is a tax exempt designation that is only granted upon written request to the IRS by organizations that further a specific charitable, scientific, educational or religious purpose.

No Payment Required

Although federal tax exempt status is a threshold requirement for nonprofits interested in holding a raffle in Florida, state law also limits the manner in which funds may be raised. Specifically, Florida statutes expressly prohibit charitable organizations from requiring or otherwise insinuating that a cash payment must be made in exchange for a ticket or entry into the raffle. This limitation seeks to distinguish a charity event from other gambling activities, but does not prohibit a qualifying nonprofit from suggesting a minimum donation. For example, stating that "tickets cost $100" would be a violation, but stating the "suggested donation for a ticket is $100" would be acceptable under the law.

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Disclosure

In order to ensure the legitimate operation of the raffle or lottery and to discourage misleading potential participants, Florida law requires the disclosure of certain information related to the event. Specifically, every brochure, advertisement, entry form and ticket used in connection with the drawing must indicate the source of the funds used to award the cash prize and the date, hour and place where the winner will be selected. Further, the materials must outline all of the rules and regulations governing the contest, as well as the name and principle place of business of the nonprofit. In addition, no literature or advertising material circulated by the nonprofit as part of the raffle or lottery may be misleading, false or deceptive.

Selection of Winners

All winners chosen through raffles and lotteries conducted by nonprofits in Florida must be done at random. State law specifically prohibits awarding prizes based on matching, instant winner or pre-selected sweepstakes. This prohibition also makes it illegal to remove, disqualify, reject or otherwise discriminate based on whether or not the entrant made a cash donation to the organization as part of the raffle. Further, while an organization may limit the number of tickets each participant may take, no awards may be conditioned on a minimum number of tickets having been disbursed or contributions made. Instead, all prizes offered must be awarded and an organization must notify a winner that he or she has won. The penalty for anyone caught violating this section is a second degree misdemeanor under Florida law.

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Rules for Fundraisers for Non-Profit Organizations in Florida

References

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Non-Profit Fundraising in the State of Florida

The life of a nonprofit hinges on its ability to collect donations. In Florida, most nonprofits are subject to specific reporting and filing requirements. Further, additional reporting and tax implications come into play if the organization has been deemed exempt from federal income taxes. Knowing which organizations are subject to the reporting laws, as well as understanding what activities constitute solicitation, will help ensure the success of your nonprofit.

Rules for 501(c)3 Corporations

Many charities pursue 501(c)(3) status because it allows organizations to avoid certain taxes and accept tax-deductible donations. The Internal Revenue Service grants 501(c)(3) status to charitable organizations that meet the requirements set forth in the Internal Revenue Code. While charities are first organized under state law, the IRC restricts the activities and profit distributions of 501(c)(3) organizations, also known as exempt organizations.

Rules for Contests in Nonprofits

Contests are a popular way for nonprofits to raise funds, promote their mission and collect new names for their mailing lists. Although a complex array of state, federal and even international laws imposes limits on contest activity, nonprofits also enjoy certain legal advantages. A well-designed set of rules is not only essential, it can also help a nonprofit avoid substantial problems.

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