Raffles
Posted on Wednesday, June 23, 2021
ShareMany organizations hold raffles to raise funds as part of their annual fundraiser. If your organization holds a raffle, are you aware of the requirements that must be followed?
A raffle is considered a form of gaming, along with bingo events, casino game nights, festivals, and other gaming activities. In Indiana, a raffle can only be conducted by a qualified organization in accordance with state law. The state law defines a raffle as “the selling of tickets or chances to win a prize awarded through a random drawing, including a door prize”. A qualified organization is a charitable organization operating in Indiana that has a constitution, articles, charter, or bylaws that contain a clause that provides that upon dissolution all remaining assets shall be used for the nonprofit’s stated purpose.
In order to hold a raffle, the organization must first file form CG-QA, Qualification Application with the Indiana Gaming Commission to quality to be eligible to conduct charity gaming events. It then must obtain a license by filing either form CG-AL, Application for Annual Activity License which covers a period of 12 months or form CG-SL, Application for Single Activity License for a one-time activity with the applicable fees.
A qualified organization is not required to obtain a license if the value of all prizes awarded at the activity does not exceed $2,500 for a single activity and not more than $7,500 during a calendar year. If the organization intends to hold an activity with prizes of not more than $2,500 more than one time a year must send an annual written notice, no later than 30 days before the first event, informing the commission of the frequency and location of the activities, as well as the estimated values of all prizes for each activity.
All organizations holding gaming event, whether required to obtain a license or not, must maintain accurate financial records of the income and expenses and have a separate charity gaming (raffle) checking account. Organizations must retain receipts and invoices that correspond to each expenditure made from its gaming (raffle) proceeds. Those that are required to obtain license must also submit financial records to the commission using a specific form provided by the state within a specific time period.
Finally, if an organization receives at least 90% of its total gross receipts from any gaming activity, it must donate 60% of its gross charitable gaming receipts less prize payout to a qualified recipient that is not related to the organization.
Contributed by: Carrie Minnich, CPA, MAcct |Director | DWD CPAs & Advisors
Posted in Mission Minded Nonprofits
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