Important! All states regulate who can organize a raffle, who can participate and how they are run. Many states restrict raffles to 501(c)3 organizations and impose limits on how much raffle revenue can be generated annually. Most states require permits or licenses for online sales of raffle tickets and some states prohibit online sales entirely. It is your responsibility to research and comply with your state's laws re: conducting raffles.
This help article covers how to enter item(s) in your catalog for the raffle prize(s) and how to award/record the winners.
1. Add Item for Raffle Prize(s)
Raffle Prizes are taxable as ordinary income. Most states require that you provide raffle winners with the documentation they'll need for their tax preparation. Creating a separate item in the catalog for each Raffle Prize:
- Provides the winner with a receipt showing the FMV of their prize, and
- Provides the prize donor(s) with a receipt (or thank you letter) for their donation.
To enter Raffle Prize items:
Go to Catalog > Add an Item:
- If the prize was donated, select the donor record. If the prize was purchased by your organization (or is a 50/50 split), create and use a Friends of. . . donor record.
- Include "Prize" in the item name to clarify to your team that the item is not "for sale" and for appropriate listing on winner's receipt for tax purposes.
- Most important: Use Type = Silent to produce a description sheet, and to allow sale to winner for $0 (or a negative amount for cash prize credits). This will provide the appropriate price fields/documentation on the winner's receipt for tax purposes.
- Be sure to provide an accurate FMV for the winner's tax reporting. If the prize is "share the pot", you'll need to edit the item to update the prize amount once it is calculated.
- Uncheck the box at Display Options > Display Item in Public Catalog. Since the prize cannot be purchased, but the tickets (chances to win) can, it is generally easier to use the Raffle ticket item(s) to promote the raffle.
Awarding the Winner(s):
Note: The software does not conduct the "drawing" or designate the winner(s) - the winner must be chosen and notified the old fashioned way - outside the software.
Once the winning ticket has been determined, documentation is provided by placing the prize item in the winner's cart/order:
At an in-person, gala event:
- Go to Auction Night > Sell Item
- "Sell" the prize item to the winner's bid number for $0.
For all other drawings:
- Go to Orders > Add Order and search/select the winners name.
- If they have an open order, it will display. If they don't, it will open a new order. If their name isn't found, use the New User tab to create a new order for them.
- Click on the Add Item button > add the prize item to the order for $0
To record Share the Pot or 50/50 Prizes:
- Calculate the Prize Amount
- Go to Catalog > Edit prize item
- Edit the FMV to equal the prize amount and Save.
- From Auction Night > Sell Item or Orders Page (instructions above), sell/add the item to their cart for the negative amount of the prize (eg -$575) - this will add a credit to their order/balance due.
If the prize is
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