Raffles and 501(c)(3) Organizations

If you have ever been involved with a non-profit (501(c)(3)) organization, then you are well-aware that raffles or lotteries are a common fundraising method. However, until 2004, it was illegal in Oklahoma for non-profits to use raffles or lotteries to raise funds for the organization. Thankfully, several legislators recognized the fact that raffles were one of the cheapest and simplest methods for non-profits, particularly smaller non-profits, to raise money. 

Title 21, Section 1051 of the Oklahoma Statutes provides the exception to the ban on lotteries for certain organizations. A “lottery” is defined as a game of chance where individuals pay goods or money for a chance at winning property from the lottery. The following organizations are exempt from the ban on lotteries: 

1. A church,

2. A public or private school (must be accredited by the State Dept. of Education), 

3. A student group or organization affiliated with a public or private school,

4. A parent-teacher association or organization affiliated with a public or private school, 

5. Fire Departments 

6. Police Departments,

7. 501(c)(3) organizations, and

8. An organization identified in 3A O.S. § 402(20) (i.e. a religious, charitable, labor, fraternal, educational, or other association which is a non-profit 501(c)(3) organization that has been in existence for at least two years and has specific bylaws). 

If your organization is one of the eight types of organizations listed in Section 1051, then your organization may conduct a lottery or raffle for fundraising purposes. However, there are several other requirements or rules that must be met when doing so. First, the raffle must be conducted by members of your organization and those members cannot be financially compensated for conducting the raffle. This means that your organization cannot hire a third-party individual or company to conduct the raffle on behalf of your organization. 

Second, the raffle must be conducted by issuing numbered tickets in exchange for voluntary contributions to your organization. The corresponding stubs of the tickets must be drawn under the supervision of an official of your organization (i.e. a director, member, manager, chairperson, etc.). 

Altogether, the rules regarding raffles/lotteries and non-profits are fairly simple. However, it is important to be aware of the requirements before embarking on this particular fundraising effort.