Run a nonprofit sweepstakes fundraiser

Though sweepstakes and raffles are alike in that they both involve people supporting your cause by getting entries into a drawing for a prize, they are regulated differently. Raffles are most often considered a form of gambling by government regulators since donors make a payment in exchange for a chance to win something (like you’d do at a casino). Despite this, raffles for charitable purposes can be allowed at the federal level for 501(c)(3) organizations (US), but they must still comply with all state and local raffle laws that apply to them. This makes it very difficult to run an interstate raffle and impossible to run them nationally. Consult with your state government gaming/gambling departments and their websites to ensure you are in full compliance with your fundraiser.

By law, sweepstakes must offer a free method of entry (typically by mail-in form) in addition to donation-based entries. Because of this, sweepstakes may not be considered a gambling activity in the same way that raffles would be (you can’t gamble for free). This difference in structure means that raffles and sweepstakes are regulated differently. Accordingly, charitable organizations may be able to run a sweepstakes in all 50 states and even internationally. As stated above, ensure you consult with your state government gaming/gambling departments and their websites to ensure full compliance of your fundraiser.

In many cases, 501(c)(3) charities consider sweepstakes entry donations to be tax-deductible (depending on each donor’s personal tax situation, of course).

This decision is up to each nonprofit and their legal counsel. We often see nonprofits adding a statement of tax-deductibility to their sweepstakes donation receipts, however.

Yes, but you must exclude countries that do not allow their residents to participate in sweepstakes. A few countries also have arduous regulations that make them undesirable to include.

That said, there are many countries for which it’s not a problem. The Eventgroove Fundraising team will help you understand which countries to include or exclude if you run an international sweepstakes.

No, and most charities don’t. The term “sweepstakes” sounds old-fashioned to most people, and some unscrupulous for-profit companies have also given the term a bad name. The only place that the term “sweepstakes” is legally required to be used is in the official rules.

We most often see organizations use their own terms like “draw,” “drawing,” or “giveaway” to refer to their campaign.

Winners are drawn by the system randomly utilizing a certified algorithm. No human or outside intervention impacts the drawing.
The algorithm takes into account multiple prizes, multiple quantities of prizes, your various entry levels, and any free entries.