By Mike Gricius, CPA – Manager
Should your organization offer gaming as a means of raising additional funds? Several charitable organizations are actively using raffles and other gaming activities as a fundraising mechanism to raise funding to support the organization’s mission and purpose.
The decision to be involved in such activities needs careful thought and planning by each organization. The most important factor is the legality that must be followed. It would be in the best interest of the organization to contact the state’s gaming commission to understand and to obtain information related to gaming activities.
There are many allowable gaming events that charitable organizations can pursue for fundraising. Some of these events include bingo, door prizes, raffles, festivals, and pull tabs.
In general, a charitable organization needs to be a qualified organization as defined by the Internal Revenue Service to be an active participant.
For each gaming activity allowed by the state’s gaming commission, a license needs to be obtained which is done by filing an application and payment of a fee. Once an organization chooses to hold a gaming activity, there are several regulations and rules that must be followed. For example, the use and determination of net proceeds, financial records, and event limitations.
For a complete definition of qualified organization and lists of rules and regulations, see Indiana Code: Charity Gaming Statute IC 4-32.2 which can be found at www.in.gov. Rules and regulations may vary between states, so please check with the gaming board of each state.
Gaming events can create an opportunity to attract more funding for a charitable organization, but as pointed out above, such activities must be done legally. Failure to abide by the rules and regulations will result in disciplinary action that leads to monetary penalties.
Therefore, it would be good practice to consult with legal counsel and to contact the state’s gaming commission to understand and to obtain information prior to being a participant in such events.