Saturday, April 26, 2008

State Board Blocks Charity Raffle for Being Too Large

The St. Paul Pioneer Press reports that the Minnesota Gambling Control Board has blocked a proposal by the CLIMB Theatre, a section 501(c)(3) nonprofit theater company, to raffle off a $1.4 million house.  The Theatre had asked the Board to waive the the normal $100,000 annual limit on amounts raised by a single charity through charitable raffles.  The Theatre had hope to raise a total of $900,000 by selling $20 raffle tickets, with $200,000 going to the Theatre and the remaining $700,000 going to a variety of other nonprofit groups.  The article further reports that the Minnesota legislature is considering legislation to eliminate the $100,000 limit and to instead limit individual prizes to no more than $50,000 each, and that at least some Board members felt it would have been inconsistent to approve the proposed raffle when the Board had already expressed support for the new $50,000 prize limit.

This report highlights the importance of such gambling activities for many nonprofits.  For example, it notes that more than 1400 Minnesota nonprofit organizations raise income from raffles, bingo, and pull-tabs, and it is likely that this reliance is mirrored in other states.  For example, I recently discovered the local South Bend, Indiana chapter of the Fraternal Order of Police raised more than $3 million in a single year from bingo, although after taking accounts its bingo-related costs of $2.9 million it only had net revenues of approximately $100,000, according to its most recent IRS Form 990.

LHM

http://lawprofessors.typepad.com/nonprofit/2008/04/state-board-blo.html

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