An ambitious fundraising idea is to conduct a house raffle fundraiser where the grand prize winner either wins a new home, a donated home, or the cash to build a new house. Obviously, there are Federal and State laws that need to be followed, but a house raffle can raise considerable revenue – possibly upwards of $1 million or more – for your nonprofit group.
Consider the successful track record of one of the most popular house raffle fundraisers, the House Of Dreams Charity Raffle. Now in it’s 21st year, House Of Dreams has raised millions of dollars each year for the Operation Support Our Troops charity.
While it’s pitched as winning the house of your dreams, it’s really about winning the money to build the house of your dreams. In other words, its a lottery fundraiser with attractive packaging of the prizes. Lotteries are incredibly popular with MegaMillions and PowerBall selling billions of dollars worth of tickets each year, so why not look at capturing some of that revenue stream for your nonprofit?
Each year, the nonprofit Naperville Rotary Charities group in Naperville, Illinois, sells at least 40,000 raffle tickets at $100 each. They usually sell a whole lot more than that, but 40,000 tickets is the minimum amount of ticket sales to activate the $1 million dollar Grand Prize.
That level of raffle ticket sales brings in $4 million in total revenue, while the raffle prizes have a suggested retail value of $1.3 million. Of that, $1 million is for the House Of Dreams Grand Prize. The after tax amount of $700,000 can be paid to a home builder of the winner’s choice or taken as a cash prize.
So, there really is no house being raffled off, just the idea of winning the house of your dreams. Once you accept that fact, the entire house raffle fundraiser is really no harder to put together than any other raffle your group might consider such as a motorcycle raffle, car raffle, etc.
What’s different – and difficult – is selling enough raffle tickets at a fairly high price point to make the fundraiser work for your nonprofit organization.
How To Organize A Raffle Fundraiser
Let’s take a closer look at the economics of the House Of Dreams charity raffle:
Ticket Price: $100
Ticket Volume: Minimum of 40,000 tickets
Minimum Revenue: $4 million
Prize Costs (Retail): $1.3 million
Gross Revenue: $2.7 million
Administrative and selling expenses are probably in the high six figures, but that still leaves a healthy bottom line – possibly as much as 50% of total revenue – that any nonprofit organization would love to receive. So, the question is why aren’t more nonprofit groups using the lottery fundraiser method?
After all, fundraising lotteries were how most of our public universities raised funds for new buildings and other infrastructure needs for 250 years until they fell into disfavor due to anti-gambling sentiment.
Those sentiments have changed in the last couple of decades and many nonprofits are using various raffles to raise money for their cause. Just think of a house raffle fundraiser as nothing more than a giant-sized 50/50 raffle.
You’ll need to follow the Federal and State laws regarding charity gambling, which basically means you need to get a permit from the State your charity is based in and follow the IRS rules for prize reporting and tax withholding.
It’s not that complicated and its no longer socially unacceptable to offer people a chance to win something, particularly something life changing like a new house.
And considering the fact that you don’t have to even give them the house, just the prize money to buy it with, your only real worry is how to sell enough raffle tickets to make it work. That’s the subject of another article, but luckily for you it’s already written.
So, what’s really holding your non-profit back from doing a house raffle fundraiser? You’re already spending a lot of time and effort begging people to give you money, so why not be “old school” and do a fundraising lottery?