Charity lotteries and raffles are very common methods of fundraising for charities. They are used by large and small charities and are still popular with the public.
A charity raffle is a charity lottery. They are a game in which people pay to take part and receive a random chance to win. There must be at least one prize on offer, and winning must be dependent on chance, not on skill.
Prizes in charity lotteries can be valuable items, such as consumer electronics, a holiday or even a car, or they can be cash. In many cases, the prizes on offer are a combination of these.
Despite their popularity, some charities and individuals find it hard to know if they are running such fundraising activities correctly and legally. Indeed, the Institute of Fundraising say that questions on this fundraising method are the most common topics on their helpline.
Sometimes they are confused with prize competitions, which requires a sufficient level of skill to enter, and free draws in which all entries can be made for free.
Certainly, no lottery can be run for private gain or to benefit an individual.
Charity Lotteries |Same price tickets
Charity lotteries are not restricted by price: there is no maximum ticket price. However, whichever price is chosen, all tickets must be sold for the same price. This includes marketing promotions: you can not for example sell three lottery tickets for the price of two.
Charity Lotteries | Large and small lotteries
In Great Britain all charity lotteries, large and small, are regulated by the Gambling Commission in order to protect the money raised for charities. However, not all require a licence from them.
If it is a ‘Small Society Lottery’ (society in this case is just another word for charity), then the organiser will need to register with the local authority. This applies whether the charity is running it, or whether an individual supporter is running it to benefit the charity.
The majority of charity lotteries in the UK are Small Society Lotteries. They benefit from a fairly straightforward form of regulation.
hey describe any lottery in which the value of the tickets on sale is £20,000 or less, and where a charity’s proceeds from lotteries in any one year are £250,000 or less.
It is advisable to contact the local authority and ask for their advice. Some lotteries are exempt and do not require a licence. The local authority’s licencing team will be able to advise.
A Large Society Lottery must receive a licence from the Gambling Commission to be legitimate.
It is important to seek advice early when planning to run a charity lottery. Good sources of advice are the local authority, the Institute of Fundraising, and the Gambling Commission who run a helpline on 0121 230 6666. In Northern Ireland NICVA offers guidance on charity lotteries.
Other legal issues relating to lotteries
Running a raffle can be a way to gather data on individuals who buy the tickets. If you are planning to take that approach make sure you are registered with the Information Commissioner to do so.
If your charity advertises its lottery publicly then it will have to comply with advertising codes of practice, as administered by the Advertising Standards Authoriy.
If a charity uses a premium phone line to enable people to enter a lottery it will need to adhere to PhonepayPlus’ code of practice on premium rate phone lines.
VAT is not chargeable to lottery ticket purchasers: the sale of lottery tickets is an exempt supply.
If you are interested in running your own charity lotteries, you can call 01923827770.