I cringe every time I get emails from some of my favorite charities that offer “raffles” and “incentives” in conjunction with their fundraising. Not that providing an incentive is a terrible thing; I love getting a freebie from a legal promotion every once in a while. But frequently the incentives and promotions are NOT run legally. I worry that my favorite charities will one day get their hands slapped by regulators and lose those precious funds that could have helped out their cause.

As a non-profit tasked with raising money and providing incentives, here is a simple hit list to make sure what you are doing won’t get you in trouble:

1. Keep it legal. Have Official Rules or Terms and Conditions every time you run a promotion. Every time. And consult a legal professional to make sure to make sure your rules or terms comply with all laws in the jurisdiction of your promotion.
2. Don’t create a tax reporting burden. If you are giving away a prize worth $600 or more in the USA, you will need to file a 1099 form to the IRS. We recommend that if don’t want to deal with 1099 forms, you keep prizes under the $600 threshold.
3. Call it what it is. If you are giving something away in a random drawing, call it a sweepstakes – not a contest. If you are judging entries to determine a winner based on some criteria (a drawing or poem, for example), call it a contest. If you require purchase to enter, then that may be an illegal lottery. Not sure what to call your promo? Read up on what to call it here.
4. Disclose everything. Be up front with your clientele when you promote your offer. The FTC recently cracked down on a retailer that did not disclose that they were providing an incentive for sharing their products on social. Don’t open yourself up for the FTC to come after you as well.
5. Comply with social platform policies. Facebook, Pinterest, Instagram and Twitter all have special policies regarding the use of their platform for social incentives. Read up on them to ensure you aren’t violating the terms of service (and potentially get your promotion or social account shut down).

If this seems like too much trouble, or you are worried about cost, contact us. We can help you navigate a solution and keep it within your budget.

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