Fiscal Sponsor Organizations

Thanks, but the article shared is about the selling side of raffle tickets, not about a nonprofit, or FSP purchasing raffle tickets. The project wants to purchase the raffle tix with fundraised money, (not sell tickets). My question is about if that cost is a charitable expense. This is essentially gambling, because if the project doesn’t win the truck being raffled, then they are out that $500 with nothing to show for it. And if they did win the truck being raffled, then we have another logistical issue to deal with.

What you are finding is exactly how I see it too, Shava. There is no language about the raffle purchase not being the nonprofit expense, just that it cannot be treated as a charitable deduction.

This might be what you need. https://www.irs.gov/pub/irs-pdf/p3079.pdf I searched gambling, not raffles specifically, and it came up with supporting a for-profit org with non-profit funds since there’s a chance they don’t win and all the money just goes outside the mission. Google suggests it “violates the Operational Test” and counts as “high-risk financial exposure.“ https://www.irs.gov/charities-non-profits/private-foundations/private-foundation-jeopardizing-investments-defined

Very interesting resources!

If the the org conducting the raffle was a 501c3, and conducted the raffle without incurring UBI, would the raffle ticket purchases be more compliant with 501c3 purpose (assuming mission alignment)?

Just curious as I think about what advice I’d groups if they were considering raffle ticket purchases!

@Lev Greenstein Maybe if the 5013c receiving funds is in the same mission so they don’t put donations to something the donor hadn’t intended to support? But I think it’s still akin to a high risk investment, so maybe moot point on mission alignment.