An Administrator's Guide to California Private School Law

Chapter 19 – Fundraising

given to enter a contest. 2488 The Attorney General concluded that a charitable organization that offered one free raffle ticket to each participant, and also offered additional tickets at $100 each or $500 for six tickets, was conducting an illegal lottery because anyone paying for tickets was paying “valuable consideration” for additional chances to win. The Attorney General found this was particularly true of those paying $500 because they would receive more than their proportional share of the chances to win. In light of the Attorney General’s ruling, an exempt organization can request a donation for the raffle ticket or casino night chips, but should clearly disclose that participants are not required to make a donation to be eligible to win, that the donation does not increase the donor’s chances of winning, and that the organization must provide for the indiscriminate distribution of free raffle tickets or chips to eliminate the element of consideration. In short, the organization must make every chance to win freely available. 2489 Thus, schools may be able to conduct raffles without meeting the requirements of Penal Code section 320.5 if they meet these three requirements: (1) provide a general and indiscriminate distribution of free chances to win, (2) offer free tickets on the same terms and conditions as the tickets for which a donation is given, and (3) not require any participant to pay for a chance to win. 2490 However, schools should consult with experienced legal counsel before proceeding in this manner as Penal Code section 320.5 is a criminal statute. An independent school’s violations may be result in misdemeanors against those operating or assisting in the raffle and an investigation or prosecution. 2491 If participants are required to purchase or otherwise give a donation to obtain a ticket in order to have a chance to win a prize, the drawing is considered a raffle and is subject to the provisions of Penal Code section 320.5. C. D EPARTMENT O F J USTICE R EGISTRATION & R EPORTING The California Department of Justice requires certain eligible organizations to comply with specific Registration and Reporting Requirements. The Registration and Reporting Requirements discussed below do not, however, apply to the following:  A nonprofit religious organization,  An organization that holds property for religious purposes,  A charitable corporation organized and operated primarily as a religious organization, or  A charitable corporation organized and operated primarily as an educational institution (such as nonprofit independent schools.) Eligible organizations that do not fall into one of the above categories are required to register annually with the California Department of Justice in the “Nonprofit Raffle Program” prior to conducting any raffle in California (“Registration Requirements”). The Department of Justice requires eligible organizations subject to the Registration Requirements to file an Application for Registration Form (Form CT-NRP-1), along with a filing fee, by September 1 of each year during which a raffle is expected to be conducted. If registration is not made by September 1, an eligible organization must submit the registration form and fee at least 60 days before the raffle is held. If an organization intends to conduct a

An Administrator’s Guide to California Private School Law ©2019 Liebert Cassidy Whitmore 602