An Administrator's Guide to California Private School Law

Chapter 19 – Fundraising

raffle in September, the application must be submitted in advance, giving sufficient time for registration processing. Every registered eligible organization must also file a nonprofit raffle report each year on or before October 1 on Form CT-NRP-2. The Forms CT-NRP-1 and CT- NRP-2 can both be found on the Department of Justice website: http://oag.ca.gov/charities/forms. Once registered, an eligible organization must provide the Department of Justice with the following information on an annual basis:  The aggregate gross receipts from the operation of raffles;  The aggregate direct costs incurred by the eligible organization from the operation of raffles; and These Registration Requirements and Reporting Requirements would not apply to most nonprofit independent schools if the schools are charitable corporations operating primarily as educational institutions. 2492 Schools should, however, be aware of these requirements as they may apply to raffles conducted by an eligible independent foundation, parent-teacher organization, or other school-related organization, if that organization is not operating primarily as an educational institution. A UCTIONS There are no specific restrictions on the ability of nonprofit organizations to conduct auctions for fundraising purposes. Unlike raffles, an auction is not considered a gaming activity, but rather a sale of goods by the organization. Both regular and silent auctions allow participants to bid on an item offered for sale with the highest bidder being able to purchase the auctioned item at the highest bid price. Schools may want to send potential bidders their auction policies and requirements to ensure potential bidders are aware of all auction rules and payment requirements. Although auctions are not subject to specific legal restrictions, schools should be aware of the tax consequences and disclosure requirements associated with auctions. A. S ALES A ND U SE T AX C ONSEQUENCES O F A UCTIONS Nonprofit corporations, although usually exempt from federal and California income and franchise taxes, are normally not exempt from California sales and use taxes. Unlike many other states, California does not provide a blanket exemption from its sales and use taxes to charitable organizations. Section 2  The charitable or beneficial purposes for which proceeds of the raffles were used, or the identity of the eligible recipient organization to which proceeds were directed, and the amount of those proceeds. (“Reporting Requirements”)

An Administrator’s Guide to California Private School Law ©2019 Liebert Cassidy Whitmore 603