Online Fundraising
August 3, 2021

Fundraising 101: Difference Between Online Charity Raffles and Sweepstakes

Charitable fundraising has evolved over the years. In recent times, many nonprofits and charities have turned to a more engaging medium—online charitable gaming (such as raffles, sweepstakes, Catch the Ace, etc.) as a lucrative way to not just raise money but also grow their donor base.

Raffles and sweepstakes are similar in their format wherein both games draw winner names and hand out cash prizes. However subtle differences exist. Read on to learn about each of them in detail and identify which option might be a better fit for your goals and strategy.  

Raffles and sweepstakes for charitable organizations

What is a charity raffle?

A charity raffle is an event (in-person or online) where a draw is held to raise money and prizes are awarded to the winner(s). Online raffles (also known as electronic raffles) use computers/technology for the sale of tickets, winner selection, and prize distribution. 

Popular raffles such as the 50/50 and Catch the Ace are commonly held to raise funds for charities. People obtain digital numbered tickets, each of which has a chance of winning a cash prize. The winnings are usually a percentage of the total funds collected through sale of tickets. The remaining amount goes to the non-profit or charity organizing the event. One of the main reasons that makes online charity raffles so attractive is that donors get a chance to win money while supporting a cause.

A traditional (or offline or in-person) raffle involves the sale of physical tickets on location and generally lasts for a few hours during an event. An online raffle is held virtually by setting up a dedicated webpage and online payment options for purchase of tickets. Online raffles can run for a single day or weeks or months, thus providing lots more time and opportunity for the organization to raise funds.

Since raffles are a form of gambling, they are regulated in most U.S. states and Canadian provinces; some states/provinces consider them to be illegal. Usually, to run a raffle, a state or province-issued license is required.  

Raffles might be the right option for you if your fundraising strategy and goals are focused on a specific geography such a state or province.  

Related: Regulatory Guidance for U.S. States and Canadian Provinces and Territories

What are charity sweepstakes?

Sweepstakes resemble raffles in a few aspects: sale of tickets, winner selection and prize distribution. A key area where they differ is that to enter a sweepstake, a participant doesn’t necessarily have to donate—this is the primary reason why sweepstakes are not considered as gambling and are permitted across all U.S. states. They are monitored by the U.S. Federal Trade Commission to prevent abuse and unnecessary scams.

Although a contest may not require an entrant to purchase a product to enter, a participant may be asked to give up something of value or do something onerous to enter a contest. For example, sharing a post on social media, watching a lengthy video, or filling out a survey, etc. Although no purchase or donation is necessary to enter into a charitable sweepstake, historic qualitative industry data suggests that most people are willing to donate to participate since the cause is charitable.

Sweepstakes are known as Promotional Contests in Canada and have similar regulations as the U.S. In Canada, games of pure chance such as sweepstakes are prohibited except by licensed nonprofit or charitable organizations. To legally run such contests, making prize redemption conditional on answering a skill testing question is essential to turn a game of pure chance into a (legal) game of mixed chance and skill.  

If national and/or global exposure via social channels, websites, and email campaigns is integral to your fundraising and marketing strategy, then sweepstakes might be an option to consider.  

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Difference between online charitable raffles and sweepstakes

Regulations

  • Raffles: Illegal in some U.S. states (about 10 states) and Canadian provinces. Please consult your legal counsel before planning and running your raffle or lottery. A state- or provincial- license may be required to run a raffle.
  • Sweepstakes: Permitted in all U.S. states and Canadian provinces.

Geographic reach

  • Raffles: Limited to specific U.S. states and/or Canadian provinces.
  • Sweepstakes: Possible to expand nationally as well as globally.

# of entries per person

  • Raffles: Multiple entries allowed per person.
  • Sweepstakes: Only one entry per person.

Ideal use case scenario

  • Raffles: Fit for organizations wanting to focus on a specific geography (state or province).
  • Sweepstakes: Fit for organizations wanting their fundraising campaigns to have a national or global reach.

Both online raffles and sweepstakes are excellent ways to raise funds online. Having a clear understanding of your fundraising goals and objectives and strategy will help you decide on the best option for your needs.

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