5 key things to know about sweepstakes
1. Free entry is a must
To enter into a sweepstakes, a participant simply needs to submit their name and contact information. They do not need to donate or make a purchase—this is one of the most important distinctions of a sweepstakes. However, to enter into a sweepstakes, 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 participate in a charitable sweepstakes, while entering the contest, a participant may choose to donate any amount they wish. This does not increase their chances of winning. However, if they choose to enter for free, they are usually limited to one entry.
Take this sweepstakes by the Global Intervention Assistance Foundation for instance. The winner stands a chance to win a 2019 Lamborghini Huracán Spyder and $20,000. Their official rules specify that there are two ways to enter: (1) automatic entry, if you donate or (2) free entry, if you submit your name and contact details.
You might be wondering, if people are given the option to enter the contest for free, will I actually raise any funds? The answer is “yes.” Historical qualitative data and behavior patterns suggest that people still donate, even though they are not mandated to, especially since the cause is charitable. This is why sweepstakes are a popular way of raising money for nonprofits.
2. Sweepstakes is not gambling
In gambling, players compete against “the house” and bet on numbers, cards, etc. to win a share of the prize pool. The stakes are usually much higher while gambling as participants can win or lose a huge amount.
Sweepstakes, on the other hand, can be entered for free without making a purchase or donating—this is the primary reason why sweepstakes are treated differently from 50/50 raffles or Catch the Ace, and are not considered as gambling (you can’t gamble for free).
Related: Difference Between Online Lottery, Charity Raffles and Gambling
3. No license is required
Unlike raffles which require you to have a license for each state or province, you usually don't need one to organize a sweepstakes. This makes it easy to set them up, especially if you are running them nationally or globally. You save yourself the hassle of needing to get a license in each state or province. You can easily have national or global reach, allowing more eyeballs to discover your sweepstakes and increase the potential funds you can raise. Note that for national or global sweepstakes, you may be required to adhere to a few regulatory guidelines.
In the U.S, sweepstakes are monitored by the U.S. Federal Trade Commission to prevent abuse and unnecessary scams. 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.
Related: Fundraising 101: Difference Between Online Charity Raffles and Sweepstakes
4. Fees associated with organizing a sweepstakes
In a sweepstakes, the largest cost incurred will be that of the prize for the final draw. Unlike in a 50/50 raffle or Catch the Ace (where the prize is a percentage of the ticket sales), you are responsible for determining the prize before you launch the sweepstakes. But on the plus side, this is something you have under your control. The prize doesn’t always have to be a $4 million home. You can give away an average-priced car or a computer.
Additionally, remember that you will need to pay for marketing (Facebook ads, emails, etc.) to promote the sweepstakes. And there will also be software fees to consider. Still, you will find that fundraising via sweepstakes is cheaper than most other ways of raising funds.
5. It’s a great way to earn revenue for your nonprofit
One of the goals when running a sweepstakes is to encourage people to donate. These are usually people who wouldn’t have donated if you had simply asked. The prize of the sweepstakes acts as an incentive to make them give. This has proven effective as people donate in the hopes of winning the big prize.
Also, offering the audience a chance to win a prize without mandating a purchase is a great way to thank your regular donors. It’s your chance to appreciate them for the support they give you. Ultimately, it helps build trust and commitment towards your nonprofit.
Raising enough funds for a nonprofit can be challenging. There are so many charities out there and donors can become torn about which ones to support. Hosting a sweepstakes is a good way to encourage donors to give to your organization while also giving them a chance to learn more about your work.