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Third-party raffle/giveaway for donations

  • 1.  Third-party raffle/giveaway for donations

    Posted 26 days ago
    Hello,

    I know this has been discussed before but I searched the archives and I can't find it.  Am I remembering correctly that if a third party provides a drawing or giveaway for donations to an organization, the donations are not tax-deductible even if the organization itself is not hosting the drawing or providing the prizes?  Does the IRS spell that out anywhere?  I know that Publication 526 covers raffles, but I'm specifically looking for the third-party aspect.  I need backup to share with others.

    Thank you!

    ------------------------------
    Karen Warr, GPC
    Director of Development Operations
    LifeWorks NW
    karen.warr@lifeworksnw.org
    ------------------------------


  • 2.  RE: Third-party raffle/giveaway for donations

    Posted 26 days ago

    In general, when a donor receives something of value in consideration of a gift, it doesn't matter whether the benefit is provided the benefit by the organization or a third-party. 

     

    There is an example in Revenue Ruling 67-246 where a benefit was provided by a third party.  In that particular example, the benefit is a transistor radio (!) provided by a local department store, but the discussion says, in part, "In determining the portion of the payment to a charitable organization which is deductible as a charitable contribution in these circumstances, the fair market value of any consideration received for the payment from any source must be subtracted from the total payment."

     

    As you  suggest-and as another example in Rev. Rul. 67-246 demonstrates-the chance to win a valuable prize resulting from a contribution is determined to have a value equal to the amount contribution required to receive that chance, so no portion of the contribution is deductible. "Amounts paid for chances to participate in raffles, lotteries, or similar drawings or to participate in puzzle or other contests for valuable prizes are not gifts in such circumstances, and therefore, do not qualify as deductible charitable contributions."

     

    Those two example pretty much cover the ground: "Amounts paid for chances to participate in raffles, lotteries, or similar ... do not qualify as deductible charitable contributions" and "the fair market value of any consideration received for the payment from any source must be subtracted from the total payment."

     

    My US$0.02 worth; the usual disclaimers apply.

     

    Good luck!

     

    Alan

     

    Alan S. Hejnal   

    Data Quality Manager

     

    SNAGHTML5cbfa34

     

    Smithsonian Institution - Office of Advancement

    600 Maryland Ave SW Ste 600E

    PO Box 37012, MRC 527

    Washington, DC 20013-7012

    Voice: 202-633-8754 | Email: HejnalA@si.edu                                                                                                                                            

     






  • 3.  RE: Third-party raffle/giveaway for donations

    Posted 26 days ago

    Thank you, Alan – this is exactly what I was looking for.  And thanks too to John for the conversation offline!

     

    Karen Warr, MPA, GPC
    Director of Development Operations

    Direct: 503-617-3821

    Internal: x2356

    Cell: 503-869-8290

     

    Pronouns: she/her/hers

     

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