LegalMatters: Sweepstakes: Legal Considerations and Best Practices

Running a sweepstakes campaign offers a fun, engaging way for a nonprofit to boost fundraising and gather information on its donors and supporters. Of course, when giving away items or experiences, there are legal obligations every nonprofit must follow.

To get a handle on the key legal matters and more in regard to running nonprofit sweepstakes, I spoke with Marla Altberg, CEO of sweepstakes administration and management company Ventura Associates International.

Joe Boland: If a nonprofit is looking to run a sweepstakes, what are the legal steps it needs to take to ensure it stays within the boundaries of the law?

Marla Altberg: It is always a good idea to use a specialist in this area to ensure compliance. That can take the form of a sweepstakes administration/independent judging agency or attorney with this type of expertise. The most important thing to remember is that, unlike a true raffle, in a sweepstakes you can ask for a donation, but not require it. Furthermore, sweepstakes offering prizes that total over $5,000 must be registered and bonded in the states of New York and Florida. However, Florida has an exemption for nonprofits.

JB: How can a nonprofit make sure it has all its i's dotted and t's crossed legally?

MA: Again, it's always a good idea to use a specialist. Importantly, in a direct mail package, there are mandatory legal disclosures, in addition to the official rules that must be made. That is, you must say, "No purchase is necessary to enter or win. A purchase will not improve your chances of winning" on the reply device, in the solicitation and at the beginning of the rules. The same is true for a telemarketing script, i.e., various legal disclosures must be made at certain points within the script and you must tell the consumer where she can get the official rules.