Non-Profit would assist (minimally) with raffle prizes, using their non-profit ID for tax write off. A portion of monies raised would be given to said non-profit.
If not legal, is there a way for an llc and non profit to partner? Is there a site for resources? Thank you!
A non-profit may be able to partner with a California non-profit entity under certain circumstances. California has strict laws governing a non-profit's association with individuals or entities soliciting funds on its behalf.
In California, a party or company soliciting funds on behalf of a charity or for charitable purposes may likely be classified as a commercial fundraiser. California Government Code Section 12599(a) defines a commercial fundraiser as either: (i) An individual or entity who, for compensation, solicits funds for charitable purposes; or, (ii) who receives or controls funds as a result of solicitation for charitable purposes (Gov. C. Section 12599(a).)
Under California law , a commercial fundraiser for charitable purposes must register with the California Attorney General’s Registry of Charitable Trust and annually renew this registration prior to soliciting any funds, assets, or property, or prior to receiving and controlling any funds, assets, or property, as a result of a solicitation for charitable purposes.
As part of the registration process, a commercial fundraiser for charitable purposes must file a detailed annual financial report that provides an itemized accounting of these funds, assets or property collected during the previous year on behalf of each charitable tax-exempt organization with the same agency. The commercial fundraiser must include, among other data, the total revenue, the fee or commission charged by the commercial fundraiser for charitable purposes, the fundraising expenses and the distributions to the charitable organization.
Fundraisers are also required to have a written contract with each charity for whom they perform services, allowing the charity to cancel the contract without cost or penalty for 10 days after the contract is executed. (Gov. C. Section 12599.1.)
The primary inquiry in establishing whether the LLC can be legally classified as a commercial fundraiser under Government Code Section 12599(a) is to determine whether the LLC is soliciting funds for charitable purposes. Solicitation for charitable purposes is defined by both Government Code Sections 12599 and 12581.2 as, “Any request, plea, entreaty, demand, invitation, or attempt thereof, to give money or property, in connection with which any of the following applies: (a) Any appeal is made for charitable purposes; (b) The name of any charity, philanthropic or charitable organization, is used or referred to in any such appeal as an inducement for making any such gift.
You must therefore determine whether the services that the LLC will provide to the non-profit meet this criteria. If they do, the LLC is soliciting funds for a charitable purpose and must meet the statutory requirements set forth above.
Be cautious. In 2009, Jerry Brown sued over 53 companies for fraudulent practices in soliciting funds. Go to http://oag.ca.gov/ for more information.
A not for profit ID (I think you mean a Federal EIN number) does not provide for a "tax write off." A not for profit does not pay taxes on its profits, but is under scrutiny on a federal and state level to make sure it does not abuse its qualification as a not for profit. If you Google (tm) the term "California regulation of raffles" the first two items will take you to the site of the California Attorney General summary regarding raffles, and a pdf document containing the statutes. A general rule of thumb: try not to be ingenious about getting around the State regulations. I think a lawyer experienced in these matters would be advisable.
I would add that conducting a true raffle does not entitle the person participating in the raffle to a tax deduction (this may be what you meant by tax write off). Participating in a gambling is not considered a charitable gift, thus it is not a "tax write off." A charitable gift requires the actual intent of giving - paying for raffle involves paying for the chance to win money or a prize. Any awards won must be properly reported to the IRS.
