How to legally set up charity donation drive drawings with paypal

[monkeyracer]

I have seen a few of the charity raffles get shut down by paypal, and unfortunately, the fundraising ends short, and the intention of raising as much money as possible falls short of what it could have been.

Why is paypal doing this?
Well, they have to answer to government regulations that are in place to prevent money laundering, and prevent terrorist funding. So, when a normal paypal account all of a sudden has a ton of money deposited in as a "gift" it starts to look suspicious.

Paypal offers a way to receive funds as a donation, for a specific cause.
You can simply create a donate button:

Online Fundraising Through Payal

If you have a premier or business paypal account, you can just sign in, create the button, and post it up. If you have a personal account, you can upgrade it to premier to be able to do this.

Doing it this way allows paypal to understand why the funds are coming in this way, and they won't try to shut you down.

The button tool allows a good amount of customization, like custom button images, etc, and you can have the donators either donate a fixed amount or let them donate any amount. Once the donation drive is over, the button can be deleted so that no more funds are coming in to be accounted for.


As far as the legality of using the word "raffle", that is obviously taboo, and implies that gambling is involved. It is perfectly ok to draw a random name from a hat to pick someone to get a prize. This is very similar to the way current Vendor giveaways work. You pick someone from a list of people who want to be one the list, and as a thank you for their business, they receive the prize.
So, it is probably better to call it a giveaway or donation drive rather than raffle.

Another way is to sell "digital artwork" and the proceeds from the sale will be donated to the cause. Each person receives a digital picture that designates that they contributed to the cause. Then, have a giveaway to one lucky random digital artwork customer. You would just need to make sure that those "purchasing" the digital artwork actually get it, so that it doesn't appear as a fraudulent transaction. (Keep the sent email in case you need to prove it.)

The digital artwork can be something as simple as a 100x100 .jpeg with a graphic you design for the donation drive, or whatever you choose. Just make sure it is your own work, and not plagiarised.


There are also ways to set up non-profit organizations through the IRS to be able to legally offer and administer an actual raffle, but they are complex, and only worth the effort to someone planning to do more than one drawing.

Of course, you should check with your local laws and regulations on this kind of thing, as there may be tax implications if it is not done properly.

This information is not intended for someone who just wants to raise money for themselves, but rather for the charity drives like the Pajero, Stevestock, Rock Candy, etc, set up by renowned and trusted members of this community, to be able to maximize the amount of donations for a legitimate cause, without paypal trying to shut it down.

Please post up if you have any other good ideas on how to properly set these charity drives up so that we can make sure these well deserving causes get as much as we can give.


*as a disclaimer, I am not a legal professional, and the above information was obtained through paypal's website as well as the IRS website. For full legal assistance, contact a legal professional.

[Robbob]

Originally Posted by monkeyracer

The digital artwork can be something as simple as a 100x100 .jpeg with a graphic you design for the donation drive, or whatever you choose. Just make sure it is your own work, and not plagiarised.

Ive done this years back for a raffle, people were buying individual one of a kind 125x125♦ avatars that were numbered. Paypal never bothered us but we didnt have people running to them saying it was a raffle either.

[Rckcrwlr]

Thanks for spelling it out for the masses.

As you said, the raffle thing is taboo and me getting shut down twice in two days made it unfortunate to me.

I like the Digital Design that way there is no "shipping" involved.

Not that I am going to do one in the future but I may look into the business account.

We, as RCC Members, should come up with a format for these types of things so that we are consistent. Sort of like the Giveaway Format.

[monkeyracer]

Originally Posted by Rckcrwlr

Thanks for spelling it out for the masses.

As you said, the raffle thing is taboo and me getting shut down twice in two days made it unfortunate to me.

I like the Digital Design that way there is no "shipping" involved.

Not that I am going to do one in the future but I may look into the business account.

We, as RCC Members, should come up with a format for these types of things so that we are consistent. Sort of like the Giveaway Format.

That is the intention, get some kind of standard format for these so that they can be as successful as possible. We have some great causes, and it would be great to make sure we can raise as much money as possible without any interference from an outside party.