Raffles and Prizes: Policy and Procedures
Purpose and Scope
This policy governs:
- All raffles conducted by New York Institute of Technology (NYIT) employees, students, alumni, parents, and others seeking to raise funds for NYIT or for any group associated with NYIT; and
- Any contests or surveys conducted at NYIT that include the granting of prizes to entrants.
The policy is intended to ensure compliance with federal, state, and local laws and regulations and the U.S. Internal Revenue Service.
Definitions and Legal Considerations
A raffle is a fundraising effort in which entrants pay for the chance to win a prize. Raffles may be conducted only by charities, which have been given an exemption by New York State and/or Arkansas from the general rule that paid entry to a game of chance is an illegal lottery.
To qualify for this charitable exemption, any raffle conducted under NYIT's auspices must be for educational purposes which qualify NYIT as a charity. This means that raffles may not be conducted to raise funds for non-NYIT entities or groups, even if for a charitable purpose. Students or employees wishing to raise funds for others may do so by other types of fund solicitations, such as bake sales, but NOT by raffles or games of chance.
- NYIT is registered with the New York State Racing and Wagering Board and has an identification number. Based upon the size of the expected raffle proceeds and prizes, further licensing may be required.
- NYIT will file any necessary registrations in Arkansas.
- For any prize valued $600 or more, NYIT must report the winner(s)' earnings to the IRS.
- If the prize is valued $5,000 or more, NYIT must withhold taxes. (In Arkansas, prizes may not exceed $5,000.)
- Special rules apply for NYIT employees: all cash or cash-equivalent prizes (including gift certificates) of any value must have taxes withheld, and NYIT must also withhold taxes for non-cash prizes over a de minimis amount.
Policy and Procedures
Any NYIT employee, student, alumnus/a, parent, or other wishing to conduct a raffle under NYIT's auspices must submit an NYIT Raffle Proposal Form to the Office of the General Counsel (OGC) for approval and guidance at least three weeks prior to any planned marketing or announcement of the raffle. No marketing or announcement, and no procurement of prizes, may take place until OGC approval of the raffle, rules, and any other documents, is received.
Any NYIT employee or student wishing to award a prize to one or more entrants or participants in connection with a contest or survey must consult with the Office of the General Counsel in advance for approval and guidance.
The OGC, in consultation with the Office of the Controller, will ensure compliance with NYIT policies and applicable laws and regulations, including taking steps to:
- Determine if the purpose of the proposed raffle is covered by NYIT's charitable exemption.
- Determine if any licensing is required.
- Assist with the creation of rules for the lottery or prize. Note: These rules form a contract between NYIT and the entrant.
- Determine if any type of release should be signed by entrants.
- Coordinate with the Office of the Controller as to the proper filing of tax forms, and tax withholdings, if applicable.
- Coordinate with the Office of the Controller regarding the proper collection and deposit of the raffle proceeds.
- Coordinate with any other appropriate NYIT departments, such as Development and Alumni Affairs or Student Affairs.
Additional Policy Requirements Regarding Winners and Prizes
- The rules must require entrants to be U.S. citizens or permanent residents.
- Prizes may not be purchased using P-cards.
- Prizes must be purchased through the Procurement Department.
- Any non-cash prizes must be valued less than $5,000.