Fundraising laws in Texas require charitable solicitation registration before beginning to raise money. Fundraisers must comply with the Patriot Act and Texas Cottage Food Law. Raffles are also legal, but nonprofits must follow very specific rules when it comes to the fundraising raffles they hold.
In Texas, a number of laws oversee fundraising, bake sales and raffles. These laws are meant to protect the public and the rights of other not-for-profit organizations. Before embarking on a fundraising project with your group, be sure you are well acquainted with any applicable laws.
Fundraising Laws in Texas
The state of Texas requires charitable solicitation registration before fundraising is permitted. In order to solicit donations, some charities must register with the Texas Secretary of State Registrations Unit. Note that this may be required only for public safety organizations, independent promoters, public safety publications, veterans organizations and telephone solicitors.
Note that the federal USA PATRIOT Act requires you to identify the purpose of any phone calls requesting charitable donations. Charitable calls are considered telemarketing calls, so you must also abide by the national do-not-call list.
For street fundraising rules, your organization should be familiar with Texas Cottage Food Law, which dictates the types of foods that can be sold by an unlicensed entity. If you or your organization has produced baked goods, jellies or snacks, but you are not a restaurant, grocery store or licensed food production facility, you must abide by cottage industry regulations. Some rules might impact your fundraising bake sale. For instance, you cannot sell any baked goods that require refrigeration or canned fruits or vegetables, according to the Texas Cottage Food Law.
Are Raffles Legal in Texas?
According to the Charitable Raffle Enabling Act which took effect on January 1, 1990, qualified organizations in Texas are allowed to hold as many as two raffles per calendar year. There are certain restrictions surrounding these events, however.
Texas defines a raffle as “the award of one or more prizes by chance at a single occasion among a single pool or group of persons who have paid or promised a thing of value for a ticket that represents a chance to win a prize.” Qualified organizations are also outlined under the law. They are defined as nonprofit associations, and must have been either: organized for religious purposes and in existence for at least 10 years; a volunteer emergency medical service; a volunteer fire department or any other nonprofit organization that has existed for at least three years and is exempt from federal income taxes.
Qualified organizations may distribute any prizes except money. If the organization offers a prize, it cannot be worth more than $50,000, or $250,000 if it is a house. If prizes were donated to the organization, there is no limit to their permitted value. Even though the proceeds from a Texas lottery ticket could exceed $50,000, it is permitted to offer lottery tickets as a prize.
Texas registration requirements state that organizations do not have to register their raffle with the state. However, they can have only one at a time and are not permitted to advertise it statewide or through paid advertisements. In addition, no one can be compensated for running the raffle. All raffle tickets must state the name and address of the organization, the ticket price, a description of each prize valued at $10 or more and the date on which the prize will be awarded. Unauthorized raffles or those that don’t comply with the requirements as outlined by the state of Texas are considered gambling.
- Texas Attorney General: Charities & Nonprofits: Charitable Raffles
- Harbor Compliance: Texas Fundraising Registration
- Secretary of State: Statutory Documents Forms Index
- Texas Department of State Health Services: Frequently Asked Questions about Cottage Food Production Operations
- Bracewell: Disaster Fundraising in Texas
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