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Thursday, April 02, 2009

Are Raffles a Good Idea in this Environment

Like many of you, I am involved in at least on community institution and I think all of us involved understand one simple thing: the money is just simply not flowing in and the word insolvency is on tip of the tongue. Another thing we know is that if someone gives you a donation, they probably aren't going to give you a second donation, so there is little room for failure.

Ariella's son just came home from school with a note that in order to meet payroll, the school must engage in fundraising and that at this time each boy is expected to sell $100 tickets for a $100,000 raffle.

A little simple math is helpful in evaluating such a fundraiser. To cover the costs of such a raffle (and there are so many of them out there) the students/parents/fundraisers must sell 1000 tickets just to break even. In actuality they must sell more because there are also promised incentives for those that sell. I don't know what the likelihood of selling more than 1000 tickets is, but I believe the likelihood is rather low. Perhaps the likelihood of a loss is higher. If I was on a board where such a fundraiser was suggested, I would be at the forefront fighting the idea. Fundraisers are not my game, but I think a large expected prize combined with a very high ticket price is an equation for a potential loss.

Personally I have a distaste for gambling fundraisers and a distaste for children being asked to go door-to-door. Ariella had a more modest proposal that the boys used the time off of school before Pesach to work, helping harried parents with random chores, errands, and babysitting. As I try to get all the things I need to get done before Pesach, I can say this: I would NOT, under any circumstances, entertain buying a $100 raffle ticket (when I get calls to buy such tickets from boys or girls fundraising for their school, I always tell them I will give a small donation to the school and note their name in a note, but I don't want to feed into the pricey fundraising frenzy), but I would entertain paying a bochur to help out with some household projects that need taken care of so long as they show up with their painting clothing on.

28 comments:

Ezzie said...

Everytime I hear about a raffle, the first thing I do is think how many tickets it requires to be sold. I'm guessing that if it's larger than the size of the student body, it will have a hard time making it unless it's much cheaper than $100/ticket.

SephardiLady said...

That is an interesting way of making a prediction. Ariella noted this is a small school. As it is, few schools have a student body even nearing 1000.

Ezzie said...

Right. I actually was going to say ~60% at first, but realized that it's probably higher, between parents, grandparents/aunts and uncles/etc., and members of the community, not to mention those who buy multiple tickets.

rosie said...

I also give small amounts but after several kids show up with the same fundraiser, I usually just tell them that I gave already. I would not give a $100 raffle.

tesyaa said...

There is such a thing as a 50/50 raffle where the winner gets half the proceeds and the fundraising group gets half. Seems safer than promising $100K as a prize.

People who buy big raffle tickets usually do it for their own schools, institutions, etc. and see it as a contribution, but as SL says the tax treatment is not the same.

rosie said...

I once got a call that I had won a raffle. The news came not from the organization that I had bought the ticket from but from another organization that had heard my name announced as the winner and wanted me to donate the winnings to their cause. It was only $200 and I let them take it. I would think that the yeshiva would expect the winner to donate or not claim the winnings. I am fairly certain that there would be pressure on the winner to forfeit the winnings. (Maybe they would give him back his original $100.) The only thing that I ever try to win is at a Chinese auction where a store has already donated the prize and it does not come from the organization's money. As SL said, it is highly unlikely that they could even sell $1000 tickets.

Commenter Abbi said...

I'm not sure if this is an exercise in stupidity, futility or both.

Basically, anyone who buys tickets is throwing money into a pot for someone who's number is picked out of a hat to win. Nice middot lesson and I'm sure the school will make a bundle off of this. I would never allow my children to participate in this type of activity, even if they were thrown out of the school because of it.

Chava (not my real name) said...

I'm in tenth grade. I would MUCH, MUCH rather earn money for my high school than ask someone to buy a raffle ticket or chocolate from me. I hate selling things. It is embarassing. On the other hand, earning money that goes to my school seems like a real chesed.

Ezzie said...

I remember growing up that the Hebrew Academy of Cleveland would have a cute fundraiser with selling fruits - different types of apples, etc. They would get orders in the weeks leading up to a huge delivery, then people would come by the school to pick up their orders. It was nice "selling" neighbors on something that they'd receive something from.

Lion of Zion said...

SL:

"Perhaps the likelihood of a loss is higher."

don't these raffles generally have some type of minimum clause built in? my son's school just announced a tuition raffle, but it will ony take place if they sell enough tickets to cover the winnings.

to do otherwise reeks of myopic stupidity of such an extent that i would assume is beyong the general incompetence level of most schools.

Lion of Zion said...

in e.s. the students sold cookies and chocolate to raise $ (in return for incentives). in 3rd grade my we sold cookies. my father took the brochures to his work and sold to all his non-jewish co-workers. he was mortified when the cookies came in because they weren't cheap and the packages were tiny. we never participated again.

i personally don't like asking for favors and i can't imagine ever selling cookies, raffles, etc. for my son's school.

"I would MUCH, MUCH rather earn money for my high school than ask someone to buy a raffle ticket or chocolate from me."

how about school car washes to raise $ before pesach?

SephardiLady said...

I imagine that you could build a clause of minimum ticket sales in to conduct the raffle, but then wouldn't you have to return the purchase?

I don't know a lot about the inner working of a raffle. I do know that this isn't the first 100K raffle put on by a yeshiva this year. As I recall a chassidish yeshiva was advertising one recently.

tesyaa said...

A kiruv organization I am familiar with runs a $20,000 raffle. It limits ticket sales to a certain amount so that the chance of winning is known (e.g. sell no more than 1500 tickets). There is some discount for buying multiple tickets so selling 1500 tickets grosses less than $150,000. I think their gross take one year was around $120K, net of the prize $100K, net of other expenses (mailing) probably somewhat less. Tickets are sold by adult volunteers.

rosie said...

10th grade girls like Chava(not her real name) could host a kids gathering and mothers would gladly pay to have their kids occupied for a few hours so that they could get ready for Pesach. Give the kids Pesachdik snacks. The car wash idea is cute as long as someone doesn't mind a huge water bill. Washing the car yourself is one thing that costs more than taking it to a $3 car wash, or at least is ecologically not as good.
Bochrim are good at kashering things but if there is a possibility that a kid under 18 could get injured, it is not a good idea.

SephardiLady said...

Let's not forget that the part of the car that needs cleaned is the inside for chometz.

I cleaned the inside of our car two days ago. It was a nice day and my kids played on our lawn and helped wash the outside of the cars with a little water in their pail and some old sponges.

rosie said...

My son spent $6 at the car wash today. $3 for the outside and another $3 in quarters for the vacuums outside. He is now outside with a rag for the finishing touches on the dashboard, door pockets and cup handles. With a powerful vacuum it only took 20 minutes. I guess that if students were to get a car wash to let them use their vacuums, families could pay them to do it.

tovarena said...

I don't know if this might be the situation, but one of my alma maters recently sent me a flyer for a Chinese auction. Thing is, after looking through a few pages of the booklet, it seems that this event is actually run by Torah u'Mesorah but being sent to the mailing lists for all participating schools.
Perhaps this raffle was being run similarly - as a cooperative between a few schools. Then they're much more likely to sell the minimum tickets.

jewchick said...

I second what tovarena said. I've been getting a bunch of mailings for $100,000 raffles - they all look the same. There much be a co-op for this raffle going on... of course, they should be honest about that because it WAY changes the odds...

Anonymous said...

Ezzie - unless it's much cheaper than $100/ticket.

It has to be high, for a few reasons:

1. It is difficult enough to sell 1000+ tickets at $100, it is darn near impossible to sell 5000+ tickets at $20.
2. The higher the ticket price, the more likely a wealthy person is buying the ticket, thus the more likely the winner will disclaim the prize and donate it to the school.

If I were a cynic, I might say that it would be in the schools interest to cheat and make sure that a wealthy persons ticket was chosen from the hat as "winner".

Mark

Anonymous said...

I don't like the idea of children selling anything! Ummmmmm what about the child labor laws? They were put on the books for a good reason. Some things really do sell themselves - like Girl Scout cookies and the fruit sales Ezzie described. But raffles and walk-a-thons and spell-a-thons, and the sales of all the useless chatchkes that schools these days engage totally turn me off. If we don't buy, then there's no reason to sell. So whenever a child asks me to buy something or sponsor him/her I politely decline. I tell the child point blank that it ISN'T him or her. It's not the job of the job to do fundraising!!!!! They're supposed to be students!!!! That's why they go to school. Sorry, I don't need t-shirts, wrapping paper, brownies, candy, magazines etc. If the synagogue's religious school sells Barton's candy for Pesach that's another story. That sells itself, kinda like the Girl Scout cookies.

Anonymous said...

you forget that the prize of the raffle may be underwritten [in full or in part] by a donor already, so whatever is being brought in is profit.

Zach Kessin said...

you forget that the prize of the raffle may be underwritten [in full or in part] by a donor already, so whatever is being brought in is profit.you forget that the prize of the raffle may be underwritten [in full or in part] by a donor already, so whatever is being brought in is profit.

If someone is willing to give them $100K as a prize they would have been better off just using that money for payroll. I think the chances of them getting more than $100K in tickets are slim and none.

However I think this is a case that behavior will not change until things hit total ROCK BOTTOM, and they probably still have a few months to go.

Anonymous said...

The Torah Umesorah chinese auction includes 17 schools. The same way that the recent Shor Yoshuv raffle for $100K included a number of other yeshivos.
Involved organizations absolutely must be honest with participants about this. If people are donating based on actually hoping to win, not just to donate, they need to know what the pool really looks like.
I recently got an email from one school asking me to participate in the Torah Umesorah auction, but not letting me know that it was anything but their own personal auction. I decided to buy $100 of tickets. 2 days later I got another email from another school with the exact same auction again with no indication that this wasnt their own auction. Now I know what is going on, but all of the schools are touting this as their own auction. This can't be yashrus!

Ariella said...

Update on the raffle in question: my son informed me that this is a cooperative one. He was told other yeshivas (not local ones) are also involved. But I replicated the email that I got exactly as stated. You can see from the wording that it did not give that fact away. I don't think they were deliberately hiding the fact but just thought that the email was going to the local parents who would be motivated to give for their school and so the other schools were not relevant.

While having more schools involved certainly increases the odds of selling enough tickets to cover the cost, it also diminishes the return for each school. I don't know how they are to divide the proceeds. Would it be an even split among the schools, or would each just get what its student body raises? So pooling the resources may guarantee that they can at least cover the promised prizes but I don't see that it would, ultimately, lead to a significant increase in funds for each school.

Avi said...

You know how all the "solutions" to the tuition crisis seem to be "doing more fundraising" and "getting more creative" with fundraising? Well, this is the outcome of that line of thinking. They're pooling fundraising resources and offering a bigger raffle prize!

I don't have a problem with making kids sell stuff - it may be the only genuine work-related education our schools provide. Sales is an actual career path!

I don't have a problem with pooling resources, either, although there is a real danger of backlash when someone donates to what they think is specific and then find out it's communal.

I don't have a problem with raffles, per se, just how they're used. (As an aside, I think that raffles/Chinese auctions can elevate the act of tzedaka because people are happier to give when they think there's something in it for them -- even if it's only the minute imagining what they'd do with the prize.) If used properly, raffles and Chinese auctions are gateway donations that get people involved in a cause that they otherwise would not donate to. If you're hitting up your existing donor base with a raffle -- where your proceeds are diluted by the payout -- you're being pretty stupid, because you'll quickly induce donor fatigue.

The bigger problem is using raffles as a primary fundraiser. They simply don't raise as much money as other fundraisers because you have to pay for the prize unless you assume that the winner will donate the prize. I know it's common to pressure the winner to do so, but I think that's ugly, and much less likely to work in the current economic climate. I know that if I won a $100K prize from a yeshiva, I'd simply tell them that they will get the money back in tuition! $100K after taxes is about $60K, which is about my yearly childcare/tuition spend.

SephardiLady said...

Avi:
Like you, if I won a prize (hard to do when you don't play) I'd be keeping the remainder to pay for tuition now and in the future.

conservative scifi said...

In my (conservative) synagogue, we've tried several different types of fundraisers. Raffles never really raise that much money, unless they are the "chinese" kind where all of the prizes are donated. Then the money raised is related to the effort being expended by the volunteers soliciting the prizes.

One time, an affiliate tried a concert with a mildly well known musical group from the 60's. That was a dismal failure that lost thousands of dollars.

This year, the fundraiser is a talk by a fairly famous actor and author, but a wealthy family is underwriting much of the cost, so that any sponsorships or ticket sales will be pure profit. Since the family would not donate the money directly, the event is likely to be fairly successful from a financial perspective.

Personally, I think the best (and most reasonable way) to raise money is the idea suggested by many above, which is to offer a service that people want at a price only slightly greater than it would cost elsewhere.

For example, if a carwash costs $20 at the local place, then the charity can probably charge $25, particularly if they will give tax receipt recognizing that their cost was $5 or whatever for materials, yielding a tax deduction.

I hope the schools sell the $100 tickets, but I wouldn't buy one from my kids day school.

Fox said...

What Avi and Conservative SciFi said!

We also suffer from a problem that has increasingly plagued the philanthropic world: relying on a handful of major donors rather than cultivating a broader base. For people in development, the major donors provide more bang for the buck while making the organization look great. But this model of fundraising -- putting all your eggs in just a few baskets -- is inherently risky.

Not only does the loss of a single donor have a dramatic impact, but the organization becomes focused on chasing the next big giver -- often alienating all the little givers along the way.