I was recently asked if a fire/EMS department (to preserve anonymity, it could be either, and it doesn’t matter which) could raise money for a tax exempt charity which is not in the fire/EMS service. The vehicle for raising the money was to be a raffle. For some reason I am not aware of the charity could not raise the money itself, so in good faith it asked the fire/EMS department if it would sponsor the raffle and forward the proceeds on to the charity. In that case, and I think in most if not all other cases, the answer should be no.

There are three reasons.

  1. Raising money for an unrelated purpose, no matter how deserving, is not part of the fire/EMS department’s corporate purpose and might potentially violate its charter. If the department’s certificate of incorporation and/or by-laws provide that it’s corporate purpose is, for example, “to save lives, suppress and control fires, provide emergency medical Services, provide fire protection education, hazardous materials response, and public assistance during natural disasters/emergencies,” raising and spending money on an unrelated purpose would violate the charter. It may also violate the department’s tax exempt status as granted by the IRS for a very specific, and specified, purpose.
  2. The fire/EMS department would potentially be tapping into, and diverting to another organization, sources of revenue from which it would otherwise benefit. Because the activity is not within the department’s corporate purpose, an argument might also be made by the State Comptroller’s office that the activity actually diverted funds from the department because it raised money for another organization, but using its name, from people who would have been inclined to give it support.
  3. Conducting a raffle in New York is a form of gambling which is regulated by the State and is unlawful unless permitted by law. The New York State Gaming Commissions, Division of Charitable Gaming, publishes a document called “Guidelines for Conducting Raffles.” Depending on the amount to be raised by the raffle, there are three categories which three sets of rules, increasing in complexity as the amount increased. Even for a raffle of under $5,000, and $20,000 during a calendar year, the rules are complex. Among the rules, (a) raffle tickets can only be sold on the department’s premises unless the Town has authorized the department to sell tickets in other places, and those other places, if in other towns, must have authorized the sale; and (b) all proceeds must be deposited in the bank account of the sponsor, not of the beneficiary.

The takeaway from the above is that, while a contribution to an un-related charity is appropriate if considered on a case-by-case basis, unless on a small scale a department’s actual fund-raising activities should be limited to its own account.