Can nonprofits rake it in with raffles?


This December, some lucky soul out there will win a million-dollar home in West Hills, and Kadima Hebrew Academy will pocket $1 million to benefit the school.

Maybe.

Actually, probably not. The more likely scenario is that the grand prize winner of Kadima’s first stab at a mega-raffle will take home a six-figure prize, and Kadima will net the same, depending on how many more of its 18,000 available tickets it sells. As of last week, Kadima had sold more than 4,000 tickets at $150 each, and was projecting more than doubling that number by the final drawing on Dec. 30. The deadline had originally been set for Nov. 22, but Kadima extended the raffle and has added more prizes as incentives.

Even with the extension, it seems unlikely that Kadima will reach the 15,000 tickets necessary to give away the house, as stipulated in the rules. Still, the pre-kindergarden through-eighth-grade school considers this first try a success: Many winners will walk away with the dozens of hefty cash prizes, the school will bring in money to support operations and scholarships, and the foundation will be set for a possible rerun next year.

“Once you put time and energy and effort into getting folks interested, then you have a brand,” said Brian Hersh, the consultant Kadima hired to run the effort. “Now that we’ve gotten started, we’ll do better next year.”

A growing number of nonprofits are looking toward raffles with huge prizes — generally a house, or a cash alternative — as a way to bring in large sums of money. A sold-out home raffle would bring in more than $1 million for a nonprofit.

In 2001, a change in the California Penal Code made it legal for nonprofits to hold these kinds of mega raffles. The Palos Verdes Art Center ran the first home raffle in 2003, and has had one every year since then, this year giving away a $1.5 million cash prize, in addition to two BMWs and cash prizes ranging from $25,000 to $300 to more than 100 winners.

This year, Hersh estimates about two dozen nonprofits in Southern California are running home raffles, including the Irvine Public Schools Foundation, the Greater Los Angeles Big Brothers and Big Sisters, and the Pacific Film Institute.

The first Jewish organization to try it out, the Conejo Jewish Day School, last year held a million-dollar home raffle, but sales were low and the grand-prize winner took home $50,000.

As it turns out, in most cases the house ends up being little more than a gimmick.

Most first-year raffles don’t sell enough to give away the house, and even when organizations sell all the tickets, in most cases the grand-prize winner opts for cash rather than the house. A real estate prize can be a complicated acquisition, even if the house’s location and layout fit in with the winner’s lifestyle.

The value of the house would be taxed as regular income, at 35 percent for federal taxes, according to Jonathan Gerber of Gerber and Company, an accounting firm in Century City. Throw in state taxes, and the winner can be looking at a tax payment of more than $400,000 due that year. For most people, that would mean taking out a mortgage to pay the taxes, plus potentially cashing in on a bit more of the home’s equity to make mortgage payments, pay property taxes and see to the upkeep of the house.

A cash prize, simpler because it is liquid, requires the school to withhold 25 percent of the cash for taxes, and the prizewinner would pay their remaining tax obligation from their winnings.

And yet, it is the idea of winning a dream house that draws people in.

The most successful raffles are those where the it-could-be-me factor kicks in — when the house is in a neighborhood like Beverly Hills, or even better, on the beach.

“I have a suspicion that it’s all about the dream,” said Hersh, who has run the sold-out Santa Barbara Contemporary Arts Forum raffle for two years and got Kadima started this year.

Most mega raffles use the formula of selling 18,000 tickets at $150, bringing in $2.7 million. Of that, $500,000 or more gets spent on expenses and prizes, about $1 million goes to the grand-prize winner (in cash or real estate), and the nonprofit takes in the rest. If all the tickets aren’t sold, the nonprofit and the grand-prize winner go 50-50 on the after-costs take.

State regulations require that 90 percent of the gross — after prizes are paid for, according to most interpretations — go directly to the nonprofit. Nevertheless, Hersh estimates that expenses, including a massive advertising campaign, administrative costs and consultants, can run up to $300,000 to $500,000, which goes well beyond the limit allowed to cover costs. That means the nonprofit has to have other funds available to back up the expenses of running the raffle.

There are also complex State Department of Justice regulations to follow, some of which are still being interpreted to apply to this new field of real estate raffles.

Hersh emphasizes that the school or other organization’s board has to be behind the effort, both to assume the financial risk and to mobilize the community to generate ticket sales. And, an organization has to be prepared to continue traditional fundraising efforts to cover the annual budget and capital costs for the school, while running the raffle.

Kadima’s raffle, like most raffles, is offering early-bird giveaways, meant to spike sales as deadlines approach. It has already given away more than $50,000 to about a dozen winners, all of whom are still eligible for the grand prize. People who buy more than one ticket are entered into a drawing for a BMW Z4, and a $25,000 cash prize was added when the raffle was extended. With only a few-thousand tickets sold, the odds are pretty high to win a significant prize. The next early-bird deadline is Nov. 28.

But the big draw is still the grand prize — $800,000, or a million-dollar house.

School to raffle off million-dollar home


Kadima Hebrew Academy is hoping to raise funds through one of the latest tools — a million-dollar home raffle. Kadima is selling 18,000 tickets at $150 each to give away a furnished and landscaped five-bedroom, four-bathroom, newly constructed home in West Hills.

“A few years ago, we adopted Kadima Hebrew Academy because of their mission to teach children to be caring and compassionate human beings with solid and moralistic values. It is our goal to make a difference in the lives of children,” said Kadima supporter Shawn Evanhaim, owner of California Home Builders, which is constructing the home.

Kadima is hoping to raise $1 million.

In addition to the home, Kadima is giving away thousands of dollars at early bird drawings and more cash prizes at the final drawing.

Early bird deadlines are Aug. 22 and Sept. 19. Winners of the early bird drawings will still be eligible for the grand prize at the Nov. 4 drawing.

To enter or for more information, call (818) 444-4068 or visit http://www.valleyhomeraffle.com or http://www.kadimaacademy.org.

You Gotta Be in it to Win it


Want to win a full day school scholarship? Or maybe free synagogue membership?

Now you can, in the new Jewish community raffle, Arie Katz, chair of the Jewish Community Scholar Program (CSP), created the raffle to raise awareness of adult Jewish learning in Orange County and what he calls the “amazing infrastructure in our Orange County Community.”

Synagogues and Jewish institutions will help sell tickets, which can be purchased via credit card through The Jewish Federation of Orange County.

Funds raised from raffle sales will go to a variety of local institutions, including Jewish day schools, the Jewish Community Center, local synagogues and day camps. The bulk of the funds will go toward expanding CSP, which brings the world’s leading Jewish thinkers, scholars and artists to Orange County for a series of lectures, workshops and classes. Funds from the raffle will also partially underwrite the costs of a May 2004 community retreat and a proposed community Shabbat celebration in June.

“If the raffle is successful, then the whole community wins,” Katz said.

Tickets for the raffle, which will go on sale from Sept. 1 through Nov. 12, will cost $100. The winner, which will be selected Nov. 14., will be published in the December issue of The Jewish Journal of Orange County. For more information about CSP and the raffle, visit www.occsp.org or call (949) 682-4040.

Sunday in the Park


Maybe the post-apocalyptic parking situation was a tip-off. The overcapacity of automobiles surrounding Woodley Park seemed to confirm that this year’s Israeli Independence Day Festival outdid itself in terms of spectacle and attendance. An estimated 50,000 attended, festival director Yoram Gutman confirmed, making this year’s festival the biggest yet. As Gutman told The Journal, "There are so many Israelis who live in the Valley, so maybe that has something to do with it. I never saw so many Persian Jews and American Jews."

At the vast Encino park, the aroma of barbecues tended to by picnicking families filled the spring air; kids rode rides and tossed footballs; Jewish organizations reached out to passers-by; long lines mobbed food kiosks that offered everything from smoothies to Persian cuisine; and Israeli folk dancers cut up the lawn, if not the rug.

The Journal also got to meet and greet readers and award prizes to our raffle contestants, including the children interpreting their odes to the 53rd Israeli Independence Day in crayon for our art contest.

The festival seemed to have a little something for everyone: Sephardim and Ashkenazim; Israeli, American, Persian and Russian Jews; and non-Jews. Overall, a nice (extended) family affair.

As for Israeli Fest No. 54, Gutman was undecided whether the annual event will return to its original Pan Pacific Park setting.

"It was so successful in the Valley that it may stay in the Valley," Gutman said.