Avoiding Three Licensing Mistakes Which Could Hurt Your Fundraising Auction
When I worked as an event planner for GE, I would have been mortified to inadvertently overlook a detail which could have shut down my event. With so many rules to follow from municipal, state, and federal bodies, it’s difficult to stay on top of everything.
Licensing varies greatly from location to location, but here are three common licensing mistakes I typically see with regards to a fundraising auction.
(I don’t hold myself out to be an expert in this area, so always verify with authorities in your corner of the world.)
#1: A Raffle License
Many states have regulations around licensing raffles, sweepstakes, and contests.
My Washington, D.C. clients have debates as to whether they want to involve themselves in the raffle license laws. When an organization secures a raffle license, it must follow rules affecting advertising, the number of tickets sold, and even the time of the draw (an official typically visits the site to witness the draw). In contrast, a sweepstakes – like a raffle – allows for a drawing and for prizes to be awarded, but there is no requirement that a guest pay for the ticket.
I know of one organization which conducts a sweepstakes to avoid the hassle of raffle rules. They ask guests to enter the sweepstakes, but since they can’t sell the tickets, they encourage donations. Most guests make at least a $5 donation, but a donation isn’t required to win a prize. It’s easier than securing a raffle license.
#2: An Alcohol License
Are you paying a company to manage the alcohol? Or was the wine donated and your volunteers are serving it? Are underage students handing out glasses of champagne? Is there a difference between serving hard alcohol versus wine and beer?
There are so many variations in this area. Call your local authorities and check on alcohol license rules as it relates to a fundraising auction.
#3: A Licensed Auctioneer
At this point, you might be thinking, “Are you kidding me? You need a license to be an auctioneer?”
The answer: Yes, no and sometimes. It varies by area.
I work frequently in Virginia and Florida, where a license is required. If a person accepts payment in exchange for calling bids at a fundraising auction (“payment” could be a meal), an individual is required to have an auctioneer’s license. The penalty for conducting the auction without a license is ~$2000 fine.
It’s not any “harder” to get an auction license than it is to get a real estate license. In fact, the process is similar … and time-consuming. Virginia and Florida auctioneers must attend an approved school, pass a state-administered test, secure a bond, and keep up with continuing education requirements.
In Washington, D.C., the auctioneering laws are different. Virtually anyone can walk into the municipal building and — about $800 later — walk away with an auctioneer’s license in hand!
In Maryland, licensing varies by city or county. For instance, Anne Arundel County requires a $250 license; the City of Baltimore is ~$2800.
I’ll be honest: Licensing is confusing, complex, and can be costly.
Here’s a question that reflects the challenges of this area: “Our non-profit is based in Maryland, but our auction will be held at an embassy in D.C.. We will hold a raffle, but we’re only selling raffle tickets at the fundraising auction. The drawing will be that night. Because we’ll be on “foreign soil” (the embassy) for our entire sale period, do we need a license? And if so, are we under D.C. or Maryland law?”
Whew! It’s worth a phone call or two to clarify questions with authorities.
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