Thanks for choosing RallyUp for your charity sweepstakes! Although sweepstakes are easy to run, there are a few requirements that you’ll need to be familiar with. This article explains everything you need to know to get started.
The Official Rules
Every sweepstakes has official rules that detail the terms of the campaign. This protects both you and your donors. RallyUp offers built-in official rules that will be customized for your campaign by having you answer a few questions. You’ll see these details at the bottom of your campaign page. They include:
- When the campaign officially ends (date and time)
- When the winners will be drawn (at least five days after the campaign ends)
- A detailed description of the prize(s) you’re offering
- The approximate retail value of the prizes (see below for more detail)
Your sweepstakes will also have a built-in alternate method of entry (a free mail-in entry option), which is legally required.
These official rules are relatively standard and cover the requirements of sweepstakes for US-based organizations. You should review the rules carefully to make sure your campaign remains in compliance with them.
With that said, you can override the built-in rules if you have specialized legal requirements or provide your own rules. RallyUp does not provide legal advice or guidance, but we work with your legal team to accommodate specific requirements. Please feel free to contact us for more information.
Approximate Retail Value (ARV)
The approximate retail value of your prize(s) is an important detail that will determine the requirements for your sweepstakes. Most organizations determine the ARV based on the cost to purchase the prize, or by using the Manufacturer’s Suggested Retail Price (MSRP). Some types of prizes like spending time with a celebrity may not have an ARV since these prizes are unique to the campaign and can’t be purchased.
If the prize is cash or if there is an option for the winner(s) to choose cash instead of the prize, then the actual cash value should be listed as the ARV.
Registration and Bonding
If the total ARV of your prize(s) is over $5,000, then you’ll need to register and bond your sweepstakes in the state of New York if you want residents there to be able to participate. Don’t worry, though; the process is simple, and we can handle the details for you.
The cost of registering a charity sweepstakes in New York is $100 (plus express shipping fees) and the cost of a surety bond is 2% of the value of the prize(s) (plus express shipping fees). Please contact us if you need registration and bonding, or if you want to exclude New York residents from your campaign.
Advertising and Promotion
If you plan on promoting your sweepstakes via social media, radio, television or other channels, be sure to check with each media source to ensure that you comply with their guidelines for these campaigns. For instance, you may be required to include certain language in your postings (such as “no purchase necessary”).
To view examples of these disclosure requirements for different promotional methods, see the article on promoting your charity sweepstakes.
Sweepstakes sponsors are responsible for providing an Affidavit of Eligibility and a Liability and Publicity release to the potential winner(s) as needed. The Affidavit of Eligibility declares that a winner is legally eligible to win. The winner is responsible for returning the affidavit before receiving the prize(s).
The Liability and Publicity release gives the sponsor and other parties (like the sponsor’s marketing agency) the right to use and publish the winner’s name and other non-personal information in promotional materials related to the sweepstakes. This document also releases the sponsor from liability concerning taxes or claims related to the sweepstakes winner. For a sweepstakes that offers trips on which the winner can bring a guest, the sponsor is also responsible for supplying the winner with a guest release.
These documents can be found online, but we’ve also included templates below that you can use for your campaign if desired. You’ll want to customize these templates before sending them, and then contact the winner(s) to find out the best way to provide them the documents for signature.
The IRS mandates that the value of a sweepstakes prize should be included in the winner’s gross income. If the value of the prize(s) is $600 or more, your organization will need to issue a Form 1099 to the winner. You can download a 1099 form here: Form 1099.
The information provided on the 1099 Form will include the sponsor’s name, address, tax ID, the value of the prize, the winner’s name, address, and social security number. The amount of tax that the winner must pay on the prize is determined based on their income and the tax bracket they fall into.
Please feel free to get in touch with us if you have questions about running a sweepstakes or need help with specialized requirements. We’re happy to help! You can reach us any time at email@example.com.