How to throw fundraiser for cancer patient?
August 20, 2010 10:33 AM   Subscribe

My mom has cancer. Her sisters are throwing a fundraiser to offset her medical bills and pay for a trip. Please help me understand their obligation to donors and the powers that be.

My parents are certainly in need of help financially. My mom was diagnosed with stage 4 endometrial cancer. She had a radical hysterectomy, just finished her chemo treatments, and has a cat scan next week, results the following week. She is doing great, going strong, marker is down, last scan showed no new growth, "cancer free!" etc. (yay! can't tell you how happy we are about that!)

Now that she is done with chemo, she is flying out to California from Missouri to visit her family, then she and two of her sisters will be driving back to Saint Louis, ala Thelma and Louise. Her sisters are organizing a fundraiser where they and other vendors will sell various goods (think tupperware, jewelry, etc) and 25% of proceeds go directly to the trip and medical expenses. They are also raffling a weeks lodging in Hawaii. There are flyers made, which are explicit as to how this money will be spent. Trip, then medical expenses, then household expenses. They are planning on doing a "press release" about the fundraiser next week.

In addition to my own awkward feelings about this which I guess I just need to get over, I am concerned about the legalities of this. Does anyone have any experience with holding a fundraiser for cancer or other disease-stricken people? Do they need to form some sort of legal entity? Obviously it takes months to get 501(c)(3) status. This is happening in California. My mom is in Missouri, but will be attending the fundraiser.

I appreciate any thoughts you have on this. I just don't want good intentions to turn into a giant mess. And, at this point, this is definitely happening.
posted by fyrebelley to Law & Government (7 answers total) 1 user marked this as a favorite
Setting up a 501(c)(3) entity is needed only when donors want to be able to deduct their donations. That would not be available anyway since charitable contributions cannot be properly made for the benefit of one person (in general).

Donations that are made would probably be characterized as gifts to her. Any amount up to $13,000 per year can be given by any one person without any concern for gift tax issues. And gifts are not taxable to the donee.

(These comments relate solely to Federal issues, not to Missouri or California issues.)
posted by megatherium at 10:38 AM on August 20, 2010

Raffles are legal in some places and illegal in others. That's the only thing that leaped out at me in terms of legalities. Here's the info for California. (IANAL)
posted by cocoagirl at 11:22 AM on August 20, 2010

Our 501(c)3 has recently done work whereby the family of a very sick individual did all the work with a few fundraisers and events, but instead had the checks written to our agency with the understanding that all funds raised would go to the individual in question.

It sounds shady, but it passed muster w/ the accountant and the auditors w/o any issue at all.

But megatherium has it, I think, wherein you keep the dollar amounts under the threshold and operate on a cash basis.
posted by TomMelee at 11:26 AM on August 20, 2010

What Tom describes is indeed shady and could jeopardize 501(c)3 status. Theoretically, there are legal issues with the raffle but these kinds of things are held all the time and are never investigated, as long as they're kept within the bounds of a family/friends network. If you start making a sort of business out of it, like buying a lot of ads to attract total strangers into the raffle, that's a different story. For this reason I would avoid the press release or be clear in the wording that "the family and friends of [your mom's name] are raising funds to do XYZ".

And, I hope all goes well with her health.
posted by beagle at 12:04 PM on August 20, 2010 [1 favorite]

What TomMelee is talking about sounds to me like a restricted fund (PDF) which is perfectly legit in the non-profit/fund raising world if done correctly. But it's not necessary to work with a 501(c)(3) unless your "donors" want to be able to write off the gift as a charitable tax deduction.

I'm sorry to hear about your mom, and good luck to your family.
posted by misskaz at 12:28 PM on August 20, 2010

Response by poster: Thanks for your answers! I'm going to try to steer them away from the press release. To be honest, that's what started to panic me a bit. I appreciate your help, and well wishes.
posted by fyrebelley at 3:08 PM on August 20, 2010

IANAL - I have seen some groups sell DumDum lollipops for a dollar each and with it you get a free entry into a prize drawing. So it's technically not a raffle - you purchased a good.
posted by CathyG at 6:31 PM on August 20, 2010

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