Question: Scholarship trust as raffle prize?

Is it possible to run a raffle for a grand prize of a scholarship trust? I'd like to offer a scholarship to the winner of the raffle to their highschool of choice I just don't know tax implications etc if it's a general scholarship as opposed to a scholarship to a specific school.

Asked by Anonymous

Answers:

Advice from PTO Today

Craig writes:
Raffle rules vary greatly from state to state. Check with your state's charitable gaming office for the rules on raffles. If there's no charitable gaming office, try googling your state's name + raffles, eg "Indiana raffles."

From the point of view of the regulating agency, I think what you will be offering isn't a scholarship so much as a prize, even if it's paid directly to the school rather than to the winner. You'll need to discuss with them the specifics of what's allowed.

The IRS doesn't regulate raffles, so I don't think there are any federal tax implications.

It's a fun idea -- please let us know if it works out.

Community Advice

mum24kids writes:
In addition to what Craig said about the state, there could be a Federal tax reporting implication, depending on the amount you award. If it's $600 or greater, you may have to fill out a 1099-MISC or something similar for the winner at the end of the year. But that's something to research after you find out what your state says.

Advice from PTO Today

Craig writes:
Good point -- thanks for clarifying, mum24kids. There aren't likely to be tax implications for the PTO, but the scholarship recipient's parents will have to acknowledge the scholarship on their tax return. Thus, the 1099.