Your Fundraising Auction Can Be Jeopardized By These Three Licensing Mistakes
With so many rules to follow from federal, state and municipal bodies
, it's really difficult to stay on top of things. As event planners know, inadvertently overlooking one of these details could have shut down my event.Licensing varies greatly from location to location, but here are three common licensing issues 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 License for the Raffle
Many states have regulations around raffles, sweepstakes, and contests.
My Washington, D.C. clients have debates as to whether they want to involve themselves in the raffle licensing laws. Securing a raffle license is only the beginning for an organization. It must follow rules affecting the number of tickets sold, advertising, and even 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. When they ask guests to enter the sweepstakes, they encourage donations since they can't sell the tickets. Most guests make at least a $5 donation, but a donation isn't required to win a prize.
#2: A License to Serve Alcohol
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 on this single area. I suggest you call your local authorities and check on the rules.
#3: A Licensed Auctioneer
At this point, some of you are thinking, "Are you kidding me? You need a license to be an auctioneer?"
The answer: Yes, no and sometimes. It varies by area.
In Virginia and Florida, a license is required. If a person accepts payment in exchange for calling bids at a benefit auction ("payment" could be a meal), an individual is required to have an auctioneer's license. The penalty for conducting an auction without a license is ~$2000 fine.
Getting an auction license is no more difficult than it is to get a driver's license. But it is 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. The actual process to get an auction license is very similar to getting a real estate license.
In Washington, D.C., the laws are different. Virtually anyone can walk into the municipal building and -- about $800 later -- walk away with an auctioneer's license.
Licensing varies by county or city in Maryland. For example, Anne Arundel County requires a $250 license.
I'll be honest: Licensing is confusing, complex, and can be costly. Here's a question that reflects the challenges of this area: Although our non-profit is based in Maryland, 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 auction and the drawing will be that night. Because we'll be on "foreign soil" (the embassy) for our entire raffle 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.
Copyright (c) 2010 Red Apple Auctions LLC
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