We recently had a client ask us a question, and I thought that the answer would be helpful to readers of this blog. A nonprofit organization received gift cards to use as prizes for a raffle. Our client knows that cash is not allowed for raffle prizes, and she asked us if a gift card is allowable because gift cards are used like cash.
A qualified organization may hold up to two raffles a year and may offer any prize except money. ‘Money’ is defined as coins, paper currency, or a negotiable instrument that represents and is readily convertible to coins or paper currency. If the raffle organizers offer a prize which they have purchased or have given other consideration for, the value of the prize may not exceed $50,000, or $250,000 if the purchased prize is a residential dwelling. There is no value limit on prizes donated to the organization.
According to the Texas Attorney General, a prepaid credit card (gift card) is not a negotiable instrument, and hence not money. Therefore, it is permissible for a nonprofit corporation to award prepaid credit cards (gift cards) as prizes in a charitable raffle.