Oorah's Million Dollar Raffle

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  • #1049146

    nishtdayngesheft
    Participant

    My statement was based on A) Reason and B) Query, so it was not an assumption at all.

    #1049147

    YW Moderator-42
    Moderator

    Snowbunny, you asked whether a mortgage is an issue of ribbis and I answered, I’m not sure what your follow up question/statement was.

    #1049148

    what is a “heter iska”?

    #1049149

    YW Moderator-42
    Moderator

    Popa, u also have to take into account the higher tax bracket u will be in for the one or ten years. I hope whoever wins speaks to a financial advisor before deciding.

    #1049150

    Ðash®
    Participant

    I just read the fine print in my book. First of all, it does mention “no purchase necessary” so it is a legal sweepstakes and is therefore tax deductible.

    The million dollar prize requires a donation, the other prizes are no purchase necessary.

    #1049151

    YW Moderator-42
    Moderator

    Interesting point, as the prize is 1000 times your donation, that obviously requires a donation so there cannot be a “no purchase necessary” option. I wonder how that works in terms of being tax-deductible and legal. I always understood raffle donations to be tax-deductible only because there is a “no purchase necessary” option so therefore you are not gaining anything in return for your donation. But in this case where you gain an extra possible $1000 for every dollar donated how can it be tax-deductible?

    #1049152

    Ðash®
    Participant

    The “no purchase necessary” option is needed in order to be legally considured a sweepstakes and not a lottery. It has nothing to do with being tax deductible.

    #1049153

    For sure it would be tax deductible if you do not win, I would say that they probably give you a tax deductible receipt after you enter and donate the amount of money you donate.

    #1049154

    YW Moderator-42
    Moderator

    Dash, I understand that the option is there to make it a legal sweepstakes.

    I am addressing a different, although related point that many people (including snowbunny in the previous post) don’t seem to know:

    Most people take for granted that a “donation” is tax deductible but this is not always true. If you get something in return than it is not tax-deductible.

    The classic example of this is with dinner ads that come with a meal. If you pay $500 for an ad and get 2 free meals with it, the organization is not allowed to give you a receipt for the full $500, rather they must deduct the value of the meal. This is pashut and most organizations actually do follow this.

    Where it gets less pashut is with “raffles”. According to the IRS, receiving a raffle ticket giving you a chance to win money is considered receiving something in return for your donation and therefore a raffle donation is NOT tax deductible.

    (snowbunny’s thing about “if you don’t win” applies to maaser according to most poskim but the IRS doesn’t hold of that svara so it does not apply to taxes. Note also, whereas by maaser you can say that you would have otherwise spent $10 on dinner and therefore count $490 toward maaser, when it comes to taxes you have to deduct the full value of the fancy meal you received)

    There are many accountants and tax lawyers who hold that if the raffle has a “no purchase necessary” option then it IS tax deductible because you aren’t getting anything extra for your donation that you wouldn’t have received otherwise. (Note I said “many” and not “all” – some say that even with the option it is not pashut which is why many tzedakas such as BMG don’t give receipts for their raffles and Chinese Auctions)

    Which brings us to our question regarding the current Oorah sweepstakes. Until this year, they have had the “no purchase necessary” option and have given receipts.

    But this “Million Dollar Raffle” seems to be a separate zach in which you have to donate to enter and the more you donate the more you can win. So for every dollar you give, you have a chance to win more so you are getting something in return according to the IRS. Therefore, according to my understanding of the situation, they should not be allowed to give tax receipts for this auction. V’tzarich iyun gadol.

    #1049155

    Ðash®
    Participant

    Organizations don’t like to give receipts for sweepstakes because they need to state on the receipt what the value of those “goods or services” are.

    The fact that it is possible to get a sweepstakes entry without a donation has no effect on an instance where that charity gave a sweepstakes entry in exchange for a donation.

    #1049156

    ☕ DaasYochid ☕
    Participant

    Snowbunny,

    I don’t see that anyone answered you question, so here’s a simplified explanation of heter iska.

    A transaction which would normally be structured as a loan, can be structured in a way to make it a type of transaction which doesn’t involve ribbis. A contract is signed between the two parties in which the “lender” is considered an investor, and is investing in a business handled by the “borrower”. The additional money he will receive is not interest, it is a return on his investment.

    Although normally such a loophole would not be allowed, because it is too similar to actual ribbis, an exception was made because people were not lending money because there was no material gain, and businesses were unable to prosper.

    #1049157

    ☕ DaasYochid ☕
    Participant

    RE: Oorah raffle ribbis issue:

    The Shulchan Aruch (Y.D. 176:15) allows a dowry to be structured in a way which has an increased amount if the payment are delayed. The posek I spoke to (he answers Choshen Mishpat and ribbis shailos daily) was mattir the Oorah rafle on these grounds. It is similar to the dowry, which has the status, for ribbis, of a matana, as does the raffle.

    It seems that Mod 42 and Joseph are correct that it is considered (despite the wording) to be a choice of two different prizes because there is no chov (obligation) based on a loan (or sale, which would have been ribbis d’rabbonon).

    #1049159

    YW Moderator-42
    Moderator

    Who’s listening/watching to the Oorahthon? How come no Lipa this year?

    #1049160

    Torah613Torah
    Participant

    42 – listened to most of it with a very enthusiastic relative. It’s much more entertaining when you know the people involved. 🙂

    #1049161

    ☕ DaasYochid ☕
    Participant

    I’m very sad today. I didn’t win the fiveishmobile. 🙁

    #1049162

    YW Moderator-42
    Moderator

    Lol. Reading through this old thread it seems that Joseph and I were agreeing and were actually proven to be correct at the end. I guess that happens sometimes. 🙂

    Anyway, to follow up: I think the guy who won last year gave $10 so they only had to pay $10,000 rather than $1,000,000. It seems that their gamble paid off. They are doing the same raffle again this year. I assume they have some sort of deal with a sponsor to do this for a few years with the hope that they will never have to pay the full million and even if they do it will only be once in the few years that they do it. So sounds like a pretty good business decision to me. It hypes up their raffle and encourages people to give more. And it is more than just one year…

    #1049163

    chaya.esther
    Member

    I would greatly appreciate if any of the chochomim here mentioning ribbis and other halachic violations could tell me which Rov holds this and post all the sources

    #1049164

    reading this conversation confirmed my suspicions that there are 3 types of tzeddakah givers in the world:

    type 1: gives tzeddakah for the sake of the mitzvah, for the sake of giving, to the places he deems worthy and without any other motives. these people may even specifically not give to the organizations that have fancy advertising campaigns.

    type 2: give tzeddakah cuz they know they need to, but are most likely to give it to a place where they will “get something out of it,” a place that offers them an extra incentive.

    type 3:only give the amount of tzeddakah they do because of the fancy incentives and cuz they feel like they’re getting something tangible.

    i think our community is probably 20% type 1, 70% type 2, and 10% type 3.

    this is what i concluded from running a chinese auction and from paying close attention to things like this thread and places like mishpacha inbox (after the askanim article).

    is this a good thing? is there anything we can do to change this? why should the smaller organizations who dont hold fancy fundraisers, but are often more worthy than most of the bigger organizations who spend money on advertising, be struggling so much accomplish their goals if Hashem put enough money in the world for everyone to have what they need? any ideas? solutions?

    #1049165

    👑RebYidd23
    Participant

    Oorah uses offensive advertising tactics with their dollar bill characters.

    #1049166

    YW Moderator-42
    Moderator

    Who won the million dollar raffle this year and how much did they win?

    #1049167

    YW Moderator-42
    Moderator

    “type 1: gives tzeddakah for the sake of the mitzvah, for the sake of giving, to the places he deems worthy and without any other motives. these people may even specifically not give to the organizations that have fancy advertising campaigns.”

    Why would someone in this category not give just because there is a fancy campaign? If it is a worthwhile tzedaka, what does the fancy campaign have to do with anything? If anything, they should be happy that a worthwhile tzedaka is getting its name out.

    #1049168

    YW Moderator-42
    Moderator

    In other words, I can’t stand people who fault Oorah for the advertising. Lemaysa it works so why not do it. They happen to be, in my opinion, a very worthwhile organization that does a lot of good work with the money they are making. Without all the advertising, this might not have been possible. (They also happen to be very entertaining which itself is a nice thing that I think the klal needs)

    You are correct that the need for fancy auctions and advertising shows that many frum people have their priorities wrong and don’t appreciate tzedaka enough but that doesn’t take away from what Oorah does.

    #1049169


    Participant

    Why would someone in this category not give just because there is a fancy campaign? If it is a worthwhile tzedaka, what does the fancy campaign have to do with anything? If anything, they should be happy that a worthwhile tzedaka is getting its name out.

    I’m not saying that all my tzedakah is lishmah but I want as much of it as possible to be used for whatever the goal of the organization is.

    #1049170

    YW Moderator-42
    Moderator

    If you give money to a yeshiva they can use it to pay the rebbeim, pay the mortgage, or to buy toilet paper. All are necessary parts of achieving the “goal of the organization”. Advertising is also part of this. It is part of the steps that Oorah thinks is necessary in order to function to the level that they do. Therefore, it should not bother you that some of “your tzedaka” is going toward fancy advertising.

    On a similar note, if you give tzedaka through a fund raiser, he might get a commission. Some people don’t like this and want “all of their tzedaka money” going to the organization. But it is the same thing, the yeshiva paying the fund raiser is just as much a part of their business as paying the rebbeim.

    #1049171


    Participant

    It doesn’t bother me that they have overhead, but if someone else can do the same job with less overhead, that’s where my money will go.

    #1049172

    squeak
    Participant

    Oorah <> worthwhile tzedaka organization.

    #1049173

    charliehall
    Participant

    “a raffle donation is NOT tax deductible.”

    I’d rather just write a check to the organization. If I want to gamble, I’ll go to Empire City or buy a lottery ticket.

    #1049174

    “advertising…… is neccessary to function to the level that they do”

    my only question is, is it neccessary because otherwise their donors wouldnt give tzeddakah, or because otherwise they would give their money to other places?

    i would like to be dan klal yisrael lekaf zechus and say that it is probably the former. meaning, the only reason organizations need to have all these costly advertising campaigns is because there is competition between tzedakkahs!

    anyone think this issue can be solved?

    #1049175

    sorry. the latter.

    i believe the only reason tzeddakahs have marketing costs is not to convince people to give tzeddakah, rather to convince them to give their tzeddakah to that specific organization.

    #1049176

    ☕ DaasYochid ☕
    Participant

    Both. There are undoubtedly those who set aside a specific amount for tzedakah and will give no more and no less.

    There are also undoubtedly those who don’t have a specific amount to give, and good marketing and PR will coax more money out of them than they would otherwise give.

    #1049177

    YW Moderator-42
    Moderator

    If the raffles/advertising is mazakeh the rabbim in giving tzedaka that they wouldn’t have given otherwise than that itself is a worthwhile thing. Obviously it would be better if that wasn’t necessary but if that’s the metziyus than kudos to them.

    #1049178

    is it possible, however, that the difference (between the amounts people would give without the advertising and what they give with the advertising) is around the amount that is paying for the advertising?

    meaning say 300 people would be giving $10 each to a given organization if it didnt advertise. instead, that organization spends $2,000 on advertising and manages to either get another 200 donors to give $10 each or to get 200 of its original donors to double their donations. if you do the math you’ll realize they didnt make a cent more of profit.

    ok ill do the math for you:

    $10 x 300 ppl = $3,000

    $10 x 500 ppl = $5,000

    -$2,000 marketing costs

    = $3,000

    maybe my estimates are off but i have a feeling the advertising is not really increasing the amount that ends up in the final pool of what is used for tzeddakah.

    #1049179

    ☕ DaasYochid ☕
    Participant

    Even if so, the marketing people are making parnassah.

    #1049180

    nishtdayngesheft
    Participant

    Bas rabi akiva,

    Your assumption pure conjecture. It does not appear to be supported by anything.

    #1049181

    YW Moderator-42
    Moderator

    I got the Oorah auction book today and there is no million dollar raffle this year. Nor are there the free gifts for $250 donors. Seems they are cutting spending this year.

    Anyway, who won the million dollar raffle last year and how much did they win? I don’t think they ever announced it.

    #1049182

    SayIDidIt™
    Participant

    No free gifts for $250? How could they do that?

    SiDi™

    #1049183

    YW Moderator-42
    Moderator

    I agree SiDi, it’s a travesty!

    #1049184

    SayIDidIt™
    Participant

    What about 8 Nights 8 Flights?

    #1049185

    YW Moderator-42
    Moderator

    And no monkey! But at least we can win Google Glass.

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