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When I worked as an event planner for GE, I would have been mortified to inadvertently overlook a detail which could have shut down my event. With so many rules to follow from municipal, state, and federal bodies, it really is difficult to stay on top of everything.
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. When an organization secures a raffle license, it must follow rules affecting advertising, the number of tickets sold, and even the time of the draw (an official typically visits the site to witness the draw). In contrast, a sweepstakes - like a raffle - allows for a drawing and prizes to be distributed, but the guest doesn't have to pay for the ticket because there is no such requirement.
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. Florida and Virginia auctioneers must meet certain criteria such as: attend an approved school, secure a bond, pass a state-administered test, 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 instance, Anne Arundel County requires a $250 license.
I'll be honest: Licensing is confusing, complex, and can be costly. Here's a question that illustrates the challenges of this area: "Our non-profit is based in Maryland, but 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.
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Award-winning fundraising auctioneer Sherry Truhlar, CMP, BAS runs Red Apple Auctions, a firm specializing in teaching non-profits the techniques proven to grow auction profitability. She offers a number of FREE
auction ideas on her website, including the popular Auction Item Guide, a meaty compilation of
best-selling auction items . Sign-up for the Guide at Red Apple Auctions.
