Running a house draw

I am sure everyone has dreamt about waking up in their dream home. This aspiration (realistic or otherwise!) is extremely common and one charities across the globe have started to tap into. This comes at a time when charities and fundraisers are looking for opportunities to diversify their income during the COVID-19 pandemic.

As fundraisers adapt to find new ways of engaging with supporters during the coronavirus, charities have started to turn to house draws as a new opportunity.  

For some charities, this may sound like an enticing prospect with the chance to raise hundreds of thousands, if not millions of pounds for their cause. However, running a house draw isn’t always straightforward and charities, as well as individual fundraisers, need to be aware of the challenges, as well as the opportunities.

As with many new activities, new fundraising initiatives need to be done well, with all due diligence, and consideration of how the public are likely to respond. When house draws have attracted attention, it has not always been for positive reasons.  Media stories where people have complained that they were expecting to win a house only to be given a lesser prize are well known, so it is vital that charities prepare properly.

Run correctly, house draws can be an excellent fundraiser for charitable causes.

The idea behind a house draw for charity is pretty simple. People buy or freely obtain tickets (depending on the type of draw) to take part in a draw where a property is put up as a prize to be won. Proceeds of the draw are then either partially or wholly given to the charity.

Charities can run a draw themselves or in partnership with another organisation. Alternatively, charities could have limited or no involvement with the draw, with the proceeds raised on their behalf by an individual or business.

So far, so good. However, running a house draw is not as simple as just acquiring a property, putting on the draw and celebrating the funds raised. Away from the world of charities, many individuals have attempted to sell their properties and found that they were trying to sell their home in a way that is actually breaking the law!

There are two ways in which draws are normally run;  as  a free draw or as prize competition. Both are not regulated by the Gambling Commission so neither require a licence. However, the boundaries between them and lotteries are sometimes misunderstood.

At face value these terms sound pretty similar, however lotteries are regulated by the Gambling Commission, whilst free draws and prize competitions are not. If you want to run a house draw, you will need to decide which method is most appropriate for your draw.

There are potentially several benefits to running a house draw. Firstly, there is the obvious selling point of being able to raise significant funds through the attraction of a property as a prize. Several charities have previously been able to raise incredible amounts of money for their cause.

There may also be the opportunity for charities to establish themselves in a new area through the running of a draw. A large-scale fundraising event like a house draw could also lead to more supporters engaging with the charity in the area where the property is based.

Teenage Cancer Trust worked with the fundraising platform Omaze to develop the charity’s first ever £1 million house draw in Cheshire. With COVID-19 presenting real challenges for income generation across the sector,  the charity wanted to bring in vital funds to protect their frontline services.

The charity and their partner established clear guidelines; from making sure that contingencies were in place should the event not sell enough tickets, to specifying what percentage of the proceeds would go to good causes and who would be liable for the property.

They also sought legal advice and undertook due diligence to ensure they were complying with regulatory requirements.

The draw was a massive success. The campaign enabled  Teenage Cancer Trust to raise  £250,000  , with their partner pledging to donate  £1million over the next three years. It also brought welcome publicity for the charity, with awareness of their activities in the north-west increasing by 113%.

A lot of work goes into preparing a house draw ahead of the event. The extent of the preparation will vary depending on whether a charity is running the event itself, or if it is working in partnership with another organisation, such as a fundraising platform.

Some charities have found that it is easier to work with a fundraising partner to avoid taking on numerous responsibilities that come with running a house draw. If working with a partner, charities must have a written agreement in place which specifies both parties’ respective  responsibilities for the event.

Regardless of who is primarily responsible for the event, there are several considerations that the organisers should be thinking about, including:

• Who owns the property and are they liable for guaranteeing its condition?
• Does the organiser have sufficient funds to hold the property and can they demonstrate they have control of it?
• Will the house be given away regardless of the level of funds raised? What contingencies are in place if you are unable to give the house away due to lower funds than expected?
• Does the marketing for the event accurately represent how the event will work, how the prize will be awarded and explain the relevant terms and conditions?
• Are marketing, advertising and legal costs deducted from the proceeds of the draw?
• Who will cover legal fees?
• Who will cover additional costs including stamp duty and other property taxes, as well as the overheads of the property?

If you plan to run a house draw you should try to make it as accessible and straightforward as possible for participants and people interested in taking part. Your supporters and the wider public may have never heard of house draws before, or they may have a limited understanding of how they work. Media coverage of house draws has often focused on bad practice or scams by fraudsters.

Providing a list of FAQs can help people develop a better understanding of how the draw works and any terms and conditions that apply. A good example of these are the list of questions used by Teenage Cancer Trust in their draws.

There have been several stories that have made into the press where participants in a draw have said they were promised one thing and then given another.

For instance, there are well publicised examples of people complaining that they were promised a house for winning a competition, only to receive a smaller cash prize and be told that not enough money was raised for the house to be given away.

Many of the issues that come up can be avoided by proper due diligence. The organiser of the event should make sure that they have sufficient funds in place to control the property. Broadly speaking, there are several areas worth looking at:

• Advertising and marketing for the event – could the adverts/marketing used mislead participants and fall foul of the Advertising Standards Authority (ASA)?
• The draw - is the draw legal? Even if you are confident, it is strongly advisable that you seek legal advice as the organisers are liable
• Financial - can financial commitments regarding the holding and transfer of the property be met?

House draws potentially cover a range of legal areas including gambling law, advertising law and property law. Due to the potential complexity of the draw and to protect your charity’s reputation, you should always seek legal advice before running one. For the draw itself, it is strongly advisable to get a legal opinion on its wording.

You will also need to meet regulatory requirements, even if these fall short of being legal requirements. This includes following the code of fundraising practice and the advertising guidelines set out by the ASA.

None of us would sell a house without advertising it properly, understanding the legal pack and making sure that contracts are sound – the same applies to house draws.  House draws can be an amazing way of engaging with supporters and raising vital funds , but it is crucial that charities get it right. With the right due diligence and preparation, they can be a valuable addition to a fundraising strategy.