St. Louis, Mo., March 26, 2013 – The Better Business Bureau (BBB) is urging area residents who are considering buying tickets to a heavily publicized St. Louis Dream House Raffle to read all contest rules carefully before deciding whether to enter. The rules are listed on the raffle’s website, but not on its promotional materials. One of the rules says that the house will not be awarded if the charity fails to sell enough tickets.
In addition, the BBB has concerns over what it sees as a lack of openness on the part of the National Wheelchair Basketball Association, the Colorado-based charity that is conducting the raffle. Specifically, the charity has told the BBB that it will not detail its relationship with the professional raffle consultant hired to help run the St. Louis raffle.
The National Wheelchair Basketball Association, or NWBA, is based in Colorado Springs, Colo. The charity says it coordinates and promotes wheelchair basketball around the world.
Beginning in April 2012, the BBB’s Wise Giving Alliance asked the NWBA for information that would allow the charity to be evaluated under the BBB’s 20 Standards for Charity Accountability. The NWBA has not responded to the request. Participation in the BBB program is voluntary.
Michelle Corey, BBB president and CEO, said the charity’s unwillingness to detail its involvement with its the fundraising consultant, Raffle Administration Corp., is troubling.
“Financial transparency is a cornerstone of any good charity,” Corey said. “It is even more critical when a charity comes into an area for the first time and asks that people trust it with their money.
“This charity may be doing important work, but we believe the best way to earn the public’s support is for it to step out of the shadows and be open about how it is spending its money.”
Neal Martin-Zeavy of San Francisco is founder and head of Raffle Administration Corp.
The raffle, which has been advertised extensively in newspapers, magazines, direct mail pieces and on TV, touts a top prize of a $1.8 million luxury home or $1.3 million in cash. Tickets are $150 each, three for $400 or five for $550. The grand prize drawing is scheduled for June 8.
Several other prizes are being offered, including an automobile, vacations, electronics and several other cash awards.
Advertisements for the raffle show a photograph of the house in Chesterfield, Mo., and state: “Win this $1.8 million St. Louis Dream House or choose $1.3 million in cash.”
The raffle rules, at www.stlouisraffle.com, include conditions and restrictions that could be helpful in deciding whether to participate in the raffle. Among the rules:
- The grand prize winner will have the opportunity to choose between the house and the $1.3 million cash prize only if the charity sells at least 45,000 tickets by May 24. If 45,000 tickets are not sold, the house will not be offered as an option, and the winner will be awarded 50 percent of the net proceeds of the raffle.
- The $1.3 million top cash prize -- or a lesser cash prize if fewer than 45,000 tickets are sold -- will be paid out in an annuity over 20 years. If the winner elects to take the prize in a lump sum, the maximum amount of the top prize will be $1 million.
- Under Internal Revenue Service guidelines, the price of tickets is not considered a tax deductible charitable contribution.
- If the grand prize winner selects the house, all applicable federal and state income taxes will be due at closing. The winner also will pay all transfer fees. Taxes on all other prizes will be withheld by the charity.
- All raffle entrants must agree to have their names and/or likenesses disclosed and used by the news media and the charity.
John R. “Randy” Schubert has served as the executive director of the NWBA since February 2012. Before that, Schubert was owner and lead consultant of Schubert and Associates Consulting, a business specializing in fundraising and planning.
Records on file with the Internal Revenue Service show that before joining NWBA, Schubert was a paid consultant for Special Olympics Southern California, receiving $114,000 in 2009, $120,000 in 2010 and $112,000 in 2011.
In 2010, Special Olympics Southern California sponsored the first of four annual Dream House Raffles. IRS records show that Special Olympics paid Zeavy $358,000 in 2010 and $389,000 in 2011 to coordinate its raffle.
Schubert acknowledged that Zeavy and Raffle Administration have been hired to help coordinate the St. Louis raffle, but Schubert said he would not release any information about the relationship between Raffle Administration and NWBA, including any financial arrangements between the two.
Daniel Sinton, who works for Raffle Administration and describes himself as raffle coordinator for the NWBA, said that contracts and budgets related to the raffle are confidential. Sinton did not respond to BBB questions about past Raffle Administration house raffles or a request for detailed information on NWBA’s relationship with Raffle Administration.
Raffle advertisements describe former Cardinals player Ozzie Smith as raffle spokesperson and his photo and endorsement are prominent in the campaign. Schubert and Sinton would not reveal the charity’s relationship with Smith, including whether he is compensated.
Attempts to reach Smith were unsuccessful.
It appears that Zeavy first became involved in home raffles in 2006, when he was a teacher at Mount Madonna School, a college prep academy near Santa Cruz, Calif. After that event, he began working for other California charities, assisting with house raffles.
In addition to his involvement in the Special Olympics raffles, Zeavy has been involved in a number of other home raffles in recent years, most of those in California.
Other charities that paid Zeavy for his involvement in home raffles in 2011 include the Ronald McDonald House Charities of San Diego, which paid Zeavy $360,000; Yerba Buena Center for the Arts in San Francisco, which paid him $542,000; Community Action Marin, a nonprofit in San Rafael, Calif., which paid him $382,000, and Boys and Girls Clubs of Denver, which paid him $223,000.
Schubert and Sinton declined to estimate how much NWBA might make on the St. Louis raffle, but two of the charities that participated in recent Zeavy raffles show that costs associated with the raffles far outstripped proceeds.
The Yerba Buena raffle took in about $4.6 million and paid out $1.4 million in prizes and $2.1 million in other expenses (consulting fees, advertising costs etc.), netting the arts center $1 million, or about 22 percent.
The San Rafael charity did not fare as well. It took in nearly $3.7 million from ticket sales and paid out $1.1 million in prizes and nearly $1.9 million in other expenses. That organization netted $693,000 or about 19 percent of all money raised.
Missouri law allows tax-exempt charities to conduct raffles in the state.
Missouri has no regulations regarding licensing, registration or reporting.
The BBB offers additional tips for persons considering buying tickets to a charity raffle:
- Research the charity carefully before participating. Go to its website and read about its work; ask the charity for financial information. Contact the BBB for a Charity Review by going to www.bbb.org or calling 314-645-3300.
- Spend only what you can afford to lose.
- Ask whether the charity is using a professional fundraiser to assist in the raffle and how much of the ticket price will actually go to the charity for its programs.
- Know your odds of winning. The charity should be able to tell you the chances of you winning any individual prize.
- Find out when the winners will be announced and make sure the drawing is held at that time.
- If you are interested in ensuring that the charity gets the largest percentage of your money, it is always best to make a direct contribution to avoid fundraising expenses.
Contacts (News Media Only): Michelle Corey, President & CEO, 314-645-0606, firstname.lastname@example.org, or Chris Thetford, Vice President-Communications, 314-584-6743, email@example.com, or Bill Smith, Trade Practice Investigator, 314-584-6727, firstname.lastname@example.org