Barrow's Deluxe Raffle Not Risk-Free

Start-up costs high in unusual fund-raiser

By Kerry Fehr-Snyder and Susie Steckner

At 8:25 this morning, one lucky individual who bought a $100 raffle ticket will be randomly selected to win "his and hers" Mercedes-Benzes.

Fifteen minutes later, the computerized drawing for Barrow Neurological Institute will select another winning ticket for a dream vacation package worth $60,000.

The early-bird drawing is part of a unique raffle that will benefit medical research at Barrow, a specialized hospital for brain and spine disorders located at Third Avenue and Thomas Road in Phoenix. A final drawing for the other 7,698 prizes being given away is April 28. The deadline for entries is midnight April 21.

The much-hyped Heath & Wealth Raffle is the first of its kind in the United States, an idea Barrow's foundation board borrowed from Canada and lobbied legislators for years to change Arizona law.

But it was also a risky endeavor.

The foundation had to buy all 7,700 prizes, totaling $4.8 million. It also has to cover all the costs associated with the raffle, from ad agencies to printers to television commercials that have aired repeatedly, often in primetime, since Feb. 18.

"We are at the break-even point," said Kathy Rice, raffle coordinator, declining to say how many tickets have been sold so far. "We're on track for where we thought we'd be by now."

Organizers need to sell 150,000 tickets at $100 apiece to generate $15 million. After the cost of prizes and raffle services is subtracted, Barrow would receive $6.1 million for research.

Mary Jane Crist, president and chief executive officer of the Barrow Neurological Foundation, said more than half the 150,000 tickets have been sold but would not reveal the exact number.

"This is not philanthropy," she said. "This is not people giving us a gift. People are purchasing a chance to win something."

But it's exactly that philosophy that has raised some eyebrows in the non-profit community.

"It's not an issue of right or wrong here," said Robert Ashcraft, director of the Center for Nonprofit Leadership and Management at Arizona State University. "Some segment of the population on moral grounds may have some concerns of games of chance and gambling."

Some members of the fund-raising community also may not like the shift in philosophy with such a raffle, he said. It changes the idea of donating to an organization because it's a worthy cause. Instead, people are giving money in return for a chance to win a fancy car, furnished house or other prize, he said.

The upside is that Barrow may be tapping into a segment of society that would never donate to the hospital, Ashcraft said. The downside is that individuals who buy a raffle ticket may not want to give later during foundation pledge drives.

"Raffles are done all the time, but the size and scope of this is bigger than anything I've ever seen," he added.

If any eyebrows are being raised in the non-profit community, they're out of curiosity, raffle organizer Rice said.

Asked whether Barrow would run a similar fund-raiser in the future, she said, "Absolutely, this will be the first of many."

As for tax implications, "It is what it is in the United States," Rice said. "I don't think that's caused people a lot of concern."

Winners will be taxed on the value of their prizes. Losers will not be able to deduct their $100 tickets as charitable gifts because they are not gifts.

Ashcraft likened it to the game show The Price Is Right.

"The good news is you won the grand prize. The bad news is you won the grand prize."