Could a town scholarship committee obtain a Connecticut raffle permit without an IRS charity letter?

Plain-English summary

In November 2001, Connecticut’s AG concluded that the Watertown Scholarship Committee qualified as a charitable organization for a raffle permit. The committee collected voluntary contributions and raised funds to award postsecondary scholarships to town residents. Both its educational purpose and its manner of raising money fit the charitable-organization test the AG applied.

The committee lacked an IRS letter certifying federal tax-exempt status. The AG said the raffle statute did not require one, so its absence did not defeat eligibility on the question presented. He also noted a separate state charitable-solicitation registration issue in a footnote; the opinion’s holding was about eligibility under the raffle statute, not a blanket ruling on every permit or registration condition.

Scholarship committee members at the time

The AG treated the committee’s scholarship awards and donation-based funding as charitable activity sufficient for the raffle-eligibility issue.

Raffle regulators at the time

The AG concluded that federal tax-exemption certification was not a statutory prerequisite for this raffle-permit question. The statute separately described nonprofit operation within the municipality for a minimum period; the opinion did not conduct a separate factual inquiry into every permit requirement.

Currency note

This opinion was issued in 2001. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did Watertown’s scholarship committee need a federal 501(c)(3) letter to qualify for a raffle permit?
A: No. The AG said the raffle statute did not require that letter and found this committee charitable on the supplied facts.

Q: Why did the AG classify a scholarship committee as charitable?
A: It raised donated funds to provide postsecondary education assistance to town residents, a purpose and funding method the AG found charitable.

Q: Did the opinion decide every possible permit and fundraising requirement?
A: No. Its central question was whether this committee was an educational or charitable organization under the raffle statute. A footnote mentioned a separate charitable-solicitation registration issue.

Background and statutory framework

The special revenue division asked about raffle eligibility for a municipal scholarship committee formed under a 2000 act allowing voluntary donations through motor-vehicle tax bills. The AG read the raffle statute’s charitable category using ordinary meaning and cases treating educational gifts as charitable, then applied that reasoning to the committee’s scholarship work.

Citations and references

Statutes: Conn. Gen. Stat. §7-172(5); 26 U.S.C. §501(c)(3).

Case: Waterbury First Church Housing, Inc. v. Brown, 170 Conn. 556, 561, 367 A.2d 1386 (1976).

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Opinion page: https://portal.ct.gov/ag/opinions/2001-formal-opinions/susan-g-townsley--division-of-special-revenue-2001023-formal-opinion-attorney-general-of-connecticut

Original opinion text

Susan G. Townsley, Division of Special Revenue, 2001-023 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

November 9, 2001

Susan G. Townsley

Executive Director

Division of Special Revenue

555 Russell Road

Hartford, CT 06103

Dear Ms. Townsely:

This is in response to your request for an opinion on whether the Watertown Scholarship Committee is eligible to receive a raffle permit. The central issue is whether this type of committee is an educational or charitable organization as required by Conn. Gen. Stat. §7-172(5). For the following reasons, our answer is affirmative.

As you note, entities eligible to receive a raffle permit are limited to certain non-profit organizations. Raffles are permitted as a way to raise funds for those worthy causes. Eligible organizations are listed in Conn. Gen. Stat. §7-172, which provides, in pertinent part, as follows:

Qualifications for sponsorship of or participation in bazaar or raffle. Ticket sale. No bazaar or raffle may be promoted, operated or conducted in any municipality after the adoption of the provisions of sections 7-170 to 7-186, inclusive, unless it is sponsored and conducted exclusively by (1) an officially recognized organization or association of veterans of any war in which the United States has been engaged, (2) a church or religious organization, (3) a civic or service club, (4) a fraternal or fraternal benefit society, (5) an educational or charitable organization, (6) an officially recognized volunteer fire company, (7) a political party or town committee thereof or (8) a municipality acting through a committee designated to conduct a celebration of the municipality’s founding on its hundredth anniversary or any multiple thereof. Any such sponsoring organization, except a committee designated pursuant to subdivision (8) of this section, shall have been organized in good faith and actively functioning as a nonprofit organization within the municipality that is to issue the permit for a period of not less than six months prior to its application for a permit under the provisions of said sections.
Conn. Gen. Stat. §7-172 (emphasis added).

You report that the Watertown Scholarship Committee does not possess a letter from the Internal Revenue Service certifying it as a nonprofit charitable organization exempt from federal taxation.1 26 U.S.C. §501(c)(3). However, as you note, an exemption letter is not required by statute for a raffle permit. The only issue, pertinent to this opinion, is whether the Committee is an educational or charitable organization, as required by Conn. Gen. Stat. §7-172.

The Watertown Scholarship Committee, according to your background material, is organized to take advantage of Public Act No. 00-222, which allows persons paying motor vehicle property tax bills to donate an extra amount to a municipal scholarship fund to provide financial assistance for post-secondary education for residents of the municipality. The Public Act provides as follows:

An Act Concerning The Property Tax On Motor Vehicles And Local Scholarship Funds.
Be it enacted by the Senate and House of Representatives in General Assembly convened:

(NEW)(a) A municipality, by ordinance adopted by its legislative body, may establish a local scholarship fund to provide financial assistance for postsecondary education for residents of the municipality.

(b) Any municipality which establishes a local scholarship fund pursuant to subsection (a) of this section shall establish a scholarship committee or designate an existing committee in the municipality to select, annually, the scholarship recipients.

(c) A municipality may redesign and designate a place on its municipal motor vehicle property tax bill for taxpayers to check off amounts to donate to the local scholarship fund. The redesign of such tax bill shall be done so as to allow a taxpayer to voluntarily check off and donate an amount of at least one dollar. The donated amount shall not reduce the tax liability but shall be in addition to the amount otherwise due and payable. The redesign of the motor vehicle property tax bill shall be approved by the Office of Policy and Management prior to its use. The municipality may include an insert with its motor vehicle property tax bills which explains the scholarship fund and the check-off provision to the taxpayer. The town treasurer shall deposit all moneys collected as a result of the check-off in the fund and the treasurer may accept donations from other sources for purposes of the fund.

Approved June 1, 2000. Effective October 1, 2000

2000 Conn. Pub. Acts No. 00-222

The term "charitable organization" is not defined in the raffle statutes. In the absence of a statutory definition, we employ the commonly approved usage of the language. Conn. Gen. Stat. §1-1(a); Caldor, Inc. v. Heffernan, 183 Conn. 566, 570, 440 A.2d 767 (1981). The term "charitable" means "of or concerned with a charity". American Heritage Dictionary of the English Language (2000). The term "charity" means "1. Provision of help or relief to the poor; almsgiving. 2. Something given to help the needy; alms. 3. An institution, organization, or fund established to help the needy. 4. Benevolence or generosity toward others or toward humanity." American Heritage Dictionary, supra. The scholarship committees, envisioned by the Public Act referenced above, are clearly functioning as organizations performing charitable purposes within the scope of the commonly understood definition of the term. It does this by providing financial assistance to others for advanced education.

Moreover, the caselaw makes it clear that this kind of educational scholarship committee is commonly accepted as a charitable organization. Charity means "... a gift, to be applied consistently with existing laws, for the benefit of an indefinite number of persons, either by bringing their minds or hearts under the influence of education or religion ... or otherwise lessening burdens of government." Bannon v. Wise, 41 Conn. Supp. 469, 586 A.2d 639 (1990), aff’d, 217 Conn. 457, 475, 586 A.2d 596 (1991) (citations and quotations omitted). "All gifts for the promotion of education are charitable in the legal sense." Russell v. Allen, 107 U.S. 163, 172, 25 S.Ct. 327, 27 L.Ed. 397 (1882). A trust for the advancement of education is charitable. Lockwood v. Killian, 172 Conn. 496, 500, 375 A.2d 998 (1977). Thus, it has been nearly universally held that the establishment of a fund to make gifts and loans to students is unquestionably a charitable undertaking. See, e.g., In re Yule’s Estate, 57 Cal. App. 2d 652, 654, 135 P.2d 386 (1943); In re Butler’s Estate, 137 N.J. Eq. 48, 49, 42 A.2d 857 (1945); Quinn v. People’s Trust & Savings Co., 223 Ind. 317, 325, 60 N.E. 2d 281 (1945); Sessions v. Skelton, 163 Ohio St. 409, 419, 127 N.E. 2d 378 (1955); Commonwealth Trust Co. of Pittsburg v. Granger, 57 F.Supp. 502, 504 (D.C. Pa. 1944); In re Morgan’s Will, 200 Misc. 645, 646 107 N.Y.S. 2d 180, 181 (1951); Daughters of Am. Revolution of Kansas v. Washburn College, 160 Kan. 583, 590, 164 P.2d 128 (1945); Pattillo v. Glenn, 150 Fla. 73, 84, 7 So. 2d 328 (1942).

To qualify as a charitable organization, the entity must be organized exclusively for charitable purposes. Waterbury First Church Housing, Inc. v. Brown, 170 Conn. 556, 561, 367 A.2d 1386 (1976). Also, it must adopt a manner and means of function which is charitable in nature, such as by obtaining money for its operations by private donations. Id. at 564.

The Scholarship Committee in issue satisfies both tests. Your background material shows that it exists for the purpose of helping to collect funds and award scholarships to town residents for post-secondary education. This is clearly a charitable purpose. Also, its means of obtaining funds are charitable in nature. It collects private donations, either through the motor vehicle property tax bills or through other contributions to the fund and runs fund raisers to collect money from the public to benefit the fund.

For all the foregoing reasons, we believe that the Watertown Scholarship Committee is a charitable organization eligible for a raffle permit under Conn. Gen. Stat. §7-172(5).

Very truly yours,

RICHARD BLUMENTHAL

ATTORNEY GENERAL

Robert F. Vacchelli

Assistant Attorney General

RB/RFV/bjo

1A check with the Department of Consumer Protection/Attorney General’s Office Charities Unit also indicates that this Committee has not registered with the State under the Solicitation of Charitable Funds Act, which regulates charitable organizations, defined by that statute as "any person who is or holds himself out to be established for any benevolent, educational, philanthropic, humane, scientific, patriotic, social welfare or advocacy, public health, environmental conservation, civic or eleemosynary purpose, or for the benefit of law enforcement officers, firefighters or other persons who protect the public safety." Conn. Gen. Stat. § 21a-190a (1). Governmental units soliciting charitable donations need not register, provided that they file an exemption form available from the Department of Consumer Protection Website. Conn. Gen. Stat. Sec. 21a-190d. See, www.dcp.state.ct.us/licensing/all.htm#charities.