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Nonprofit Law/Can we raise money for a contest?

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Question
I work with a 501c3 organization. We are interested in having a film contest to raise awareness about our cause.

If we fundraise $5000 from sponsors, then award that as a cash prize to someone (an individual) is that legal? Are the donations tax deductible to the donors?

Answer
I would need to know how the film contest would raise awareness about your cause.  Is the content of the films going to be something that would further one of your purposes?  If not, are you determining that the publicity your organization receives from having the contest would attract attention to your cause?

Are the sponsors going to be giving funds to sponsor a particular individual entering the contest? After you give me the above information I will reply further.  I am assuming that the decision on who will win the contest will be based upon the content of the particular film and not on chance (like a draw).

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic

Expertise

I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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