SATURDAY, JUNE 11, WAS A DAY of great fanfare at Oak Creek Elementary School in Irvine, Calif. For amid the food, family games, and entertainment, nearly 4,500 people gathered, tickets in hand—hoping they'd win the Irvine Public School Foundation's (IPSF) “$Half-Million Dollar$” House Raffle.
Ticket buyers started showing up at noon, basking in a picturesque California day—despite the fact that the event didn't start until 3 p.m. And while it was Dawn Smith of Irvine who eventually walked away with a new 1,205-square-foot William Lyon townhome worth $470,000, the IPSF and raffle sponsors claim to be the real winners after the event.
“The raffle grossed about $2.4 million from the sale of nearly 12,000 tickets at $200 each,” said Tim Shaw, CEO of the IPSF. “We hope to net over $1.7 million, after expenses.” And with that kind of community support, their sponsors are sure to benefit as well.
“We got a lot of legs out of this [program] on a lot of fronts,” says Brian Doyle, director of sales and marketing for William Lyon Homes, of his company's partnership with the IPSF. “John Laing Homes had a great experience with [IPSF] last year,” says Doyle, “but they didn't have product that would fit in this year's parameters, so they recommended us.”
DONATIONS WELCOME Under the IPSF program, builders aren't expected to donate a home, but instead are encouraged to get the price as low as possible. “We know they can't just give homes away, particularly in a place like Irvine where they have so few to work with,” says Shaw. “We hope builders can support the program by offering a house to us at their cost—minus whatever ‘donation' they can make.” For William Lyon Homes, that donation was a $25,000 discount on the price of the home.
After designating a home that was already under construction to the event, William Lyon was asked to help promote the raffle at its model homes and through its customer database via e-mail. “Our e-mail response rate and click-through rate really jumped when we tagged this on as a promotion,” says Doyle. “We found that we could engage 5 [percent] to 10 percent more people as a result.”
To drive ticket sales, the IPSF launched a statewide promotion campaign touting more than 150 prizes including the grand prize William Lyon two-bedroom, two-bath courtyard townhome located in the The Irvine Co.'s new village of Woodbury—along with generous cash prizes, first-class tickets to Hawaii, a 42-inch plasma TV, and more. “We got a huge marketing splash from that,” says Doyle, estimating a value easily in the six-figure range.
Although the raffle's proceeds will support educational programs in Irvine schools, according to Shaw, 68 percent of the sales were purchased outside of Irvine—by residents of 400 cities throughout the state. “Most people aren't buying tickets because they have an affinity for the schools,” he says. “They're doing it to gamble, and by limiting ticket sales we are giving them great odds to win something.”
CALIFORNIA GIVING Across California, house raffles have become a popular way to raise money, largely due to the incredible success of the IPSF program. But Shaw, who gets frequent calls from other organizations seeking guidance, cautions builders to take a hard look before they leap into a house raffle agreement. The state imposes restrictions on charitable raffles that create a staff-intensive environment (see “Labor Organization,” right). “If it's not managed to a ‘T', it's easy to see how an organization could lose tickets, violate state laws, or even misappropriate funds,” says Shaw. “It sounds like a great thing to do, but if an organization tries this and fails, they blow it for everyone,” says Shaw.
Governed by the state's “90/10” rule, only 10 percent of the proceeds from a charitable raffle can be used for costs associated with the raffle, including staffing, marketing, prizes, postage, and printing. “You can see the problem if one of your prizes is a half-million-dollar home that you are not getting for free,” say Shaw.
Learn more about markets featured in this article: Los Angeles, CA.