Often in our practice, we are asked if charities fundraising in Washington need to obtain a liquor license before serving alcohol at an event. The answer “ as it usually is in law “ is: it depends.
Liquor License in Fundraising Events
In general, where a charity is holding a public fundraising event, a liquor license is required to sell or serve alcohol. However, no liquor license is required if the event is private “i.e. is open only to a predetermined guest list to be held at a private location.
Usually, alcohol served at private events is provided to guests free of charge. In the case of a public event, the proceeds of alcohol sales must go directly to the nonprofit and cannot inure to the benefit of any officers, directors, or members.
To further complicate the question, charities can obtain banquet permits, which allow non-liquor licensed caterers to pour alcohol at private events held in public places provided that the alcohol is purchased by and returned to the host at the end of the event. Alcohol served under a banquet permit must be provided to guests free of charge or brought by individuals attending the event.
Additionally, donations of alcohol from distributors, manufacturers, or retailers cannot be accepted. Rather, the liquor must be purchased from a retail store at full retail price.
Special Occasion License
If your organization wishes to sell or serve alcohol to raise funds at a public event, a Special Occasion license must be obtained. The alcohol served or sold must be purchased from a Washington State licensed distributor, manufacturer, or retailer and may not be sold below cost.
For instance, if the charity plans to operate a wine toss where participants have the chance to win one of a number of different bottles of wine, each ticket sold must be at least as much as the most expensive bottle of wine participants may win.
However, raffles of alcohol can be done only with the charity’s members, which is defined as a person who is approved for membership after having submitted a written application and been investigated and approved by ballot. Additionally, because a wine toss is considered gambling in Washington State, your organization may also be required to obtain a gaming license.
Additionally, alcohol may be donated by a winery, brewery, or distillery if the donee’s Favorable Determination Letter has been received by the Liquor Control Board.
However, any donated alcohol must be sold at wholesale cost. Thus, if the wholesale cost of a bottle of wine is $25 and there are 5 glasses per bottle, each glass must be sold for at least $5.
Organizations that have obtained a Special Occasion license may sell spirits, beer, and wine by the individual serving or sell bottles of wine for on-premises consumption. Sales can be made either by cash bar or ticket sales prior to the event provided that the ticket sale includes the exact amount of drinks the guest receives and the cost is covered in the ticket price.
If the organization wishes to sell beer, wine, or spirits for off-premises consumption such sales must be approved by the organization’s board and the alcohol must be in manufacturer sealed bottles.
Further, Washington State only allows one liquor license per location. Thus if your event is to be held at a liquor-licensed location, the licensee may not sell or serve their liquor in the same room to event guests. Additionally, if your event is held at a venue and alcohol service is provided by the venue, alcohol service must be suspended during any live sales of alcohol by the organization (i.e. a live auction).
Similarly, if your event is catered by a liquor-licensed caterer at a non-liquor licensed location, the event is under the catering license and a Special Occasion license is not allowed. Where a liquor-licensed caterer is providing alcohol service, profits from the sale of alcohol accrue to the caterer rather than the charity.
Fundraising events such as galas, auctions, dinners, and wine tastings are a fantastic way for charities to engage the community and solicit donations. From private events where board members pop open a bottle of their finest wine to share with friends of the organization to large gatherings in public venues, charities need to be aware of the laws and licensing requirements surrounding such events and plan accordingly.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. Ellis advises nonprofit and socially responsible businesses on corporate, tax, and fundraising regulations. Ellis is licensed to practice in Washington and Arizona and advises nonprofits on federal tax and fundraising regulations nationwide. Ellis also advises donors with regard to major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.