Offering alcohol at fundraising events and other sponsored social events can be a good way to enhance a relaxed atmosphere and encourage giving. Before deciding to serve alcohol at an event, a California nonprofit needs to take several things into account.
Be mindful of permitting requirements.
State and local rules regulate alcohol in a number of ways. Complying with alcohol laws is essential to avoiding fines and creating other problems. At a minimum, an organization that will sell alcohol at its event will need to comply with California’s licensing requirements. The California Department of Alcohol Beverage Control Form ABC-221 grants applicants a one-day permit to sell alcohol at a specific location.
The place where the event is held may have further licensing requirements and could limit when and where alcohol can be served (even for free). Local laws often prohibit alcohol consumption on public property. If the event will be held at a city park, check with the city before serving.
Be properly insured.
The organization’s insurance policy needs to cover special events where alcohol will be served. Although under California’s dram shop laws most situations where alcohol is responsibly and lawfully served do not impose liability on the host, alcohol still adds significant potential liability to an event. At a minimum, special event coverage should be sought from the organization’s general liability carrier, with specific provision for the fact that alcohol will be served.
Be strict about underage drinking.
Underage drinking at an organization’s event can damage the organization’s reputation and expose it to significant liability. Under California law, knowingly serving alcohol to minors can make an organization liable for any injuries the minor causes while under the influence. Cal. Civ. Code §1714(d).
Selling alcohol raises a number of complex questions.
Unlike giving alcohol away at an event, selling alcohol dramatically raises the stakes for an organization. Selling alcohol must be consistent with the organization’s state and federal tax designation. For example, a nonprofit that sells too much wine could be deemed to be a wine-buying club instead of a charity. The organization may also need to comply with sales tax rules.
Be cautious about how alcohol is paid for. Indirect sales are probably still sales. For example, the organization should not try to skirt around state and local rules by charging an admission fee to recoup the cost of “free” alcohol.
Talk to an attorney to review your compliance plan
Before hosting special events with alcohol it can be useful to speak to an attorney to verify that the event will be consistent with the organization’s governance rules, applicable laws, and tax guidelines. The Church Law Center of California specializes in helping religious and secular nonprofits resolve their compliance questions. Call us today at (949) 689-0437 or reach out to us through our contact page.