I think that a lottery requires money from the seekers while raffle doesn't. Right?
The fundamental difference in between a raffle and a lottery is that a raffle always has a winner (i.e. all the purchased tickets are entered into a raffle draw) while a lottery may return a non-winning result (i.e. a combination of number that nobody has selected for their entry).
Let's do a fundraiser! We'll get some volunteers to put in many, many hours making a beautiful quilt, with a theme connected to our organization, and then we'll raffle it off!
This means that if you hold the winning ticket, you win the quilt.
It doesn't have to be a quilt, of course. It could be a gift certificate to a restaurant. It could be a toaster oven, a bottle of wine, or half the money collected through sales of raffle tickets.
In the last case, it is common for the holder of the winning ticket to make the magnanimous gesture and donate the whole of the winnings to the cause.
I (native British English speaker) would tend to characterise a lottery as having monetary prizes, and a raffle as having non-monetary prizes.
Collins in its "English" section (you need to click on the relevant tab) tends to agree with me:
a method of raising money by selling numbered tickets and giving a proportion of the money raised to holders of numbers drawn at random
a similar method of raising money in which players select a small group of numbers out of a larger group printed on a ticket. If a player's selection matches some or all of the numbers drawn at random the player wins a proportion of the prize fund
- a lottery in which the prizes are goods rather than money
However, in its "American" section (again, you need to click on the relevant tab) there is no such distinction:
- a game of chance in which people buy numbered tickets, and prizes are given to those whose numbers are drawn by lot: sometimes sponsored by a state or organization as a means of raising funds
- a lottery in which each participant buys a chance or chances to win a prize a lottery in which each participant buys a chance or chances to win a prize