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To Auction or Not to Auction: These Are the Considerations

July 4, 2022
8 minutes

Here at Funraise, we get a lot of questions about auctions, raffles, and the like. And it makes sense: charity auctions are a huge investment of resources. Time, money, energy, quaint vacation rentals—you’ll need them all if you want a successful auction experience.

If you’re on the auction fence, we can help you decide if an auction is the right fundraising path for you—and if you should invest those hard-earned dollars into auction-specific tools.

Start with charity auction basics

Since you’re considering a charity auction, you’d probably like to start at the beginning. We’ve got you covered with some auction talking points that keep us up at night.

  • Whether you’re running a one-person show (we see you, nonprofit start-ups!) or employing thousands of folks around the world (any mega-churches here?), an auction can be a great way to raise money and build community.
  • There are several types of auctions. They can be in-person or virtual, and they can be live or silent.
  • Auctions are flexible. You can auction off 10 items or 200 (but also that’s way too many unless you just foraged for 200 truffles in Italy and need to sell ‘em off stat). Plus, you can combine formats—say, an online auction with a live-streamed bidding component—to meet your unique organizational needs.
  • To procure items for your auction, start with your donor base. From there, check out local businesses and spread that net!
  • Just like regular donations, auction item donations and bids are tax-deductible—but the IRS says that bidders can only deduct the amount once it exceeds an item’s fair market value.
  • If you’re hosting an online auction, you’ll need a dedicated website and you’ll want to consider auction software. And while we love a good paddle raise at a live auction, mobile bidding tools can also be helpful.
  • Some key ingredients for a successful auction: lots of promotion (get thee some sponsors!), an awesome array of auction items (say that three times fast), careful budgeting, and some really solid communication skills.

Benefits of a nonprofit auction

Now that we’ve covered the basics, it’s time to see if an auction is right for your organization. So, what are the benefits of hosting an auction? Let us count the ways…

Raise money quickly.

Unlike campaigns that take place over several weeks or recurring gifts that trickle in once a month, auctions make dough fast. Once bidding wraps up, you can raise a lot of money in one fell swoop.

Build community.

Want to get your donor community riled up for a good cause? With a great host and a great assortment of items, a live auction can attract a super-pumped crowd that gets to mix and mingle with each other and staff members.

Communicate your mission.

By getting many of your donors (and potential donors) in one place at the same time, whether it’s online on in-person, you have a rare platform to share your mission and vision with your whole community at once.

Online auctions are cost-effective.

With no rental and catering fees, an online auction can be done on the cheap—though it still requires a commitment of time.

Attract new donors.

An auction is a great way to encourage new donors to get involved with your organization. And if you take your auction online, you can attract an even wider audience.

Have fun!

Ultimately, auctions can be a lot of fun. Who doesn’t love winning prizes for a good cause? It’s a thrill.

Drawbacks of a nonprofit auction

An auction is probably sounding pretty darn great by now, isn’t it? But there are drawbacks, too, and it’s important to consider them. Here’s the fuzzy end of the auction lollipop. (gross.)

It can be pricey.

An auctioneer, rental space, emcee, catering, decorations, specialized software—an auction can really add up. Before you sink a lot of money into it, make sure it’s going to (literally) pay off.

It takes time.

Even a simple online auction takes a lot of time to plan, from choosing a format to soliciting and distributing items to sending thank-you notes.

Engagement can be a struggle.

Especially with live online auctions, you’ll have your work cut out for you keeping everyone engaged and motivated to bid.

Things can go wrong.

As with any big event, things can go wrong—much more so than, say, when you’re sending your annual end-of-year donation requests. Make sure you have contingency plans for tech issues, staff shortages, inclement weather, and more.

Charity auction legality and compliance

When it comes to auctions, there’s one more area you need to consider, and that’s staying within the bounds of the law. Here are a few things to keep in mind if you want to protect yourself—and a few resources to check out if you want to learn more.

  • You need a license to sell alcohol.
  • Prior to soliciting auction items, consider writing up a donation acceptance policy detailing what you can and can’t accept. This way, you won’t feel obligated to auction off the three pygmy goats your neighbor wants to donate. (But we’d totally take them if you don’t want them. Just saying.)
  • Make sure you have the necessary insurance policies in place.
  • Donors who win items can claim a charitable contribution deduction—but only for amounts greater than the item’s fair market value. Donors who donate items get a donation receipt for anything worth more than $250.
  • Legalized games of chance are regulated activities, so know what’s allowed and not allowed in your state before you plan a roulette night.

And here are some helpful links from the IRS for figuring out exactly what’s kosher:

Questions to shape your auction

Ready to auction it up? Excellent! You’ll need to ask yourself a few questions before you can really get down to planning—and then lots more after that.

  • Should our auction be virtual or in-person?
  • Do we want a live auction or a silent auction?
  • Should the auction be a standalone event or part of a larger event, like an in-person gala or online campaign?
  • If it’s an online auction, what should the timeframe be?
  • Should we include a raffle?
  • Should we include a direct appeal?

Tips for pulling off an awesome auction

So, you’re doing an auction and you know what it'll entail. We’re with you! One last to-do so you can hit the ground running: Check out these tips and tricks for ensuring a successful auction experience.

Start early.

An auction shouldn’t be rushed—after all, great auctioneers book out early, donor calendars book up months in advance, and soliciting great items takes time.

Combine items into unique packages.

People want to bid on things they can’t just walk into a store and buy, so combine items to get a bigger bang for your buck. A bottle of champagne, gift card for a mani-pedi, and bathrobe aren’t so exciting on their own. Combine them (and why not throw in a chocolate bar or two?) for a spa day auction item.

Craft experiences you can’t buy.

A private tasting from a local chef, a garden party at a board member’s super snazzy summer home—think about what people can’t get in stores.

Invest in a great auctioneer.

If you’re doing a live auction, a great auctioneer will more than pay for themselves. Interview a few to be sure you’re getting one who really connects with your cause and will put in the work to help you organize the auction to get the biggest payoff.

Advertise your items.

Once you have some awesome items, let people know! If someone sees that they can bid on a week at their dream beach house, you’d better believe they’ll RSVP “yes.”

Accessibility is key.

Whether your event is online or in-person, it should welcoming and inclusive for anyone and everyone.

Turn to your volunteers.

Feeling stressed already? That’s where your amazing volunteers come in! An auction is a perfect time to ask for their services, from addressing envelopes to gift-wrapping packages.

Charity auctions: FAQs

Can a small nonprofit hold a charity auction?

Absolutely! One of the great things about auctions is that they’re flexible, so you can make them as intimate or as grandiose as you want. If you’re planning an auction solo or with a very small team, we suggest keeping it simple and bringing in lots of volunteers to help out.

How does a virtual auction work?

A lot like an in-person auction, but everything takes place online. Once you have a dedicated site set up, you can handle everything from registration to donation receipts with your handy nonprofit CRM. You can look into specialized auction software and mobile bidding tools, or you can livestream the whole shebang.

What staff do you need for an auction?

In an ideal world, you’d have an event lead, volunteer coordinator, marketing lead, tech lead, day-of coordinator, host/emcee, and volunteers galore. In many a nonprofit reality, most of those roles might be filled by volunteers—and that’s okay!

How do you procure items for the auction?

Lots of hard work! And you’ll need help, so this is where you really rely on those volunteers. Assemble a procurement team, write up a wishlist of items, and then start asking. Reach out to donors first, then local businesses. Have board members and volunteers reach out to their network. Then, it’s all about determination (i.e., lots of letters and phone calls).

What do you do after the auction?

Thank everyone who came, whether they donated or not. Let them know how they can stay involved with your cause. Do a debrief so you know what worked and didn’t next time around. Review all that juicy data to identify trends and opportunities as well as potential donor opportunities. Take a breather before you start something new.

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