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Online Auctions Can Be Strong Revenue Source
Dec 5, 2012
Rachael Ray has it so easy. When raising money for her foundation Yum-O, the celebrity chef was able to turn to friends like former “All My Children” doyenne Susan Lucci for online auction items. Recent bidders for Ms. Lucci’s vintage red leather Chanel bag ran the price up to nearly $4,000.
But, have no fear – online auctions have turned into revenue streams for agencies large and small, locally based and national in scope.
Public schools, clinics and small arts organizations have all significantly profited by going this route. One of the largest online auction companies, BiddingForGood, reports having helped nonprofits raise more than $164 million since its 2003 founding.
Planning and Strategy
Going the online auction route is less demanding than pulling off an on-site auction because scheduling and party-planning are not an issue. They do, however, require careful planning and staff time.
Before you can post the items up for bid, you must write descriptions, take photos and be prepared to upload information. While it is possible to run an in-house “manual” auction directly off your website, especially if you have only a few items, most organizations now opt for online platforms. These platforms have the necessary technical expertise and often have international footprints.
Results of online auctions are highly measurable, offer information on what item categories received bids, and provide a map for how best to run your next auction.
Before you select your online auctioneer, you need to consider your overall approach.
- How big will your auction be?
- Will it be a one-time event held over a predetermined period of time (one to three weeks appears optimum), or will it be something you do on an ongoing weekly or monthly basis?
- Will it have a theme? A sports-related organization, for example, might seek auction items such as sports equipment, tickets to sporting events, or private lessons.
- How will you measure financial success or the impact of the auction on the public’s vision of your agency?
The Real Challenge
Then, there is the major challenge: acquiring items or services. The more you gather, the more you make. Some of your usual supporters may have desirable items to donate. Those without valuable items to chip in can contribute by reaching out to local businesses for gifts of products or services.
Also invaluable are “experience” items, such as lunch with an author or a tour of a local television station. Keep in mind when soliciting items that unlike what occurs at on-site auctions, where men are typically the biggest buyers, about 70 percent of online bidders are women. So solicit accordingly. Auction items may also come from some of the online auction companies themselves. They offer below price travel or entertainment packages that you can auction off, and you don’t have to pay the companies unless the packages sell.
While many of the online auctioneers have a significant ongoing base of followers, it still helps to reach out to your base and let them know when the auction will occur. Urge them to bid early and often and to alert their friends.
Use every social media tool you have to reach as many people as possible. Ask supporters to make use of announcements on Facebook or in the newsletters of other organizations they support. If you have a theme, music for example, place ads in arts sections of local publications, especially the free ones.
Auctions are e-commerce. Have a method for responding to potential bidder inquiries or to help them troubleshoot. Remember you will be responsible for mailing or delivering the sold items, and shipping costs money. Most of the Web companies feature customer ratings, so make sure yours are on the high side.
Online Auction Sites
Once you are registered, at little or no expense, MissionFish displays your logo, mission and a link to your website. MissionFish offers an organizational page, and your constituents can be sent links to that page.
It’s wonderful that eBay automatically draws thousands of bidders, but most won’t have ties to your organization, so your auction may not enlarge your target community. MissionFish’s standard listing expenses and commissions are lower than BiddingforGood’s.
Unlike eBay, most bidders on BiddingforGood will be your supporters, so you must be far more aggressive about getting the word out. Many nonprofits have found BiddingforGood to have an easier interface when they want to add items.
BiddingforGood also allows for a more customized home page that better allows you to profile your organization and describe auction items. On the negative side, this site is expensive: nearly $600 per year plus up to 9 percent of your revenue.
“We chose Gelman, Rosenberg & Freedman from a pool of applicants because they impressed us with their knowledge and awareness of issues facing our organization.”
Darla Mecham | Vice President-Finance
International Center for Not-for-Profit Law