The Dollars and Cents of a Fundraising Auction
Any charity planning a fundraising auction has to consider the costs associated with their event. Costs associated with the venue, food/entertainment, and the items for sale are all important to developing a great night for your guests, but all these costs can leave a non-profit with a sense of worry.
Is your event going to cover the costs and more so that your organization has the money to pursue it’s mission in the coming year? In this article, we cover a few more granular questions that charitable organizations may have about the dollars and cents of their charity auction to help ensure you reach and exceed your fundraising goals.
What kinds of items sell best at auctions?
Bestselling auction items can be summed up in one word: desirable. Whatever you're offering needs to be appealing to your audience for them to spend money on it. This really is the key factor.
Typical categories for auction items include:
Local Travel
Fine Dining and Wine
Home and Decor
Art, Cultural and Entertainment Outings
Sporting Events and Related Memorabilia
Jewelry and Fashion
Family and children focused items and experiences.
Your professional benefit consultant will be able to give you specific guidance as to what will exactly work for your audience.
More desirable auction items/categories can be read about on QGiv.com, and CentralMassAuctions.com
How do you price auction items?
The answer to this depends on your auction format. Pricing of silent auction items for your charity event typically should be priced between 30 and 50% of fair market value as a starting point for competitive bidding on the item.
Your pricing for your live auction items should be determined by an experienced professional benefit auctioneer as this will vary greatly from event to event and will depend upon the unique needs of your organization.
What is fair market value?
Fair market value stands for what any given item is actually worth at that exact moment in time. In other words, if you were to ask a group of people, what they would pay for the item and then average out their answer, then that number would be considered the fair market value to them.
An auction is always a great indicator of fair market value. If the item has been well advertised and sold the price typically realizes fair market value, what it was worth to the buyers at that exact moment in time.
In planning for your live or silent fundraising auction, you should be cautious in using donor value, which is the value that your donor tells you an item is worth. There can be many instances where the value has been inflated. And as a result, will create a challenge for you in setting appropriate opening or minimum bids.
Do buyers pay a commission at an auction?
Over the years, it's become a common practice in many segments of the auction industry, like real estate and automobiles for the buyer to pay commission, to buy at an auction. This is normally referred to as a buyer's premium. This became popular for sellers to help defray the cost of conducting the auction.
Typically this practice is not used in most charity fundraising auctions. When a guest buys at a charity auction, there is usually no additional commission that is owed.
How much do auctioneers charge?
At this point, you have probably realized the importance of experience in ensuring you accurately set prices and successfully run your charity auction. This may feel like an additional cost, but a highly experienced charity auctioneer should never be looked at as a line item cost for your event, but instead an investment that should reap a huge immediate return for your charity.
Fees will vary from company to company based on the experience, services received, and the proven past results. Always keep in mind that a low cost alternative is often not the best alternative because you'll usually get exactly what you pay for.