In a perfect world, auction committees would have no problem getting unique and exciting charity auction items donated for their fundraising events. Anyone who has served on a charity auction committee knows this is rarely the case.
Securing a variety of exciting items purely by donation is much easier said than done. Making a ton of calls, sending out hundreds of emails and pulling favors may produce a handful of adequate items, but all too often the resulting selection of auction items is missing those jaw-dropping items that really get crowds excited about bidding during an event.
This is why consignment is a secret weapon for the charity auction committee. The process is simple: reserve a unique item or incredible experience at no cost upfront and then offer it to your audience in the live or silent auction. If it sells above the package cost – great! You’ve raised money and delighted your donors in the process. If the item doesn’t sell above the package cost, no problem! Your organization pays nothing, making it an entirely risk-free proposition.
Pretty simple, right? Well, not everyone agrees. Our Event Consultants speak to thousands of Nonprofits about their events each year and they sometimes hear comments like: “No consignment… Sorry, we only use 100% donated items… We’re pretty sure we can get something like that donated.”
Some organizations are not comfortable with consignment items because they are worried that not all the money donors pay is going to the cause. Others feel like they are losing money when they have to pay for auction items they could otherwise potentially get donated.
It’s these misconceptions about consignment items that may be costing Nonprofits thousands of dollars in lost revenue.
Here are four reasons why it makes sense to invest in better auction items:
1. Takes Money to Make Money
Anyone who has been in charge of planning a fundraiser auction items event understands there are costs associated with raising money, and when planned strategically those investments can really pay off. An event's logistics alone add up, and most development teams realize that investment is necessary to attract interest, sell tickets and create an enjoyable atmosphere for attendees that will encourage donations. Advertising, catering, entertainment, venue rental, etc. – all of these costs are incurred in hopes of producing dividends in the form of bids and donations. Investing in valuable big-ticket auction items serves the same purpose.
2. Atmosphere of Big Spending
Hosting an event with quality auction items creates an atmosphere of spending that will translate into bigger bids on other items. Just like an amazing venue and an entertaining emcee will hopefully drive more bids during the live auction – so will the excitement of bidding on an incredible travel experience. It's not your basic gift certificate or dinner at a local restaurant, it's something that will really get people pumped up. When people are excited and have high-end items to bid on, the bids will be higher and happen more often.
3. Earning Potential
Instead of focusing on the cost of an auction item, it's important to consider how much money an item has the potential to generate. Travel packages, in particular, have much higher revenue potential than most other items sitting on the auction table – regardless of whether or not those items were donated. This is especially true for consignment travel packages that can be sold multiple times. If an experiential travel package has a Nonprofit Cost of $2,500 and gets sold to the top two bidders for $3,750, the Nonprofit keeps a total of $2,500 ([$3,750 - $2,500] x 2 = $2,500). That’s big money compared to a donated $500 gift certificate that might garner $450 in bids.
4. Opportunity Cost
Some organizations choose not to use consignment travel packages because they think donors will spend that money during the event, perhapse on auction items that were donated. If the same $2,500 travel package wasn’t offered, would each of those donors have spent their $3,750 on something else that was donated? Not unless there was an item of equal or greater value – and even then there is no guarantee they would have won the bidding and the item. This is otherwise known as the opportunity cost, or the loss of potential gain from choosing other alternatives. Ignoring this opportunity can boil down to thousands of dollars being left in the pockets of attendees who may have otherwise spent generously on big-ticket items.
Some Development Directors and auction committees may voice concerns that consignment items mislead bidders who assume that 100% of their bid is revenue for the Nonprofit. At the end of the day, what's most important is raising significant funds for your organization - and most patrons understand that there are costs associated with fundraising. Audiences simply want to bid on something exciting knowing whatever proceeds are generated go towards a cause they care about.
For organizations still concerned about "hiding" the cost of an auction item, there is an easy solution: Inform your audience!
“If I have an item with [Nonprofit cost],” says professional Benefit Auctioneer Doug Sorrell, “I tell the attendees that this is the case. I tell them, ‘In a perfect world every item I offer would be totally donated. With all the competition now, that is no longer the case. This is an item that has a modest cost to the committee if I am able to sell it. So let's see who would like to buy this fabulous experience and when you are done I will ask if I can sell it to you.’ No one ever objects. They have been informed. They realize this is a fundraiser and the committee can't lose money. This builds a level of trust between attendees and myself right from the start.”
Money spent on big-ticket benefit auction items such as unique experiential travel packages should be viewed as an investment. The potential ROI for such high-value items is much larger than donated auction items, which often times carry less value. Capture your audience's attention, get them excited about making bigger bids and ultimately make a bigger difference in your mission.