Thank you for calling me last week to discuss the use of consignment travel packages in our upcoming live and silent auctions. As much as I enjoyed chatting with you, I wanted to further explain why I passed on your services.
If I remember correctly, the whole process works like this: Nonprofits can reserve an item on consignment to include in their upcoming auction with no upfront cost. If it sells, they purchase the item using a portion of the proceeds, and the remaining difference is their profit. If the item doesn’t sell, they aren't obligated to purchase anything, hence the term "no-risk travel".
This sounds great and all, but in my experience, if something seems too good to be true, it probably is. Here are six reasons I'm probably not going to use your services:
1. Consignment is for suckers.
Winspire, in case you haven't heard, ‘consignment’ is kind of a dirty word for nonprofits.
I don't know your company, but I know consignment auction items. The providers always tout their no-risk, no obligation, all reward benefits, but for years I've heard more cautionary tales than success stories. Another nonprofit in the area told me they used consignment in their auction last year, only to be taken advantage of with cut-rate vacations, poor service and exorbitant markups.
My nonprofit operates based on transparency with our donors, board and staff, and I'm just not comfortable dealing with a consignment provider that doesn't do the same.
For more information about how we operate and what we believe, click here.
2. I could assemble a cheaper, better package.
Now let's get to the real reason most nonprofits don't use consignment: It's just not a good deal!
With all due respect, there is no reason to go to a consignment company to create a vacation package that I could just as easily create on my own. If I take any one of your consignment travel packages and break down the individual components, I'm sure I can price out your travel packages with a quick search on Expedia or Kayak.
It just bugs me that many of the companies out there who create these “travel deals for a cause” aren’t actually giving us a deal at all. Oftentimes these packages are marketed as being unique or discounted, when in fact they are average experiences anyone could get.
Plus, as a development staffer, I communicate with our most important donors to ensure they come back to donate year after year. My development team knows our audience better than anyone, and that expertise means we can create exciting auction travel packages tailor-made for our bidders.
As a full service travel agency, Winspire’s trips can be booked whenever the bidder wants to travel (based on availability), with minimal blackout dates that are clearly noted. We also handle the trip booking, saving you time and money later. And we love that know your donors well! It can be hard to guess which of our over 200 widely varying Experiences is best suited for your audience, but knowing their interests and "bucket list" items is a big advantage and gives your Fundraising Specialist a lot more information to work with.
3. Our donors can't afford these trips.
Not only is consignment too expensive for us, but our donors aren't going to pay for these luxury trips.
I mean, why are these packages so expensive? You would think that a company in the business of helping nonprofits would get better prices.
Granted, there are some exceptional packages and experiences we could never get on our own—I do love the idea of offering sold-out tickets to the Broadway show Hamilton, an Elton John concert or a trip to the Kentucky Derby—but how are we supposed to sell a travel package for $5,000 and make a profit?
The Fundraising Specialist suggested we use a 20% markup on consignment travel packages. That way a $5,000 package would sell for $6,000 and we would raise $1,000.
Now I’m not going to say no to an extra thousand dollars added to our bottom line, but I just don't think people will pay $6,000 for a vacation package.
Our partnerships with vendors around the world do allow us to offer competitive prices, but as you noted, many of our most popular packages are red-hot tickets or "bucket list" Experiences without an obvious market value. We have seen time and again that people are willing to pay top dollar for incredible packages like an Exotic Supercar Driving Experience, a "backstage tour" of the Capitol Building with a historian, or a VIP tasting and tour with a winemaker in Napa.
Finally, try browsing our Luxury Properties, hotel-only stays designed for silent auction tables.
4. Consignment items cannibalize donors' giving budgets.
Even if they did buy that pricey package, their $6,000 purchase is money that disappears from the rest of the auction. What if the bidder would have spent the money on an auction item that was 100% donated instead? Or perhaps they would’ve donated the $6,000 outright in a special appeal or fund-a-need!
You can't deny that's significant opportunity cost right there.
Again, assuming the package cost is $5,000, the winning bid would give our organization $1,000...but isn't that still $5,000 we'd be missing out on? I'm not interested in sucking the buying and donating power out of a room with purchased trips.
Finally, while travel may be among your auction's priciest items, this actually works in your favor, and here's how: Going back to travel budgets, 80% of our winning bidders set aside $5,000 or more for their annual travel budget — with 40% set aside a whopping $15,000 or more! So items with a higher price point naturally get patrons reaching into their travel rather than philanthropic budgets. What this means for your event: People can buy a Winspire trip and still bid on that gift basket or raise their paddle for your fund-a-need.
5. We have to limit overhead.
We hold our gala and auctions every year to make money, not spend it. So as long as we're talking bottom line here, showing the expense of buying a consignment trip on our end of year statements will unfortunately overshadow any profit that could be made.
We are evaluated by our donors and graded by CharityWatch annually based on how much of our budget we spend in overhead (administrative and fundraising costs). And with the boom of social media and technology, we are being scrutinized more closely than ever.
It's better to play it safe and avoid any unnecessary expenses; our donors would feel more comfortable if we stuck to 100% donated items.
As far as saving costs, we want you to get everything you need for your auction donated. We know how difficult procurement can be; that's why we provide resources to make procurement easier. But the items that typically generate the highest bids—4 nights at an all-inclusive resort in Jamaica, the Country Music Awards, the Kentucky Derby—are rarely donated. So these incredible trips are meant to simply complement and enhance the rest of your auction items.
6. Procurement is my job.
I admit travel and exciting entertainment experiences are very popular with our donors. But as the head of the auction committee who organizes these charity galas year after year, I should be encouraging my team to put together the packages ourselves. After all, I'm the one who has been tasked with auction duties; I'd be shirking my responsibilities if I didn't procure great auction items on my own.
What would my boss think if I hired someone else to do all the work?
Not only is it my duty, it's more strategic in the long term. If we focus our efforts on procuring unique experiences in our area, we can partner with local businesses and build relationships that will foster future donations, improving our overall longevity.
As far as partnering with local businesses, that's great! We suggest limiting your use of consignment to just a few featured items, then get the rest donated. Plus, if you want to capture 100% of your donors' purchases (who wouldn't?!), local businesses love how easy and rewarding it is to underwrite the cost of one of our trips.
So, I hope this letter adequately explains why we're passing on consignment. All in all, I think we can do much better getting incredible vacation packages donated on our own. Who's with me?
Winspire, I look forward to your response.
Your turn: What would you say to Skeptic? Have you used consignment in your fundraising auctions? Let us know in the comments below.