Sunday, June 04, 2006

Important Information for Your Fundraising Auction Event

This document was created to dispel many myths, misunderstandings, and just plain lack of knowledge surrounding the choices that many development officers and non-profit organizations rule out or ultimately choose when evaluating the outstanding potential of a live “Fundraising Auction”, “Charity Wine Auction”, “Benefit Auction” and or “Charity Auction.” Before making any final decisions, please read the following information.

Many alleged fundraising auction firms and a few peripheral auction support companies (i.e. auction item consignment companies, fundraising auction software companies, point of payment services, and other auction support services) are continuously providing their potential clients with poor, if not totally wrong, information. More often than not, these entities do this out of their ignorance of the auction industry that they claim to be representing and supporting. The agenda is clear, as these entities want to sell the targeted non-profit organization a product or service it really does not need. Rather than accepting the position and opinion of these companies verbatim, I would suggest potential clients should consider adopting a stance of questioning their authority which might better serve their organization. Always do the following: (1) check the contract organization’s references; (2) explore the events they have conducted; and (3) most importantly examine the results that they claim to have achieved for their clients.

Actual Statements from Non-Profit Development Executives

“Live Auctions just don’t work for us. Silent Auctions are the way to go.”
I often hear potential clients attempt to negate the empirical evidence resulting from having conducted a live auction. The facts are clear! Take any fundraising event that you can envision and consider adding a live auction. If the live auction is conducted correctly, then 67% percent of the event’s gross revenue will come directly from the results of the live auction. The other 33% percent of the event’s gross revenue will be derived from the combined total of the following: (1) Ticket Sales; (2) Silent Auctions; (3) Raffles; and (4) Other revenue generating devices.

“Your auction services fees are how much?”
If a non-profit development executive is simply utilizing price or “price shopping” as a deciding factor in their selection of a fundraising auction firm, then they are making a huge mistake. What the development executive believes they are saving as front end costs, they often fail to understand that they will lose anywhere from 10 times or even 30 times that initial cost difference in lost revenue experienced on the back end of the event. In other words an upfront cost savings of $4,000 dollars can equate to a $40,000 dollar loss in revenue on the back end of the event for many reasons. The days of the “free” fundraising auctioneer who donates his services are rapidly disappearing. “Free” can also be a death blow to your event because the auctioneer: (1) does not take your event seriously; (2) might be inebriated; or worse (3) he is an inexperienced auctioneer. The savvy business person and development executive knows that “to make money you must spend money.”

“Our auctioneer is being provided at no cost by Christies, Sotheby’s, Bonhams etc.”
These names are some of the most respected in the auction industry for sure. However, their forte` is in the upper echelon retail auction market and not the fundraising auction niche. The sad truth is that when many non-profits agree to have one of these major auction houses represent their charity event, the non-profit is often sent one of the auction house’s most junior and novice auctioneers in training. Will this make a difference in your event’s bottom line? Absolutely! I have presided over many events in following up the efforts previously achieved by one of these noted auction house auctioneers, and the results that my firm has achieved have been phenomenal when compared in contrast. Even the most senior auctioneers from these auction houses may have very little familiarity with the non-profit sector and the fundraising auctions they are asked to preside over. The sad truth is that many of these auctioneers from the noted auction houses often “leave money on the table”. Is “free” better if it ultimately costs you $100,000 dollars in lost bids and revenue? If an auctioneer’s service fee of a few thousand dollars would “hedge your bet” in gaining that $100,000 dollars that the “free” auctioneer ultimately lost, then would the auctioneer’s fee be more than justified?

Event Management Software (EMS)
The last time I checked there were twenty seven fundraising auction software programs available on the market. This number does not include other peripheral auction support companies that are also attempting to break into the non-profit customer fundraising auction market. All of these companies are fighting to be top dog. In my opinion, most of these available software programs and peripheral auction support services are useless, as many non-profit organizations ultimately have to repeat one or more steps separate and apart from the company’ claims of alleged benefits and less work. In my opinion, few of these software programs and peripheral auction services companies truly rise to the top in honoring their claims in truly making it easier for the prospective non-profit clients.

In many cases it is still much more expeditious and effective for a non-profit to utilize a human auction clerk and triplicate bid sheets in recording the auction results. Most non-profits do not even utilize the other “bells and whistles services” incorporated into the fundraising auction software program. A software program’s ability to generate catalogs, tax letters and thank you letters may appear to be impressive when the company is attempting to sell these services to the inexperienced development executive, however most proficient non-profit development officers still create these documents independent of the fundraising auction software program. Where’s the benefit?

After the non-profit spends large sums of money in buying these auction software programs and peripheral auction support services what are they really gaining? Not much! Your experienced and knowledgeable fundraising auctioneer and contracted fundraising auction firm will be able to best advise you as to the benefits, pitfalls and available alternatives to most of these available auction software programs and peripheral auction support services.

Volunteer Services Trades – A Bad Idea and A Recipe for Disaster!
I reviewed a peripheral auction support services web site recently. There was a posted article written by a benefit auctioneer. Forget the fact that this benefit auctioneer is a self-taught and has never attended an accredited auction school, or further completed an apprentice program with a recognized fundraising auction firm. What really galled me was the fact that this auctioneer was gleefully recommending that non-profits and charities “trade volunteers between their individual organizations and unique fundraising auction events as an immediate solution to supply the required labor for the event.”

In my opinion, this is a truly bad idea and ultimately a guaranteed recipe for disaster. I have seen this done only once in my experience and it failed for any number of reasons. On other occasions where I have been aware of this poor practice being implemented, those events have also met with disastrous results.

Below is a list of some of the potential problems that can and do occur when non-profit organizations consider this poor practice as a viable solution and alternative, instead of recruiting and utilizing their own non-profit organization’s staff and volunteers.

(1) Confusion. “Who’s actually running and benefiting from this fundraising event” said an attendee.
(2) Liability! Have the “traded volunteers” gone through your non-profit organization’s training and expectations.
(3) Responsibility. This also ties in with liability. If there is a mistake or problem, then which organization is ultimately responsible? If I were a development officer, I would avoid this scenario at all costs.
(4) Non-profit organization’s mission. It is the individual development officer’s responsibility to promote the mission of the individual non-profit organization, and not to promote another non-profit’s resources.
(5) Your event is smash success! You have worked long and hard to come up with a unique theme, proprietary ideas, and unique approach. Do you wish to see a “copy cat event” spring up as a result of the “traded volunteers” harvesting your ideas?

The list goes on and on. The best solution is to always utilize your own resources as much as possible.

Non-Profits Trading Auction Items and Lifestyle Experiences – A Great Idea!
If you are in need of auction items for your fundraising auction event and you are coming up short. You might consider trading unique auction items and lifestyle event experiences with other non-profit organizations. For example, you might be conducting a wine themed fundraising event in behalf of winery association and you are struggling to come up with a unique lifestyle experience auction item. Consider calling an event producer in a ski region and offer to trade tickets between your fundraising events. These lifestyle experience auction items might also include airfare, hotel accommodations, and other items included as well. These lifestyle experience auction items are often complete packages with great donor values and are always a huge hit with the auction bidders!

This type of auction item trade allows for both non-profit organizations to offer their individual event’s attendees and potential bidders a wide array of lifestyle experiences with great ease and usually at no cost. This is a great option and solution to a very common problem experienced by many non-profit executives.

The 5% Rule
After years of experience dealing with the 5%, I developed what I call the “5% Rule” as it applies to these special people – the complainers. The fact is that as professional fundraisers, we may be doing everything absolutely correct, and yet people still complain. In my experience as a professional fundraising auctioneer, I have found that 5% of a non-profit organization’s board, committee members, and even volunteers will complain about something always. The 5% Rule also applies to a fundraising event’s participating attendees as well. This is an inescapable fact that I have witnessed over a thousand times in my career. Common complaints often heard are as follows: “There are too many live auction items.” “The room was too cold or too warm”. “The auctioneer was too fast or too slow.” Blah, blah, blah, ad nauseum! More often than not, these complaints have very little, if any, actual detrimental impact on the event, as much as these complaints are more focused in serving the individual needs of the person who is complaining.

I am in no way suggesting that a development executive should dismiss, be curt, or rude to one of these 5% (complainers). Instead, provide the individual complainant with an answer such as, “We appreciate your input and we have taken your concerns into consideration. Based upon the scope of our event, and the specific requirements involved, we have decided to follow a course of action that has been overwhelmingly approved by our board in best serving the majority of our event’s attendees and our organization’s assigned staff. Thank you again for letting us know your thoughts.”

Here’s the advice that I provide to every non-profit organization staff member that I have contracted my company’s services to. “Do not worry about catering to the needs of the 5%, when it’s the other 95% that will be directly responsible for making your event a huge success.” In other words, catering to the unreasonable and often selfish demands of a few will detract and deter from the non-profit organization’s overall mission of earning money. Unfortunately, I have witnessed far too many organizations attempt to cater to the 5% in foregoing the more appropriate needs of the other majority 95%. As a result, the event suffered needlessly. Typically, this has more to do with weak leadership and their inability to say “no”. As fundraising auctioneers our job is provide our clients with solutions to their problems, and also to help our clients avoid problems altogether if possible.

Tom DiNardo is a licensed auctioneer, freelance writer, certified appraiser (GPPA), and consultant to both the auction and wine industries. © 2006 Tom DiNardo. All Rights Reserved. For more information about Tom DiNardo and DiNardo & Lord Auctioneers please visit or call 888-503-0828.