When it came time for the National Trust for Historic Preservation’s (NTHP) black tie, silent auction fundraising event in June, it decided to forego the penguin suits -- at least for a few weeks. By placing auction items online 3 1/2 weeks prior to the event it allowed online bidders to place a maximum bid that would then be conveyed by proxies standing in against the silent auction bidders at the live event.
NTHP’s goal was to open up the items to its entire membership, as well as anyone else who might be interested in preservation. The increased audience provided by the Internet paid off. The auction raised nearly $95,000. When the online segment closed, the Washington, D.C.-based organization had already netted approximately $22,000 in bids.
“We were pleasantly surprised by the online bidding portion of the auction,” said Susan Neumann, director of member engagement at NTHP. “We learned quite a few things about timing as well. Our closing was over Memorial Day weekend and it was beautiful on the East Coast so there wasn’t a lot of traffic on the site.”
The nonprofit had been contemplating conducting an online-only auction and the results from the June event has inspired Neumann to eliminate the black tie event next year in favor of an online auction. One of the benefits of the online auction will be the reduction in the manpower hours needed for coordinating both the online and the live event, Neumann said.
“I was shocked at how little investment it cost us,” Neumann added. “It depends on how much you want to invest on the Web site. We didn’t invest anything. We built it ourselves using two staff people. We ended up paying less than $2,500. So it was an excellent investment for us.”
NTHP utilized cMarket, the Cambridge, Mass.-based Internet auction and special events services provider, as the platform for its auction.
“There’s a fundamental disconnect when a nonprofit runs an auction,” said Greg McHale, executive president and co-founder of cMarket. “The economics of an auction are that, fundamentally, the more people you have bidding, the higher the bids. The reality is that when you run an auction as a part of a physical event it is limited to the people in attendance, which is generally a dramatic subset of your entire constituency.”
A nonprofit builds an auction homepage where it can talk about its gala, event or organization and donors get involved by filling out easy-to-use forms. There’s also an online catalog of items and what McHale described as the integration of email. An organization can upload its email list, or those of sponsoring companies, and send emails out to its entire constituency. It’s the links and logos to the sponsors and the catalog that drives the success, he explained.
The nonprofit can have up to four links and logos underneath any item in the catalog. For example, if a nonprofit is holding an event in New York City it could link to a hotel, restaurant, Amtrak, or any other local or national sponsor.
“It’s all about cause marketing and the donor organizations see the value in this,” McHale said. “The outreach of sponsors is often limited to those attending the event. When they get that ad in the back of an auction catalog it’s like yearbook advertising. Online, they’re reaching a much wider audience.”
Once the auction is complete the nonprofit has the all-important task of collecting the winning bids.
“The payment process needs to be very easy to use and integrated as seamlessly as possible, into the auction,” said Gary Brashear, vice president, sales and marketing at Auctionpay, a payment processing solutions company. “If you send them outside of the auction software, many times you will lose people. They might have to register for an entirely different site and that’s not what they may expect.”
Levels of security and encryption all need to be communicated to the donor as they are going through the transaction. There’s also the matter of credit cards. “The application for processing has to be approved by a processor and ultimately Visa, Master Card, etc.,” Brashear explained. “Nonprofits often don’t have the resources or do not want to employ the resources to do all of that work. Our applications took 6-9 months to get approved so if a nonprofit was going to try and develop this, it would take some time.”
Deciding what to auction is also key. Larry Davis of Steiner Sports in New Rochelle, N.Y., said that consignment is one way to go. For example, Steiner will put up its top 25 items, unless someone at the nonprofit has certain requests for items, Davis explained. Items relevant to the hometowns in which the auction is being conducted are also included, along with a few staples that work throughout the country, like items signed by boxing legend Muhammad Ali, or baseball greats Hank Aaron, Mark McGwire or Derek Jeter.
In setting up any auction there is plenty of data that could get potentially lost in the mix. Some nonprofits are choosing to go online to track auction data and eliminate those cumbersome hard files.
“The benefit of online tracking is now instead of having one person responsible for tracking items, you can now open it up to the volunteers,” said David Hassan, chief executive officer of event management company Snap Solutions in Northbrook, Ill. “So now you’re shifting the workload from one person and allowing the volunteers to become involved in the process.”
Online tracking provides an organization with an audit trail of every item that has arrived and where it is located. Tracking also allows automatically generating thank you letters, cutting more hours off of a nonprofit’s auction to-do list.
“You also make it easier to open up the donations,” Hassan added. “Using paper, you may be able to solicit and collect 200-300 items. By doing it online you’re able to increase that to 700-800 items because you can solicit more and track better and that in turn, increases revenue.”
I did it … eBay
Due to the success of the Santa Monica, Calif.-based Prostate Cancer Foundation’s (PCF) online auction, Chief Operating Officer Debbie Bohnett said that she receives one call a day from a nonprofit asking about it. The 300-item eBay auction raised $200,000 and featured a number of experiences to bid on including, lunch with singer Avril Levigne, going on a commercial shoot with skateboarding pro Tony Hawk and playing tennis with Donald Trump.
“You really need people who are engaged and nobody is more engaged than eBay users,” Bohnett said. “It is complicated because you’re doing something that charities don’t often do. Once you get online and a community as large as eBay, with 100 million-plus registered users, you’re interfacing with a lot of different people.”
PCF utilized one in-house person to concentrate on the auction, as well as the company Silent Partners. Silent Partners acquired many of the non-experience items and served as the interface with nonprofit auction service MissionFish, which is through the nonprofit Points of Light Foundation in Washington, D.C. PCF had no up-front costs. The winning bids were paid through MissionFish, and Silent Partners wrote the PCF one big check at the end.
There are two sides to working with MissionFish, explained Clam Lorenz, spokesperson for the organization. One is called eBay community selling. People who sell on eBay can choose to give a nonprofit from 10 to 100 percent of what they make.
When the listing closes, MissionFish collects the donation from that community seller and delivers it to the nonprofit. It then provides the seller with a tax receipt for their donation. In exchange for doing all of that, MissionFish deducts a fee from the donation. That fee is 2.9 percent plus $3.
The fee is only applied when there is a successful donation. There is also $10 donation minimum. So if a seller chooses to give 10 percent of their item but it only sells for $50, that 10 percent would normally calculate to $5 but due to the minimum donation, MissionFish collects $10 from the seller. It then deducts its fees, transferring $6 to the nonprofit.
Nonprofits are paid via electronic funds transfer. MissionFish holds on to donations until the end of the month that the listing ends, plus an additional month, plus 20 days.
“We do that because on eBay there are several different refund periods where, as a seller, you can choose to give the buyer a refund,” Lorenz said. “So we hold on to the donation for that chunk of time until we’re confident that there’s no more opportunity for a refund. What we don’t want to do is give an organization money right away and then call them back next month because there’s been a refund.”
Organizations begin by registering for a free nonprofit account at MissionFish followed by setting up an eBay seller account. Once complete, a MissionFish seller account must be activated and then the nonprofit must check a preference in its MissionFish account that lets the database know that the assigned seller ID is associated with your nonprofit.
The process is essential since MissionFish and eBay treat nonprofit sellers differently than regular community sellers.
As a nonprofit seller, when you list your item through MissionFish there is no approval process so it doesn’t sit in queue for 24 hours on a business day. Since it is a nonprofit seller a donation is not charged when the auction is over nor is a tax receipt provided.
The nonprofit seller is ultimately responsible for eBay fees (insertion fees and final value fee - which typically range from 4 to 6 percent of the end price) but MissionFish does not charge a fee, basically providing the service to nonprofit sellers gratis, Lorenz added.
“Our auction worked because the items were unique in-demand experiences with a high-bidding upside,” Bohnett added.
“Combine that with the reasonable fees that eBay charges and it all added up to an experience we’d be more than happy to repeat in the future,” she said.
© 2004 The NonProfit Times
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