November 15, 2008
AUCTIONS     -    Carl Borning

Maximize auction revenue, build systematic processes

According to Statistics Canada, Canadians gave a record 8.6 billion dollars in 2007 to charitable causes. With this much money at stake and so many organizations vying for a piece of the proverbial pie, maximizing and increasing the charitable donations that flow into an organization is critical.

A key element of the fundraising strategy for many charities is the special event, which can include everything from live and silent auctions to galas and golf tournaments. These events rake in an estimated $40 billion annually – 15-20% of all fundraising – according to studies conducted by the Association of Fundraising Professionals.

AFP also notes that Canadian organizations are slightly more likely than American organizations to rely on special events for a larger percentage of their annual fundraising. Arts and cultural organizations are the most dependent, with one-quarter of those groups reporting that special events accounted for 41% or more of their overall fundraising in 2005.

Avoid reinventing the wheel

Fundraising consultant Mike Vendetti of A1 Auction Service says that many charity groups let a lot of money “walk out the door” because of the way their event is planned. To stop the losses, he suggests embracing long-term strategies for increasing donations and organizing volunteers through the use of comprehensive fundraising software. Handled properly, such software creates a structure that can last through volunteer turnover and increase the fundraising potential of the organization.

“When you have software you can share information that was learned over time,” says Vendetti. This helps long term staff and volunteers to prioritize and increase donations. For new volunteers you hand it to them and say, ‘start with this.’ There’s no reinventing the wheel.”

Checking out - the first concern

Although checking out is typically perceived as an “end of night” issue, it is often at the forefront of the organization’s concern. For fundraiser Gary Tice, the decision to utilize software after observing an inefficient checkout process led to a $25,000 growth in net proceeds in less than two years.

In 2006 Tice was forced to re-think his approach to fundraising after volunteering to help the Step By Step Early Education and Therapy Center in Naples, Florida with its annual event. His daughter Heather had become event chairwoman that year and inherited manual procedures that lacked efficient protocols and a systemic mind-set.

 “When I’d volunteered for other events, I was involved in getting the tables set up,” says Tice. “This time I was involved in the check-in and check-out process and saw how difficult it could be. It was disorganized and frustrating. I was worried about getting people to come back next year. I thought to myself that there must be a better way.” 

Tice, a former banker, analyzed the event and found that the old procedures were, in a sense, myopic: they did not lay the groundwork for future events. That realization led him to go online in search of a solution. He selected the fundraising software ProvenBenefit from New York-based Proven Software.

According to Tice, the check-in process was fast and smooth the following year, and the check-out time was cut in half. Online credit card processing was cut to 3-4 seconds and invoices with full item information, payment information and even fair market values were instantly available for winning bidders to take to their financial advisors for appropriate tax deductions. All that was left was picking up the item. There was no waiting.

Donor and bidder tracking data – worth their weight in gold

Despite heavy emphasis on speedy checkout, the stability and consistency of donor and bidder information is perhaps the most critical element of the process. This extends far beyond entering a name and contact information into a spreadsheet. 

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“I can’t imagine running any event fundraiser without software,” says Tracy Merfeld, an industry consultant who estimates that it “easily” improves the efficiency of an event by more than 25%. “There is no way you can run an auction of any size with paper and pencil, or a simple spreadsheet.”

Merfeld, along with her husband Doug, have spent the past 14 years and counting working the live auction component of the annual Roger Maris Celebrity Benefit Golf Tournament. Now in its 26^th year, this event has raised over $1,200,000 for charities. Merfeld utilizes auction software to manage many aspects of the auction, which features hundreds of sports and entertainment items.

 “When there is turnover with volunteers, the charity often loses valuable information,” says Merfeld. “However, with a proper infrastructure in place, the information can be passed on from year to year and they acquire a mailing list where the donors and bidders can be contacted and know of upcoming events.”

Revenue enhancement

During an event additional fundraising efforts and techniques can boost the donations when properly organized and executed. In addition to a live auction, for example, silent auctions, raffles, fund-a-needs, and many other revenue enhancing techniques can be utilized.

A silent auction with a “buy it now” price can increase revenue generated on a single item by 20% over a silent auction with no buy it now.  Research has demonstrated that bidders that dearly want an item will happily pay a higher price on the spot as an alternative to waiting until the end of the event to see if the item has been won.

Properly executed raffles also dramatically increase the revenue of certain items, for example jewelry and electronics, which typically do not sell well or at fair market value. Instead, the software can manage a raffle at the event with $20 tickets that generate $2000 for the same item.

“Fund-a-Need” is a simple concept as well, and often increases event revenue by 25-50%. The auctioneer takes a break from the auction and asks if anyone in the audience would be willing to donate money to help a particular need within the charity. This gives attendees the opportunity to make donations that are strictly in the spirit of charity without the expectation of goods in return.

The rule of thumb at an event is that you should get more on most items than fair market value. An organized software system facilitates the management and execution of these revenue enhancers.