How to Hold an Online Auction

Steps to fundraising via online bidding sites.

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You’ve probably either attended or helped organize an in-person auction at some point, whether live or silent – they’re the bread and butter of some small nonprofits, and common add-ons to special events at larger nonprofits. But have you tried an online auction?

They offer many advantages, as described in the article, “Is a Live, Silent, or Online Auction Best for Your Nonprofit?” If your membership is at least 200 people, an online auction stands a good chance of selling out most of its goods and making a good profit.

Here are the basic steps to holding an online auction:

  1. Choose a vendor. You’ll need to go through an auction site such as PayPal Giving Fund, Charity Auctions Today, or BiddingForGood. For a fee or commission, they make it easy for you to display your items, then allow bidders to register, enter credit card information (which means guaranteed payment for you from the winning bidders), and place bids within a set period of time, ideally one to three weeks, after which the site collects the payments and transfers the total to you. Compare their service offerings with regard to price, ease of posting, quality of their interactions with bidders (for example, some will send out “bid alerts” telling people when they’ve been outbid on or won an item) and so on. Your nonprofit is in charge of actually shipping the goods to the winning bidders.
  2. Solicit goods. The whole reason auctions work as a fundraising concept is that you don’t pay for the goods being auctioned off. Instead, you solicit these from local merchants, your board members and volunteers, and so forth. Nearly anything that isn’t used, tacky, or too unusual to attract a wide audience may make a good auction item, from vacation packages to craft items to gift certificates for massage and other services to parties at a board member’s home or yacht. When you’re close to the auction date, ask businesses such as theaters and sporting venues whether they have last-minute extra tickets to donate. Because of the quick turnaround time, it’s usually easier to incorporate such gifts into an online auction than other auction types. In general, however, having a committee of volunteers begin soliciting items three to six months before the auction is optimal.
  3. Decide when enough is enough. Since you’re not limited by time or display space, you can bring in as many items as you think you can feasibly sell, handle, store, and ship. Set a realistic fundraising goal based on these limitations and the size and financial capacity of your membership.
  4. Collect or take photos. You will need photos of every item for an online auction. In fact, multiple photos are best, as you know from your own online shopping experience.
  5. Determine fair market values. Be sure to ask the merchants or donors for estimates, which you’ll need to set starting bids (described next) and to tell bidders for tax purposes. See “Is Your Nonprofit Overpromising Tax Deductions?” for more information.
  6. Set starting bid amounts. You’ll need to set minimum bids for your online auction, usually in simple amounts like $2, $5, $10, or $20. It’s best to set these at amounts between 25% and 50% of each item’s market value. That helps avoid creating the impression that your auction is a mere feast for bargain hunters. It also helps avoid insulting the goods’ donors, who may ask or find out the selling prices later. Start higher (75% or so) on items that are essentially cash equivalents, such as gift certificates for grocery stores or restaurants. Base the increments on the items’ value, with the goal of reaching its market value or your realistically hoped-for amount within three bids. You may also set a top-end amount (called a “guaranteed” or “buy-now” bid) that lets the person forestall other bids and declare themselves the winner. Of course, you’d set a high figure — typically 150% of the market value.
  7. Let people know about the auction. People rarely visit auction sites without having a particular charity in mind to support. You’ll need to promote it, both before and during. Your newsletter, website, and social media pages are all good ways to do this.
  8. Present goods in an attractive light to bidders. This means not only supplying good photos, but writing up enticing yet accurate descriptions. Don’t get so caught up in playing marketer that you forget to provide basic information such as size, measurements, contents, applicable dates, washing instructions, and the like. And the titles of items should definitely be descriptive (for search purposes) rather than cutesy or full of puns.
  9. Hold the auction. Here’s where it should get exciting. The highest volume of bidding will happen during the first 48 hours. Don’t hesitate to monitor the bidding and post interesting news on via email or on your Facebook or other social media page, and encourage people to keep bidding right up until the end. Don’t worry about over-emailing — the “game” aspect of auctions means that most people regard these emails as less intrusive than the average email missive.
  10. Arrange for delivery or shipping. If these are coming straight from a merchant, you may be able to simply pay the shipping cost or warn bidders that they must pay for shipping, and then reimburse the merchant. In other cases, you’ll need volunteers to get the items safely sent or delivered to the recipients. Because international shipping can be a bother, many nonprofits limit bidding to people within the United States.  

For more detailed information on online and other types of fundraising auctions and events, see The Volunteers' Guide to Fundraising; Raise Money for Your School, Team, Library or Community Group (Nolo).

by: , J.D.

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