How much can our nonprofit expect to earn from a live auction?

Estimating auction proceeds in order to plan procurement.

Question

I'm a parent of a child who is attending a small, private nursery school. We need to raise money for new playground equipment. One of the parents thinks we should hold a live auction. But I hear that's a lot of work. Can you tell me how much money we might raise, to help us decide whether it's worth the effort?

Answer

Projecting your auction earnings is a good idea. Although many people assume it’s a matter of chance and the vagaries of bidders’ preferences, there is actually a science, or at least an art, to figuring out likely auction proceeds and planning your procurement accordingly.

First, your nonprofit will want to aim to have 200 or more people in the audience (not counting kids). With that number of people, it’s a fairly safe bet that the items you’re selling will strike someone’s fancy. (This assumes, of course, that you’ve been reasonably selective, and avoided some sure-fire losers such as amateur artworks.)

There’s no point in even considering an auction if you expect to attract fewer than 25 people. Also, try to have at least two people per item to be auctioned, so that there’s decent competition for each item.

Next, estimate how much each person — or, given typical spending patterns, each couple — will be willing to spend. It’s usually not more than $1,000 per person or couple per evening, though this of course depends on local culture and demographics.

So, let’s say you have an audience of 100 people, 70 of whom are in couples (so you’ll count them as 35 people), and 15 of whom are unlikely to bid (perhaps because they’re honorees or on comp tickets).

This leaves you with 60 active bidders. You figure, based on what you know about the income levels and giving history of parents at your school, that they’re willing and able to make average bids of $300 apiece. That would make it possible for your auction to raise 60 x $300, or $18,000.

With that in mind, you will need to solicit enough goods for your audience to eagerly spend that money on. To reach a goal of $18,000, you’d need to procure donated items whose worth is at least double that amount, or $36,000. That rule recognizes the fact that, while some bids will go over the items’ market value (and the live auctioneer will be doing everything possible to make sure they do), others will go for lower.

It’s also best to have enough individual items to fill between 30 minutes and two hours of bidding, which typically means around ten to 40 items.

For detailed information on conducting an auction for your charity or nonprofit (whether live, online, or silent), see The Volunteers' Guide to Fundraising; Raise Money for Your School, Team, Library or Community Group (Nolo).

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