This article – which is an update of a 2007 article – is courtesy of Idealware, which provides candid information to help nonprofits choose effective software. For more articles and reviews, go to www.idealware.org.
What tools can help you raise money and rally support for your cause through an online auction? We take a look at the software tools that are widely used in the nonprofit sector.
An online charity auction can be a good way to raise money, rally support for your cause, and hopefully, to have some fun. Like any special event, an online auction requires solid planning and a fair amount of staff time. What it won't require, however, is substantial technical expertise. Several good online platforms will host and help you manage your online auction.
What should you be thinking about as you consider an online auction? What tools might work well? We asked a number of nonprofit professionals with experience in auctions for their software recommendations and condensed their advice here.
How Online Auctions Work
Online auctions are similar to real-life auctions, except that in the online version everything is done through the web. Instead of traveling to a gallery or showroom, for example, potential bidders browse webpages to see pictures, descriptions, and suggested prices for the items being auctioned.
Most online auctions use a method called "proxy bidding," which works almost as if the auction tool were your trusted representative at a live auction. A participant in an online auction enters the maximum amount he is willing to pay for a particular item directly into the auction website. The system bids for him, increasing the current price by small increments as much as necessary to win the item, up to the participant's maximum amount.
If no one else beats that high bid, the first bidder wins — potentially paying much less than his maximum. If someone else enters a higher maximum bid, however, the system will email the first bidder to let him know he has been outbid, and to allow him to up his maximum bid, if desired.
It's also important to think about the features that will make your auction feel like an exciting event for your audience, if that's important to you. Some nonprofits design their online auction as an ongoing fundraising opportunity and auction off several items every day or every month. Others design them as an online event that takes place over a specific week or two, with extensive outreach and marketing. If you're planning this type of online auction event, it's important to think about the overall branding and experience of your auction as well as the presentation of the items themselves — issues that some tools can help you with more than others.
What About Manual Online Auctions?
It's possible, and not terribly uncommon, to run online auctions without the use of a tool specifically geared to handle them. You could, for instance, ask people to post their bids into the comment section of a blog and then follow up with the winner — the highest bidder who posts before a particular time — in order to collect the payment and schedule delivery. Or you could post items with their current bid price on a website, ask people to call or email to place their bid, and then update the website accordingly in near-real time.
This type of format may work fine for auctioning off a few items, especially if you don't expect a ton of bids. It might in fact be more comfortable for less technically savvy bidders. However, it will be increasingly difficult to manage as you have more and more items, and will appear less professional and put-together to those who are familiar with online tools. As something like MissionFish or eBay isn't very expensive, it's at least worth looking at your options before deciding to go in a manual direction.
Good Auctions Require More Than Good Tools
Before we jump into specific software, it's important to recognize that a successful online auction requires a lot of planning, preparation, outreach, and staff time. No matter how good your software is, it can't create a successful auction on its own. In addition to choosing the right tools, you'll also need to:
- Plan an overall approach. How big will your auction be? Will you continuously put up items over time or create a limited-time event? How will your auction mesh with the rest of your fundraising strategy? How will you ensure that it reinforces people's understanding of and commitment to your organization? Will your auction have a theme that's tied to your mission — for example, an animal welfare organization might auction off pet-related goods — or will you auction off a variety of items so there's something for everyone? How will you measure success, both in terms of funds raised and constituents' perceptions of your organization?
- Acquire items to auction. A successful auction requires a considerable number of attractive products or services. Many organizations find items by asking constituents and friendly businesses for products and services. You may also wish to consider soliciting donations of experiences — for instance, the opportunity to have dinner with a local celebrity or to follow a news reporter through a day. Keep in mind, too, that a number of services (like BiddingForGood and The Gavel Group) offer packages, such as cruises or tickets to shows that you can auction off. You don't pay for these items unless they sell, and then you pay considerably less than market rate.
- Reach out to those you'd like to participate. Marketing is a key part of an online auction. Email or social media sites can let your constituents know about your auction, and remind them to visit and bid over the course of the event. Keep in mind that you'll need to target a fairly web-savvy audience — no amount of outreach will convert technophobes into online bidders. You may also find yourself auctioning items that are of interest to people outside your usual constituency. Going beyond your usual marketing and public relations channels may then be essential to a successful outcome. Some organizations offer to partner with nonprofits which will help conduct outreach to particularly targeted lists and offer them a small percentage of the total money raised in exchange for several announcements in email and newsletters.
- Be ready to provide excellent customer service and shipping. As with any e-commerce effort, you'll need to responsively answer questions. If you're selling goods, keep in mind that you'll need to mail or deliver them and account for the time and money required to do so. This is particularly important if you're selling on eBay, where you'll live or die by your customer-feedback ratings, which tend to focus on timeliness of shipments and the accuracy of your product descriptions.
- Don't underestimate the amount of time required. All of the steps described above will require a considerable investment in staff time. Don't forget, too, to budget additional time to create item descriptions, take photos, upload information, help participants troubleshoot, and more.
Online Auction Software
The nonprofit auction software market is dominated by two companies, eBay's MissionFish and BiddingForGood, with a number of smaller competitors. MissionFish and BiddingforGood are both solid tools, but differ in a number of notable ways.
Recently purchased by eBay, MissionFish allows nonprofits to conduct auctions on the massively popular online auction site for little-to-no charge. Once registered, any item you post on eBay will display your logo, mission, and a link back to your website. While you'll still be required to pay eBay's standard listing fees and commission (about 5 to 7 percent of the final price), these fees are credited back to your account six to eight weeks later. If you opt to use some of eBay's additional features — such as posting more than one picture or item — these fees will not be credited back.
Beyond these small differences, however, you add items and run your auctions just like any other eBay posting. People can see all the items that you have for sale grouped together on an eBay organizational page, and you can email links to that page to all your supporters, but your listings will be available to anyone who searches eBay. This can be both an advantage and a disadvantage. If you have valuable items to auction, eBay's vast audience virtually ensures that you'll get at least market rate for your items. However, it's harder to create a special-event feel and build community around your auction if people who don't care about your mission are doing much of the bidding.
Specifically designed to support nonprofit charity auctions, BiddingForGood (formerly cMarket) offers a number of features making it easier for organizations to use. For instance, several of the nonprofit professionals who contributed to this article found BiddingForGood's interface for adding auction items easier to use than eBay's; an additional feature allows you to easily hold onto a listing to repost it at a future date — which is useful if you plan to conduct similar auctions each year, for example.
BiddingForGood also allows you to build a more customized auction homepage than eBay does, where you can profile your organization and feature specific auction items. A BiddingForGood auction website also supports sponsor logos, allowing you to sell sponsorships for the entire event.
All of these extra features come at a price, however. BiddingForGood is notably more expensive than eBay, charging $595 per year plus a 9 percent commission on your auction revenue (on the first $75,000 collected from each auction).
As opposed to eBay, if you use BiddingForGood your own constituents will be the main bidders for your products, which will put the onus on you for getting the word out about your auction event. While BiddingForGood offers a centralized site that allows people to search on items from all BiddingForGood auctions, it doesn't have anywhere near eBay's reach or audience.
While these tools are by far the most widely used online auctions tools among nonprofits, they are certainly not the only ones available. There are a number of tools that have niche audiences or a core group of clients.
If you're looking for other online auction platforms that specialize in nonprofit events, consider BenefitEvents, MaestroWeb, or CharityBuzz. There are also a number of companies that provide online auction services to the business world — for example, AuctionAnything and Beyond Solutions — that may meet the needs of your organization as well.
As you're shopping around for an online auction tool, you may run into a whole other type of software. "Auction Management" software allows you to manage logistics and catalogs for large, complex auctions, both live and online. Packages such as Greater Giving and Auction! can be very helpful if you conduct a number of large auctions, but they don't have much functionality of their own that overlaps with the online auction software described above. Before purchasing a tool and assuming that "auction" software will support your needs, double-check their online functionality and map it against your particular goals and objectives for your auctions.
Picking the Right Tool for Your Organization
Which platform should you use, then? It will likely come down to price and whether or not you'd like to feature your auction as a self-contained, branded event.
For nonprofits trying online auctions for the first time, MissionFish can be a comparatively low-investment way to get their toes wet, and eBay's huge audience makes it very likely that you'll get at least market rate on your items. On the other hand, BiddingForGood allows for a more customized online event, in addition to easier administration.
Whichever option you choose, don't forget that online auctions will require a substantial amount of planning and staff time. A great event can't be created through great tools alone — but they can certainly help!
For More Information
Guide to Special Events Fundraising
A very useful online book covering all aspects of special events, including auctions, by Ken Wyman Associates.
Tax Considerations in Charitable Auctions
A very detailed and useful look at the tax implications involved in auctions, for the item donors, bidders, and the organization itself.
Thanks to the nonprofit technology professionals who provided recommendations, advice, and other help:
Image: Gavel, Shutterstock