Internet Offers a New Way To Do Auctions

Internet Offers a New Way To Do Auctions

Online auctions let nonprofits reach a wider audience

By: Will Wade

December 21, 2004

The annual ski challenge is typically one of the most important fundraising events of the year for the Cystic Fibrosis Foundation's Northern New England Chapter. This lively affair can draw upwards of 300 people for a weekend on the slopes and is capped with a live auction.

In 2004, in the hopes of increasing both the number and value of the bids, the organization tried something new: adding an online component to the auction.

Lisa Babaian, Executive Director of the group, said the online bidding helped the event bring in more than her goal of $100,000. Not a lot more -- the total take was $103,000 -- but the $6,000 generated by the online auction helped push it over the top. "The event was a success," she said.

However, David Reese, who also helped arrange the auction as special events director for the chapter, said that like most new fundraising techniques, there were a few rough spots.

He said there were several ways the group might have been able to improve the way it ran the online sales component in order to increase the overall level of spending. And, perhaps more importantly, he said there are benefits from using an online auction for fundraising that can't always be measured in donation dollars.

Measuring Success

It shouldn't have come as a surprise that the Cystic Fibrosis Foundation had to work through some problems in trying to add an Internet-era feature to an event that hadn't seen much change in over a decade. But Reese said that first online auction was a great learning experience, and he is considering using online auctions for other fundraisers.

"The tool is solid, though the way it was used left some room for improvement," he said.

The organization was working with cMarket, Inc., a software company that focuses on online fundraising for nonprofit groups (the ski challenge event chair was also a cMarket executive).

One of the glitches emerged shortly after the online auction Web site went live, when Reese realized that he had nobody to tell about his spiffy new auction toy; because this was the group's first online effort, it had no mass e-mail list.

"We needed an e-mail database to start with. We needed someone to send notices to," he said.

The initial plan was to partner with a local radio station to publicize both the live event and the online component, and to borrow the station's e-mailing list, but the names didn't arrive until mid-way through the auction period. As a result, Reese said the Web site didn't get as much traffic as he had expected, and the bids were not quite as high as he had hoped.

Babaian said that in 2005, the ski challenge again incorporated an online auction into its ski event, and this time it was even more successful. The key, she said, was arranging to e-mail details to more people, even asking some of the event's partners to send messages to people on their own mailing lists. "We raised more in 2005 than we did in 2004 because the database was better," she said.

The Cystic Fibrosis Foundation used the online auction period as something akin to an early silent auction. When the live event began, the highest online bids were used to set a starting price for a live, silent auction. Reese said he hoped that would drive up the bidding, but of about 30 items that had been posted on the Web site, only about half received further bids during the ski challenge event. The rest went to the highest online bidder.

James Wintner, the founder and president of BenefitEvents, a New York technology and consulting company that advises nonprofit organizations and helps them to set up online auctions, said this is a common approach, especially for organizations that are just starting to explore online fundraising.

Another widespread strategy is to set up computers during the live event for people to enter their silent bids. While this may be more complicated than the traditional sheet of paper with a list of names and bids taped next to the sale item, the approach allows people who are not actually present to place bids. The result: a much larger pool of potential donors, and perhaps a higher selling price.

Wintner says that's the key to a successful online strategy: reaching as many people as possible.

And that's why the Internet can be such a powerful fundraising tool. When used properly, an online auction can reach far more people than a traditional fundraising auction, which is typically limited to people that are interested in the group, and live in the area, and have enough money to make donations or bid for auction items, and are free on the night of an event.

That's a lot of limiting factors, Wintner says, and with the Internet, most of them are no longer applicable. A donor in Maine, for example, could bid on an online auction for an organization in California.

Reese said that while the first event may not have been a smashing success, it did achieve one important goal: Though the Cystic Fibrosis Foundation did not start with a list of e-mail addresses, by the time the event was complete they had compiled one.

Reese has since moved on to the Massachusetts Sober Housing Foundation, where he is Executive Director, and he said that having a mailing list is critical. The next time he plans a fundraising event, he would be interested in setting up an online component, and that the first thing he plans to do is make sure the group has a well-established e-mailing list.

Wintner notes that a successful online auction can attain a critical mass; if enough people know about it, they will pass the Web site address to other people, some of whom may place a bid. And every new person who registers on the site expands a group's database of potential donors. That list of people, many of whom have already indicated a willingness to donate funds to a specific group, can be used again and again, and can prove to be an invaluable resource.

"One of the most important capabilities of an online auction is development," Wintner said.

Never-ending Fundraising

Clam Lorenz, Director of Operations at MissionFish, a Washington, D.C.-based Internet auction provider, said that online fundraising has another important advantage: It never needs to end.

MissionFish has partnered with online auction giant eBay Inc. MissionFish organizes and manages auctions for nonprofits, and eBay hosts the sales on a special section of its Web site called Giving Works. Lorenz says that groups can tie auctions to special fundraising events, such as the Cystic Fibrosis Foundation's ski challenge. Or, nonprofits can use an online auction site as a never-ending virtual thrift shop.

"Everybody has something they don't want," he said.

In this model, individuals can post their items for sale on eBay and indicate that a specific charity will receive all or some of the proceeds.

Or the charity group can collect the items and offer them for sale on the Internet. This model is especially suited for churches, retirement, or other organizations that have a large and active community, because there are many members that can donate items for sale.

"Auctions are an old standard for nonprofits, but having an online component allows organizations to reach out to a lot more people who may or may not be within their core constituency," said Robert Weiner, an independent consultant for nonprofit organizations. "You can reach a lot more people."

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TechSoup thanks Will Wade for contributing this article.


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