This article begins with a confession: We started Swell to help a nonprofit replace an auction-centric event. The results were transformative and unexpected.
Fundraising events are almost synonymous with auctions. Why? Do people need to receive a product for their “gift”? Would they give to your mission without the retail experience?
Why did we cancel the auction?
The auction required significant and consequential staff and volunteer time gathering, arranging and displaying auction items. When we put a value on the time commitment, the event was not beneficial to the organization. Our volunteers were tired and we were losing committee members that did not want to ask for items. Additionally, the cost of that time and these volunteers meant that strategic fundraising opportunities were missed. We were losing site of the “forest for the trees”.
To a lesser extent but important, the auction was driving our event software choices. To host our auction, we licensed expensive software to handle our event ticketing and checkout process. This cost our nonprofit 10% of the event revenue. We lowered this cost (including credit card fees) to just 4.5%.
What was transformed?
In the process, we recognized a transformation in the post-event data and the months following the event. It was a transformation that led to the formation of Swell as a company and the long-held belief that events can be an important gateway for new donors into an organization.
- Donor Retention: The purpose of an event is both revenue and donor acquisition to support long term growth. Auction buyers were not becoming long-term donors to the organization and significantly impacted the organization’s donor retention. Note: Even the IRS doesn’t consider an auction buyer to be a donor unless the amount is above the value. Should they even be entered in your donor database?
- Donor Experience: Each year, a few auction buyers at our event encountered issues with an auction donation or never picked up an item (which we held for months in the office). We could not control the experience or delivery of the auction item in some cases and it impacted the organization’s reputation with that donor.
A guest purchased a $1200 dinner party in their home and we were not able to get the chef who offered the package to schedule it.
A group of donors purchased a one-week trip to the Dominican Republic at a home with amazing pictures but it was not the luxe spot shown in the pictures.
How many stories could we add to this one list? In every case, we lost the donor for the long term.
- Volunteer Retention: Our event volunteers did not grow weary of the new event which meant their connection to the organization and giving increased. Many of the volunteers remained on the event committee for years and several rolled onto the board. One of those event committee members recently served as the board chair.
- Negative impact on local businesses: Local restaurants and businesses are the backbone of nonprofit auctions. We asked our auction donors about the impact of nonprofit auctions on their work. They reported feeling pressure to contribute to auctions. Many small businesses reported that they receive multiple requests per week. We realized that we were leaning too heavily on small businesses that face many obstacles to their success. This is particularly true today in a post-COVID economy where businesses are rebuilding.
Recently, nonprofits have added the Fund-A-Need portion to their live auction events. These are often wildly successful. Let this be a sign that your guests are ready to give and that your focus on an auction may be pulling your attention away from getting new guests to attend who will learn and give. Note - the success of your Fund-A-Need is likely an indicator of significant online/digital opportunities related to your event giving. Don’t limit the giving to just those in the room.
Finally, it can be difficult to cancel an auction completely. Many nonprofits have had great success simply reducing the size of their auctions and focusing on a few of the most coveted items which bring in the majority of revenue.