Friday, July 23, 2010

Bidding for good (by Suzie)

My church had an online auction, and I decided to go a little wild and bid on a balloon ride. It should be interesting, I thought, unless I fall to my death. Anyway, all the money goes to my church.

Wrong. My church got little or nothing. My irritation grew when I saw feminist groups using the same company, BiddingforGood. I changed my mind after talking to its CEO as well as the executive director of the National Women’s History Project. The project has an auction with BFG now, and I’ll write about that later today.

Last year, Executive Director Molly MacGregor was afraid she’d have to end the project before its 30th anniversary. But she said the BFG staff was a great help when the project did an auction last August. She told me: "Our auction made $4,000, thank God, thank God, thank God!"

Women make or influence most purchases. Charity auctions are geared to “affluent Baby Boomers, typically female,” BFG CEO Jon Carson said in this article. (I can’t speak for his company, but I know women from their 20s on up who go to silent auctions, depending on the cause, especially if there’s an opportunity for networking. Many nonprofits mix in cheaper items so that people with lower incomes can participate.)

BiddingForGood falls into the category of cause marketing. Using its resources, a nonprofit can expand beyond its usual donors to increase awareness and donations. Companies can expand their markets and get good PR. For them, it’s product placement.

A nonprofit pays $595 a year to run online auctions on BFG. It also pays a fee depending on how much it raises from online bids: 9 percent of the first $20,000; 6 percent of the next $30,000; 3 percent of the next $40,000.

Nonprofits can supplement their auctions with items from BFG, which started its Instant Item program last year. It finds goods and services, and if a nonprofit sells one of these, BFG takes 33 percent of the final price. For Labor Day, Carson said in an email, his company will roll out new tools to help nonprofits find more items on their own and manage their auctions.

BFG started offering consignment items in 2004, but began winding down in 2005, he said.
We still have 16 suppliers (down from around 50 at the peak) and we will be taking down another 5 in mid-August ... [The vendor] gets whatever price they sell the item to the nonprofit for. Nonprofits typically set the opening bid for that price and then get anything over. Sometimes the nonprofits mark up the opening bid so there is some profit in it for them if it only gets one bid. This ultimately is between the nonprofit and the consignment partner.

To be honest I’m not a big fan of typical consignment as it’s not a very good deal for the nonprofit (37% of the items never get a bid and on average they only take home 23% of the gross auction revenue). The problem is the vendors take 100% of the first bid and, because most of the stuff is expensive, the nonprofits don’t get a lot of additional bids, which is where their profit lies (note: we do not charge our 9-6-3% fee on the vendor cost). The nonprofits will tell you it’s all found money, there is no risk, easy to access, and that they often use the items to spice up their catalogues but I personally think they would be better served working their own contacts. That said, many are small orgs and they just don’t have the horsepower or contacts to get higher-end stuff.
Here is my guess: In an auction, any item identified only with numbers came from the nonprofit. If the item has “CMP” before the number, then the item is either on consignment or is an Instant Item. You can tell Instant Items because the description says who donated it.

It bothers me that nonprofits don’t spell this out, but Carson says: “Keep in mind that these things are usually run by a harried group of part-time volunteers (many have FT jobs) who are overwhelmed and who are just trying to get across the finish line.” In live auctions, he notes, nonprofits don’t list how much they have spent on the auctioneer, their staff, the food, the hall rental, etc.

Have you ever helped run, or bid in, an auction for a nonprofit?