Overcoming Financial Restraints with Online Auctions
Thursday, August 18, 2022
Online auctions have shown themselves to be an extremely effective fundraising method for nonprofit organizations. During the COVID-19 pandemic, this method became all the more popular as nonprofits looked for ways to continue their fundraising efforts even when live, physical auction events were not possible. There are many tools now available to facilitate online fundraising events, and they have served to make hosting these events straightforward and manageable. Nonetheless, many nonprofits still hesitate to set up online auctions, uncertain as to how to make them work. To help overcome this hesitance, Auctria presents a guide to online fundraising and online auction tools for nonprofits.
How financial restraints hold nonprofits back from doing more
Financial restraints are an ever-present reality for all nonprofits. As they struggle to build up sufficient financial reserves and raise capital that can be invested in infrastructure and productive activities such as auctions, nonprofits are often hesitant to make financial commitments to resources that could help them advance their cause and ultimately bring in more funds. After analyzing the costs and potential benefits of something like an auction - whether in-person or online - many nonprofits may choose to err on the side of caution and hold back from making the necessary investment. This reluctance to spend precious resources, on something that may or may not bring a return, is entirely understandable, of course. The good news is that online auction tools are extremely affordable and cost-effective, meaning that the overall cost-benefit analysis starts to look a great deal more favorable.
Challenges that nonprofits face with fundraising
Raising funds is a challenge for nonprofits at the best of times, and it is especially so during tough financial times, such as we have experienced over the past two years. Whether at small local charities or major, national and international nonprofits, fundraisers often face the same common challenges. These include:
- Reduced individual donations: As donors feel the pinch, they are less likely to give money even to causes they are passionate about. The best way to overcome the resulting drop in income is to look for ways to diversify your income stream.
- Relying solely on donations: Closely related to the previous point, many nonprofits make the mistake of depending heavily on donations to raise funds. It is vital to long beyond donations as a revenue-generating tactic. Rather, look at what you have and devise ways to make it work for you. What skills or assets can you monetize? Perhaps a regular online auction will help.
- Maintaining trust: For a nonprofit to be a favorable target for any corporation or individual’s patronage, it must always maintain an impeccable record of good governance, financial prudence, transparency and accountability. Sometimes, even those that are very well run, may not do so well at marketing and reputation management. A nonprofit’s image is as important as its day-to-day operations.
- Slow digital growth: If your nonprofit does not adapt quickly to the online world, it may lose visibility and support rapidly. This is especially true after the impact of the COVID-19 pandemic, when business, in general, made a mass move into the digital realm. Always look for tools that will enhance your digital fundraising power - such as online auctions - and adopt them as efficiently as possible.
Examples of fundraising events that work for nonprofits
The number of fundraising options at a nonprofit’s disposal depends on the creativity of its leadership. There is any number of events and tools you can utilize to draw in the funds, but here are some of the most popular and effective:
- Peer-to-peer (P2P) and community events: P2P fundraising encourages fundraisers to reach out to their communities and engage a larger audience to make contributions to a nonprofit’s cause. Fun, perhaps even competitive events are great examples of P2P fundraising. They include fun runs, walkathons, bikeathons, etc.
- Facilitating online donations: Not all potential donors may have the means to hand over large amounts of money at a specific event, but they may be more than happy to make online donations before or after an event. Make sure that your website features easy and secure ways to transfer funds digitally.
- Crowdfunding: Looking for a way to bring in a large number of small-amount donors? Crowdfunding is an excellent option. Provided you have a strong cause, compellingly presented, as well as a simple and secure online payment platform, you can raise considerable sums through this method.
- Auctions: Auctions are among the most profitable fundraising events around. So long as you have some very appealing wares to sell, donors will be sure to want to get involved. Even if hosting an in-person auction event is not possible, tools such as Auctria make it easy to run successful online auctions.
Why online auctions are a good option for nonprofits
Live, in-person auctions certainly have their advantages, but taking your auction online can also be extremely beneficial. Many nonprofits were compelled to do so due to COVID-19 restrictions, but they have never looked back. Here are some of the benefits of online auctions:
- More buyers: With an online auction, you open your event up to an exponentially higher number of potential buyers. Because distance is not a barrier, you appeal, not only to locals, but also to buyers who live miles away, possibly even on the other side of the world.
- Convenience: Buyers have the option to bid when and where they want, and even bid on multiple auctions in one day.
- Instant engagement: Buyers can go immediately from seeing your advertising - perhaps on your website or a direct email - to making a bid, in a matter of seconds.
- Longer bidding window: You can keep your online bidding windows open for as long as you want, which means that buyers have more time to find what they want and make their bids.
- Greater choice and control: You get to decide how many items to close over what period. You can close ten items in a few minutes, or you can keep the option open on a handful of items for a few hours.
Why an increasing number of nonprofits are moving towards online auctions
Nonprofits are rapidly beginning to realize the benefits of online auctions. Aside from becoming aware of the advantages listed above, they also understand that online auctions are more affordable and easier to manage. They can access powerful, specialized toolkits, such as Auctria, which make it easy to set up digital auctions. They can potentially increase the number of auctions they host, and thus improve their revenue flow. With the rise in e-commerce, many buyers and donors are also starting to prefer online auctions. Even if the lifting of COVID-19 restrictions means they no longer have to bid online, many of them choose to, because it is so much more convenient and vastly expands their range of choices. This increased choice and convenience provide a win-win scenario that benefits both nonprofits and their bidders.
How nonprofits are making a bigger impact with online auctions
The benefits of online auctions enable nonprofits to plan and strategize auctions that reach a larger audience - or a more carefully targeted audience, whichever is most desirable. As mentioned before, there is no limit to the size of your market when taking an auction online, but also, using online auction tools, you can refine and plan your auctions more effectively.
With online auctions, you will have a precise set of metrics at your fingertips that enable you to review your past auctions and see, for example, which items sold best or how many of your registered bidders actively made bids. You can assess what marketing outlets and tactics draw the most engagement and determine your average donor retention from one campaign to the next.
Using this data, you can plan your marketing and item procurement more carefully and precisely, which empowers you to create more successful and impactful auctions going forward.
Plan and execute a winning online strategy with these tips
Once you get the hang of running online auctions, they become rather effortless to host. Follow these steps to set up your auction.
- Choose the right platform: Once you have the right online auction software in place, the rest of the process becomes much simpler. Online auction platforms are specially designed to run these events and build communities of supporters for your nonprofit. There are many options available, so make sure you choose the right one for you.
- Establish your fundraising goals beforehand: Set a fundraising goal and aim for it. Once you know where you are going, it becomes easier to know what steps to take. With this knowledge, you can make more precise item procurement and marketing decisions.
- Source your sales items: The whole point of a successful charity auction is that you don’t pay for the goods you sell. Unless you already have items in reserve, you will need to canvas donors to provide you with attractive goods and services that you can sell to the highest bidder in the interests of your targeted charity. Almost any desirable item will suffice, from gift certificates to vacation packages.
- Plan carefully: Although your auction is taking place in the digital realm, it requires just as much planning as an in-person event. Ask your team the following key questions and have them work together to provide the answers: when is the best time to host the auction? Who should we target with our marketing? What marketing tactics should we use? What items should be included? How long should bidding windows be left open for? Keep your fundraising goals in mind at all times.
- Determine fair market values: Ask your donors for the selling prices and market values of the items they give you to sell. You will need this as a benchmark against which to set your starting bids and reserve prices.
- Set starting bid amounts: As a rule of thumb, you should set your starting bids at anywhere between 25% and 50% of your items’ market value. You can start even higher on goods such as gift certificates (about 75% of the face value is a good start).
- Promote the auction: Create your auction page, complete with listings and photographs of the goods you are selling. You can then use social media and other networks to promote the auction in the build-up to the actual event. Your descriptions should be enticing, yet simple and descriptive. Don’t oversell your items. Instead, focus on providing as much detail and accuracy as you can.
- Hold the auction: The most bids will probably come in during the first 48 hours. Be sure to keep promoting it while the bidding is still open, encouraging bidders to continue participating right up to the very end.
Author: Laurie Hochman
Laurie Hochman has a passion for helping groups exceed their fundraising goals. After using Auctria for many auction fundraisers, she joined the team to help others boost their auction fundraising for many wonderful causes.
Auctria is an easy-to-use web-based platform for organizing and running online auctions. You can use the Auctria toolkit to manage the entire process, from first donation to final collection, allowing you to maximize your fundraising. It saves you time and effort, works for the entire team, and easily takes auctions online for the best results. Contact us for more information on our platform and its set of integrated online auction tools for nonprofits.