Online Auctions -- Right for Your Nonprofit?

While online auctions were once viewed with a mixture of skepticism and reluctance, the latest eBay prediction of $665 million in revenues for 2001 indicates a change in popular sentiment. And with this change comes a welcome opportunity for those in the nonprofit field. When executed correctly, charitable online auctions offer high potential for financial gain and increased exposure for the nonprofit organization and its cause.

When handled inefficiently, however, the same exposure to a larger audience can backfire, painting your organization as an ineffectual mess. And it has been argued that high-value items are necessary for generating substantial funds, as many bidders are accustomed to using online forums solely for discounted goods.

Are Online Auctions a Viable Option for Your Nonprofit?

Proponents claim an exciting alternative to year-end appeals as reason enough to jump aboard. Other benefits of online auctions include their relative low risk and low cost. The hosting services provided by most sites are inexpensive, and the promoting of your auction via the Internet is entirely free. In addition, online auctions have the potential to introduce an entirely new audience to your organization. As www.missionfish.com asks, “Why offer big-ticket items to a live audience of hundreds, when Internet auctions can reach millions?” And with 29.7 million people clicking through eBay portals annually, their argument has validity.

One of the earliest charities to venture into online auctions was Musicians on Call, which brings live musical performances to the hospital bedsides of seriously ill patients and works with hospitals to bring music into the healing process. In the fall of 1999, this charity was essentially launched with the help of an online auction, according to its Executive Director. “We raised more than a half-million dollars through that auction, recalls Dr. Leslie Faerstein, “including a record $26,000 for Bruce Springsteen tickets.” Since then, the charity has grown and added several dimensions to its fund-raising program, but continues to benefit from sales of items donated by artists such as Britney Spears, Matchbox Twenty, and Jon Bon Jovi, through auctions on VH-1 and MTV ’s Web sites.

In what may be a sign of the unsteady progress of the Internet auction, though, Dr. Faerstein recently learned that SONY’s AllStarCharity.com, which had provided charities including Musicians on Call with 100% of revenues from celebrity items auctioned on its Web site, was closing down. Unfortunately, the lesson may be that it was impossible to survive without retaining some fees for overhead.

The Actors Fund is currently in the middle of its auction, carried on its site www.actorsfund.org, for the second year. Tickets, autographed memorabilia and VIP access to hot shows and concerts bring hefty contributions to their programs – this year earmarked for members of the theatre industry who lost homes or jobs as a result of the Sept. 11 attack on New York.

For many charities it makes more sense to run an online auction on one of the major sites such as eBay or Yahoo! rather than their own site, and most nonprofits report positive experiences. Detractors cite eBay’s size as problematic, however, especially in the initial phases of the set-up process, when a human voice on the other end of the telephone line can seem like a hard-won reward. Logistically speaking, it is a good idea for someone in your organization to have a working vocabulary of Internet-related terms, to expedite the repair process when the site is not functioning correctly. This, too, is viewed as a problem by some. And while an online auction is less expensive than a traditional one, many people still harbor a general distrust for online shopping and thus are more likely to place bids in a conventional setting.

In the end, of course, the decision is exclusively your own. Do the pros outweigh the cons? Do the benefits supercede the frustrations? It is your choice, and like most other experiences in online fundraising, will likely be part of the process of growing and learning with this young medium.