This is Part 1 of a 3-part series about organizing an auction to raise funds for your nonprofit organization. Part 2 describes How to Stage an Auction to Ensure Success and Part 3 describes How to Get High-Quality Items Donated to Your Auction.

An auction is a great way to engage members — and potential members — in fundraising for your nonprofit organization. Your volunteers can help with fundraising without actually asking anyone for money. Your members can contribute to your cause (by donating items) without having to write a check. A well-organized auction can raise tens of thousands of dollars if staged:

• In the right context
• With the right marketing approach
• With the right auction items

But even if your auction will be small, you will have to pay careful attention to the details. The care you take with the details can make the difference between a successful event and one that is a net loss (which would inevitably make your organization look bad).

Evaluate the Time Commitment

Before your organization decides to stage an auction, you should evaluate the time commitment this project would demand. The lead time required for a well-staged auction requires complete commitment on the part of your organization. Depending on the scope of your auction, you might need someone to work part time for six months or more to organize all the details.

Ideally, your small nonprofit organization would not use a substantial amount of paid staff time to coordinate an auction. A dedicated, competent volunteer could save your organization as much as $10,000 in time. If paid staff members will be coordinating your auction, keep track of the time they spend on auction planning. When you tally the auction proceeds, subtract staff time and other hard costs, like postage, shipping and handling, and marketing materials.

Set Reasonable Goals

If your organization decides to hold an auction, you should set clear and reasonable financial goals. Ideally, your organization's budget will include an auction line item. If your auction is tied to your operating expenses, figure out how much money your auction must raise to break even with expenses. If this is your organization's first auction, you should begin with a conservative estimate (5% to 10% of your budget). If your organization is concentrating its fundraising efforts around an auction, you'll need to aim for a larger percentage of your budget.

If your organization is made up of all volunteers, connect the event to a specific project to make donor outreach clearer. If your organization has staff, do not assume that your first auction will cover someone's salary.

Seek Out an Underwriter

One way to ensure that your auction makes money is to raise a substantial amount prior to the event itself. Your organization can ask corporate supporters to underwrite your event with their contributions. In turn, your organization can give these supporters some positive publicity in your auction marketing materials and on location at the auction.

It will be easier to find good underwriters if you have established your auction venue, identified a possible theme, and made the event a real draw. For example:

• How many people you expect to attend
• What kinds of items will be auctioned off

Your organization's cause is an important part of your pitch, but you'll also need to explain the event's program and expected outcomes to potential sponsors.

Consider How Often You Will Hold an Auction

Your fundraising needs will help you decide how often you hold an auction. Because auctions are so time intensive, you may choose to hold them only occasionally for ad-hoc fundraising. This approach is useful when you want to complete a project, build an endowment, or fund a new staff position.

Annual auctions can generate an increasingly predictable income stream for your organization. Your auction may become an event that the community looks forward to each year and associates with your organization (or it may seem less special than an occasional auction). Repeat auctions help you to maintain relationships with your members, partners, and supporters. Your organization will develop a track record that you can present to potential underwriters. Finally, each year's event will offer a new opportunity for your organization to benefit from lessons learned and improve on your success.

Occasional auctions also help draw your community's attention to new projects and initiatives. However, when you hold auctions infrequently, you'll be starting from scratch each time — and the results will be less predictable.

Go to Part 2: How to Stage an Auction to Ensure Success

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