When the economy took a nose-dive in 2008 it made fundraising an even greater challenge. In 2009, it was clear that message that was king. As donors began making choices between potential events, cutting back on the number of auctions they attended, it was the events that effectively communicated their message in advance of the auction succeeded.

Successful events in 2009 were able to empower an audience to make a difference in the world by attending their event. Highly effective messaging led to highly motivated crowds who came prepared to help change the world, one bid at a time. But any event that took its audience for granted last year suffered dire consequences.

2010 is barely underway and the spring fundraising auction season has yet to arrive, but it is obvious that  organizations are going to have to work harder than ever to create meaningful and profitable fundraising events. Message will be important this year, but it will no longer be enough just to get a solid message together and use it to bring potential donors to your event. Successful events will need to create and celebrate a community that comes together to make something positive happen in the world.

Schools have an advantage in this respect because they have a built-in community, and they make the easiest example upon which to draw. Parents have a deep-rooted belief in the value of their children’s school, and most understand how important the auction is to the school. Successful school auctions are a chance for the parent-body to come together, party, and make something good happen for the school. At successful school auctions the big bidders are celebrated and the fund a need is the emotional high-point of the evening.

If your event doesn’t have a built-in community it simply means that you have to work harder to create a community. Community can exist year-round, it can come together for one night or an extended event. We’ll drill down into more specifics on how to succesfully create community at an event in upcoming posts, but the grand overview is that you have to find a way to bring people together to help you.

You have to make your attendees feel that they are an important part of your “family”, no matter what size check they write that night (the power of the fund a need is its ability to turn a mass of small pledges into incredible change, after all). You have to make attendees want to come back and do it again every year, and hopefully bring more friends. They need to look forward to the event, the gathering of people it represents, and the difference it enables them to make in the world.

In other words, donors not only want to make a difference, they want to surround themselves with people who are committed to making that same difference - at least once a year.

Heading into the fall fundraising season, one trend had become readily apparent this summer. More than ever, the most popular fundraising auction lots sell relationships, not stuff.

We’ve long been advocates of selling “access” at charity auctions, and by that we mean “selling access to that which you cannot buy elsewhere.” Anyone can walk in to Michael Mina’s restaurant to have dinner. But a cooking class for two people where Chef Mina himself teaches you how to prepare a multi-course feast, followed a few weeks later by a dinner party at your house where you cook and Chef Mina is your sous chef is truly amazing (be sure to ask Ed about that one).

We used to include in our definition of access places you couldn’t normally gain entrance to. VIP access to a major sporting event, for example, used to sell fine on its own merits. But even those types of lots have lost their allure, if the buyer isn’t sure that they’ll be building a relationship while they attend it.

A celebrity golf event in Raleigh this past August provides a prime example of this. We had a lot that included VIP access to the Allstate Sugar Bowl in New Orleans over new year’s eve. It included airfare, hotel, and access to the Sugar Bowl, one of the major bowl games in NCAA football. We were never able to clarify exactly what we meant by “VIP Access,” so I simply compared attending the Sugar Bowl as Allstate’s guests to getting a tour of Spago’s kitchen with Wolfgang Puck.

When it came time to sell the lot, Dennis Haysbert, the official spokesman for Allstate, was on stage with me. He gave a brief overview of how incredible New Orleans is over new year’s eve, and how much fun the Sugar Bowl can be. We got the bidding going and as quickly as it started it was over: with only two bids. As I was selling it, Dennis stepped forward declaring that this simply could not be, and went on to explain in more detail/alter the lot on the fly.

Now Dennis himself was going to be your host, he would take you down to the field pre-game, then take you up to Allstate’s VIP Box to watch the game, and even join you on Bourbon Street after for a little partying. We started the bidding over, and this time it sold for more than twice what it had sold for before. Access to the Sugar Bowl was one thing, access to the Sugar Bowl with a chance to build a relationship with Dennis Haysbert is an entirely different beast.

The relationships you strive to sell don’t have to be A-list celebrities from Hollywood - but if you have said relationships, make the most out of them. The definition of celebrity varies as much from event to event a the organizations themselves.

The National Pain Foundation, for example, used to do a fundraising auction in San Francisco. Every year one of the biggest selling lots would be dinner with Dr. Eliott Krames and his wife in their home, prepared by them and paired with wines from their cellar. Dr. Krames founded the NPF, and for the myriad pharmaceutical executives and doctors in that room he was one of the biggest celebrities we could have found. No offense to Eliott when I say that if we took that lot elsewhere it wouldn’t have the same cache. Celebrity is a relative term.

When planning your fundraising auction, encourage your committee and board members to creatively think about all of the relationships they have. Is there anyone they know who people would love to get to know as well? Sometimes the biggest money-making lots are right under your nose - or on the tip of your iPhone, as it were.

At the end of Clint Eastwood’s Oscar-award winning western, Unforgiven, Little Bill Dagget (Gene Hackman’s character) finds himself about to die at the hand of Edward Munny (Eastwood), one of the very criminals he’s spent his entire life protecting his little town from. “I don’t deserve this… to die like this,” Dagget says.

Munny pauses just long enough before pulling the trigger to reply, “Deserve’s got nothing to do with it.”

Audiences at fundraising events these days are completely unforgiving, leaving little room for error before they turn on or tune out an event. And like Munny said, “deserve” has nothing to do with it.

It used to be that if a sound system was sub-optimal, a crowd would work to hear the auction and pay attention. I did a school event this year that had an unfortunately horriffic sound system, and the crowd took that as their cue to save some money. “What’s that? You want me to bid on what? I’m sorry, I can’t hear you, my 401k is down 37% this year!”

The event finished down 40% from last year’s totals. We’ll never know for sure how much the sound system cost them, but I’d estimate that half of that is attributable to how poor the sound was.

Start the auction too late? Unforgiven. Have too many speakers or too large a program? Unforgiven. Put on a poorly structured fund a need that doesn’t spell out what you need the audience to help you accomplish? No matter how badly you need the money, this year “deserve” alone has got nothing to do with it.

We have always advocated thinking of your event as theater, and planning your event so everything that happens does so for a reason.  This year, that reason has to be focused more tightly than ever before. We’ve seen plenty of evidence to back up our theory that people are attending less events than ever before. And if they are given the slightest hint that something is amiss, they are ruthlessly tuning out and saving their money for an event that deserves it more.

Every event I’ve done this year, except one, has started off the same way: With attendees exhibiting an almost palapable, universal apprehension during the cocktail hour. I’ve had people come up to me and ask me, point blank, “What’s going to happen during the live auction? Is anyone going to bid?” The universal unspoken question, “Will there be any money in the room?” is suddenly so front and center that it is no longer taboo to bring it out into the open.

I typically try to make light of it, asking if they’ve brought their checkbook and assuring them that we’ll make the most of whatever potential is in the room. The reality is I’m holding my breath for each and every event, along with the event chairs, staff, planners and beneficiaries. The economy has everyone lowering their expectations to the point that we all become joyously happy if we’ve got two bidders on every lot.

Overall, events are down. We know that. At this point you should be aiming to raise the same as last year, while secretly accepting that a 25% downturn may be the economic reality of the times. The best event I’ve done so far in 2009 came within 11% of its 2008 total; but there is a success story to be found in there.

Planning on a challenging economy, the staff lowered food costs by over $15,000 by replacing the caterer with three restaurants who came in and each prepared a course.  The event then hired a freelance wait staff (and paid about 1/2 what they typically did through a caterer) to serve the event. The result was they netted more money than they had the year before, even on a lower gross.

The challenge with lowered expectations is to not lower them so visibly that you let your crowd off of the hook. You have to change how you talk about and ask for money, and any conversation with a supporter that sounds exactly like conversations in the past is going to be immediately ignored.

But if you are a non-profit that provides services for the needy,  demand for your services goes up in a down economy. In and of itself, that is a new way to speak about the needs and expectations of the event, while acknowledging the reality we all are existing in. The catch is not to lower expectations to the point that everybody shows up expecting everyone else to make it happen - a collective SEP Field, if you will.

It is always about messaging. It is always about messaging. And this year, more than any other, that messaging needs to be done in a clear, two-way communication. If you are dependent upon a select few bidders to support your auction, find out if they are going to support you this year, and if so, how much you can rely up on them. You need their help, and you need them to buy in to your event and your organization.

The number one question you should be asking isn’t just, “Can I get them to come to my event?” It should be, “Can I get them on my board?”

Reynolds & Buckley will be conducting a workshop entitled Fundraising Auctions in Hard Times on Tuesday, February 24th at the Volunteer Center of Sonoma County. Company founder and nationally recognized fundraising expert David Reynolds will be on hand to discuss the challenges facing anyone conducting a fundraising auction today, along with associates Greg Quiroga and Ed Gold.

This is the third year we’ve partnered with the Sonoma Volunteer Center to offer a workshop, and this workshop couldn’t come at a more relevant and important time. We will discuss emerging trends in fundraising auctions, share insights from the 50+ events we’ve done since the recession “officially” began last fall, and touch on the ever-important fundamentals:

• Laser beaming your message
• Donor development
• Bidder recruitment
• Audience empowerment

Then we’ll break up into roundtable discussion groups led by David, Greg and Ed to address the specific concerns of each organization’s event. Whether you are considering starting an auction or have a well-established event, you are certain to gain a wealth of tips and ideas.

Date: Tuesday, February 24
Time: 9:30 am – 12:00 pm
Place: Volunteer Center of Sonoma County, 153 Stony Circle, Suite 100, Santa Rosa, CA
Fee: $45 for members of the Volunteer Center of Sonoma; $65 for non-members
For: Executive directors, board members, development staff and other volunteers involved with fundraising auctions

Click here to register online for this Reynolds & Buckley workshop at the Sonoma Volunteer Center.

I feel compelled to note that all of the fees associated with this workshop cover costs for the Sonoma Volunteer Center and its programs.

My first reaction on seeing that the Naples Wine Auction raised $5,000,000 this year is that every thing is a matter of perspective.  It all depends on whether you see money as absolute or relative.

Naples raises $5 million sounds really good.

Naples auction down by two-thirds sounds really bad.

I suspect that we will hear all sort of explanations of the downturn in the next few weeks, but regardless, everyone in the fundraising business knows how hard you have to work to raise any sum of money, and $5 million  is worth celebrating!

Colleen and I have spent the last few days in the wine country.  We have had meetings in Napa, Mendocino and Sonoma.  It has given us a chance to talk to several vintners.  They are all complaining about wine sales generally but the bright spot is that direct sales and their wine club sales are as strong as ever. In fact several wineries reported that wine club members actually increased the size of their orders.

My interpretation of this is that in hard times, people value the relationships they have more than ever and are prepared to spend money to protect those they care about. If they are prepared to do that for wineries, how much greater is their commitment to a charity?

This should give non-profits a psychic boost.  All the time and effort you have invested into building relationships with your supporters will be returned, and then some.  Do not underestimate your supporters.

Disappointing News.

I just saw a depressing report from the Spectrem Group of Chicago. They spend their time tracking trends among the wealthy. This is the first feed-back that I have seen on the effects of the economy specifically on the wealthy. The first question answered is whether the rich have, through access to some secret club, remained unscathed by the current downturn. The Spectrem Group reports that households with assets over $1 million have lost an average of 30% of their assets and nearly 20% have lost over 40%.

Most of the wealthy (90%), expect a prolonged economic downturn. There is no reason to expect the wealthy to be any better interpreting the tea leaves than anyone else (if they were, they would not have lost 30% of their investments), but it will affect their behavior.

The statistic that I find most threatening for fundraising is that a majority of the wealthy (55%), are worried that they may not have sufficient assets to maintain their lifestyles. It is tough enough to raise money from individuals who have lost a significant part of their wealth, it’s really tough if that donation requires the donor to give up something significant.

Who would have ever thought that I would start to think of 2007 as the good old days.

In the last year the combined loss in property values and the stock market amounts to over $9 trillion, or approximately $90,000 for every household in America.

I suspect that it is the secret hope of every director of development that their wealthy benefactors have somehow come through this unscathed and will continue to support their charity with the same vigor as they have in the past.

Unfortunately for donations, the rich have taken a double whammy. Not only have their investments taken a hit, but the percentage return they can expect over the next few years will also decrease. They may still have more money than they can spend in a lifetime, but the wealthy will feel poorer. If you once had $300 million and you now only have $200 million, I suspect that it is human nature to focus more on the missing hundred million than to celebrate the amazing quantity of money you still have left.

The pool of donations to be divided amongst all charities will shrink for the foreseeable future. This will be going on at exactly the same time as most charities face increased pressure to provide more services.

Sadly, for your charity to survive, others will be forced under. The next couple of years will be tough, and, as shocking as it may seem, we may all start looking upon 2007 as the good old days.

This is from today’s Wall St. Journal:

“According to a new survey from American Express Publishing and the Harrison Group, nearly half of respondents with incomes of $250,000 or more agreed with the statement that “I worry that at some point I could run out of money.” That’s up from about a third in April.

Fully 69% agreed with the statement that “The recent real estate and banking crisis has affected my sense of financial security.”

Of course, $250,000 is only “Obama wealthy.” And running out of money “at some point” is a long time horizon. Yet the survey suggests that even high-income earners are cutting back their spending for fear of what the financial future might bring. Fully two-thirds say that they are “looking closely at every spending category to see where I can save.””

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This is the group that I mentioned that used to be a reliable participant at auctions but is now far more cautious. We need to re-engage. It all goes back to “Laser-beaming the message”.