Five simple questions to ask when interviewing a potential auctioneer.

1. How many charity auctions do you do a year?
2. How many years have you been doing this?
3. What is the range of auctions you do in financial terms, the size of the crowd and the types of organizations with which you work?
4. What is your longest run for doing an auction?
5. How many of this year’s auctions are repeats?

The answer to these five questions should reveal the essential facts about an auctioneer.  The first three questions deal with overall experience.  One of the challenges doing this work is that there are no rehearsal opportunities.  You learn in front of an audience.

It is really the last two questions that are most important.  There are several specific skills and characteristics that are either useful or essential for an auctioneer: a passion for a cause, a sense of humor and a facility with numbers are good examples.  But on top of those there is an indefinable quality that makes all the difference; THE ABILITY TO CONNECT WITH AN AUDIENCE.

The best metric of this quality is being invited back over a course of years.

I write while changing planes in Vegas on route back from Indianapolis.  We were there for Elegant Vintages, an auction benefiting the Indianapolis Zoo.  The event was a great success, and it appears that the auction at least matched last years, and may well have even exceeded the previous total.

Once again you have to look under the hood to see why this event has bucked the national trend.  Colleen and I agree that the secret strength of this event lies with the two chairs, T.J. Cole and Holly Banta.

They have been the Chairs prior to our becoming involved with this event, and that is least six years ago.  Apart from the obvious advantage of having two young, attractive, dynamic, food and wine loving individuals running the event, their continued involvement was particularly important this year.  They have a long term perspective, and know that the event is successful, though the totals may vary from year to year.  This removed the pressure to “out perform” the chairs of previous years.

Another advantage that comes with longevity is that they know what works.  Even though they were anticipating a drop in revenue, they insisted that the event maintained the same high quality that they were famous for in the past.  They knew that they would lose their audience if it was perceived that they had cut corners.  The wines for tasting during the evening were phenomenal!

Of course it is not realistic for most events to keep Chairs for anything like this period of time, and I am amazed at their generosity in taking on this role once again.  They both have full and busy careers, are in the midst of a major remodel and raise horses.  Thankfully they were helped some new lieutenants this year.

We just returned from Park City and the National Ability Center Auction.  I have not yet heard the final numbers, but I suspect that they may be ahead of last year.  As always it was a wonderful event, but there is no doubt in my mind that their focus on message explains their success.

The NAC helps people with disabilities to participate in the sports they love or learn to love.  This has a life-changing and life-affirming effect.

The event, named Red, White and Snow, brings over 20 wineries to Park City, Utah. There is the usual round of wine maker dinners and tastings, but the highlights of the weekend are the occasions where everyone, Vintners, Clients, Staff, Donors and Supporters get to interact on the slopes and socially.  Your heart would have to be made of stone not to be overwhelmed by the commitment, courage and dedication of everyone involved.

The night of the auction, Teague, one of the NAC atheletes who lost an arm and leg in a car accident as a child, introduces a video.  He starts by saying that he never expected to be an athelete, and the video ends with a clip of him completing the slalom course at an incredible speed.

My main challenge at the auction was simply to find a way to give the audience permission to make the donations they wished.  This is not an insignificant challenge in this time when “Frugality is the New Chic”.  I was definetly helped in this by the vintners who kept adding to their Lots.

The lesson from the weekend is that you have to fight for your organization.  The downturn in the economy has had a specific effect on potential wealthy supporters.  As a group they are attending fewer events.  Every organization is an a competition to make their event the most emotionally satisfying for their attendees to ensure long term success.

Last week a friend returned from a board meeting and announced that they were anticipating their event to be down 50% this year.  Talk about a self fulfilling prophecy!  If you are anticipating lower returns, TELL NO ONE!  It is one of those secrets that need to be whispered into a well at midnight.

As soon as they hear that you are planning on less, everyone from the lot donors to the lot buyers to the participants in the fund-a-need, will react accordingly.  This will create a downward trend that is hard to stop. On hearing that you anticipate 50% less revenue all the bidders will arrive planning to buy the same quality lots as last year for a big discount.  Unfortunately, in anticipation of lower bids, donors will have offered lesser lots.  Suddenly a planned 50% decrease becomes a 66% decrease.

If asked about your expectations you need a response.  A possible suggestion: While acknowledging the shape of the economy, we have very loyal supporters and so we hope the auction will be in the same range, give or take, as the last few years.

Any Brit will recognize the line from the Morecambe and Wise Show.  The correct answer was “Rubbish”.

That pretty well covers my attitude to 2009. As far as I can tell, fundraising auctions are down about 33.3%.  That is the average and as such paints a pretty useless picture.  A more accurate description is that auctions are all over the place.  A few have even exceeded previous years totals, but more are down.  Some are down two thirds.

Any input from other events would be much appreciated.

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.

I have just fielded a couple of calls from clients accusing me of being too blase about the decline in the returns from the Naples Wine Auction.  I agree that it reflects a significant decrease.  $16.4 million in 2007, $14 Million in 2008 and a reported $5 million in 2009.

I believe that we need more time to pass judgment.  So many factors can affect the totals, if indeed the $5 million amount is accurate.  These are some we have encountered over the years:

• Missing bidders.  At one of the early Sonoma Valley Wine Auctions we sold a package for 4 or 8 to attend the US Tennis Open.  The trouble is that it takes place on the same weekend as the Sonoma Auction.  We lost our two top bidders the following year.
• Unforeseen circumstances.  The beloved chair of an event had a heart attack the night before the auction.
• Force of Nature.  At Livermore one year, the entire West Coast power grid collapsed. Fires, Floods and earthquakes have also had their effects.
• Personal Relationships.   A couple divorced during their year as chair.  “He” inherited the auction, “Her” friends became determined that it would fail.

In other word it is too early to extrapolate from the brief news I have had from Naples concerning the trands for auctions as a whole.

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!

The question always comes up as we start working with a new client;

“In the catalogue should we list value or opening bid?”

In fact the choice is broader than that.  I have used the following options over the years, each has it’s own advantages and disadvantages.

1. Value.  The advantage is that it is straight forward.  We are not trying to trick the bidders into over bidding through ignorance.  The main disadvantage is that it acts as a barrier telling the bidder to bid this high and no higher.  There is a minor secondary problem.  Sometimes the donor includes a totally unrealistic valuation.  In that case what value do you list?
2. Opening Bid.  The advantage is that there is one less decision for auctioneer, making his or her life easier. The disadvantage is that it removes one of the best tools in the auctioneers toolbox.
3. Estimate .  I use a simple formula to determine an estimate based on the value.  I list a estimate of 10% down and 50% up.  For example, if a lot is valued at $1000, I would put the estimate at $900 - $1,500.  The advantage of this method is that does set the relative value of all the lots and it also starts the bidders thinking about the higher price.  The disadvantage is that the upper price level sets an impenetrable barrier.
4. Priceless or equivalent. I understand having to list the occasional  lot as priceless.  Literally no one knows the price.  The advantage is that while the term priceless just means no known price, big or small, the tendency is to assume a high price If you list  more than a few lots this way it becomes precious.
5. Leave it blank.  The advantage is that it is really easy.  In many ways the whole purpose of auctions is to determine a price and whatever a lot sells for is the true value of the item on that day.  The disadvantage is that it can be confusing for the bidders.  The Central Coast Wine Auction has never list any prices or values and it has worked well for years. The reason is that Archie McLaren, the founder and executive director, writes the most complete, detailed and best promoting catalogue in the business.

Unfortunately there is no one correct answer to this except to stay with whatever system you are currently using, as any change may confuse your audience.  If you are hosting a first year event I would recommend choosing from options one, two or three.  If you are as lucky as a couple of our events you would label the value as “Opening Bid” and just go from there.

As a result of the downturn in the economy, many events are finding it more difficult to get auction donations. In many cases the number of donations has declined, or the quality of some of the donations has declined. Still wanting to fill their auction with good lots, many events turn to consigned auction items as a way to round out their auction.

Do your research before adding consigned auction lots to your auction. In many cases you can get better deals on your own, if you are simply willing to do the legwork. In other cases, a lot that makes sense for an East-coast auction may not be well-suited to a West-coast event. These days many hotel properties are struggling to stay at capacity, and are willing to make deals if you deal direct. But in many cases, you don’t have to look very far to find ways to do better than the consignment companies.

One such example is Winspire’s “America’s Cup Stars & Stripes Experience in San Diego 4-Night Package with Airfare for Two” which they value at $5,618.00 and sell to events for $1,750.00.

The package includes round-trip coach airfare from anywhere in the U.S. on American Airlines, four nights at Hyatt Regency Mission Bay Spa & Marina, and a 150-minute sailing experience on Dennis Conner’s Stars and Stripes. The first time I encountered this lot, I thought the value must really be in the sailing experience. Not so.

Anyone can sign up to sail on the Stars and Stripes for $99 per person. You need to be willing to do your research and book your trip yourself. Given that Stars and Stripes offers gift certificates, it means you can secure the package without having to book the date for your winning bidder.

The Mission Bay Hyatt? I managed to find suites available at $239 per night at the height of the season. So far, this $5,618.00 package has an actual cost of $1,156.00 before taxes. Actual cost is probably closer to $1,260.00 after California takes its cut.

So the difference in value that Winspire brings to the table on this particular lot is in the airfare. Two round-trip tickets on American to San Diego for $500 is a bargain if you are coming from New York city. Cross-country flights on American to San Diego cost an average of $500 per person. If you are a New York school putting together an auction package, this lot makes sense for you.

However, Bay Area auctions would be remiss to purchase this lot based on airfare, for myriad reasons. Foremost is the fact that American doesn’t fly direct to San Diego from San Francisco. Any flight on American to San Diego would require a trip to Seattle, Chicago, or Dallas first - resulting in a 9-hour flight. The other major factor is Southwest, which flies non-stop between SF and San Diego multiple times a day, for an average of $120/person, round-trip.

Furthermore, a surprisingly large number of auction lot winners never actually redeem their lots. One event we asked to track the data reported that 45% of their winning bidders did not redeem their getaways purchased in the live auction.

The vast majority of consignment houses require that you purchase the certificate as soon as the auction is over. If your bidder doesn’t redeem the trip before the expiration date, the consignment company keeps the money and your event is out the cash. We discussed this with the Gavel Group at their inception, and they refuse to budge: A buyer’s lack of redemption is their pure-profit.

Over at Winspire, Jeff Cova is more understanding and will often work with winning bidders to extend the deadline. He’s not out to sell vapor, and is more interested in people actually redeeming their trips since he has to buy them from the various airlines, hotels, etc.

The major issue with this is that when one of your donors doesn’t redeem a trip the consignment houses make a profit. A profit that your bidder assumed was going straight to your cause when they made the bid and then opted not to take the trip. When you consign an item to your auction there is no viable way around this, and it is a risk you have to be willing to take. Some auctions opt to include the actual costs of the items they are paying for in the description. It certainly sheds a new light upon a lot when donors know how much of the money is actually going to the charity - I’m not 100% certain that light is favorable.

One other big package being offered at the original writing of this post was a trip to the  2009 Super Bowl XLIII in Tampa. It included a 3-Night Stay and First/Business Airfare for Two at a cost of $19,000.00 to the buyer. Included in the package were round-trip, first class airfare on American, three nights at the Ginn Reunion Resort, and two tickets to SuperBowl XLIII.

The Ginn Resort was, as of the original writing, offering villas for $279 per night, with many still available. SuperBowl Tickets had hit a 15-year low at that point, and were currently reselling for as low as $1,500.00 per ticket. The same section the consignment houses was offering were currently at $1,800.00 per ticket. Total cost to this point if you wanted to put it together yourself was: $4,437.00, not counting airfare (anyone want to hit the SuperBowl next weekend?). If you were to simply sell this package on your own, without airfare, you’d immediately save $15,000.00 off of what the consignment houses wanted to charge you.

To be ultimately fair to the consignment houses, I opted to research first-class flights, less than one week from the date of flight. American Airlines wouldn’t quote a fee, but I found unrestricted first-class on United for $1,600.00 per person. Meaning that you could put that package together for $7,637.00 on your own - at a savings of more than $11,000.00 off of the consignment house’s price.

Jeff Cova will point out that one of the main benefits of working with Winspire is the fact that they are experienced concierges: they will take care of your buyers, period stop. And the last thing you want are unhappy bidders, especially unhappy bidders who have spent significant amounts of money on prime auction packages.

To make matters worse, there are auction companies out there that purchase lots from consignment houses and then resell them to auctions for a significant profit. One auction house offers the Stars and Stripes package to events they work with for a cost of $3,000.00. I know because one of my clients hired them to do a silent auction, and this other firm “offered” to consign a Stars and Stripes package for $3,000.00 into the live auction. My client agreed before doing any research on the lot (or turning me loose to look it up). When I compared the write-up the firm provided me to the .pdf available on Winspire’s web site, they were exactly the same, word for word.

I understand the need to make your auction better, and encourage you to follow our guideline of 1 to 3 when spending money on an auction lot. In today’s economic environment there may be even better deals to be found out there than the above examples, which were researched solely online. A quick phone call to the Hyatt in Mission Bay, for example, may yield significant discounts, and nothing trumps interpersonal relationships.

The point being, if you have to pay for auction lots do your research. Make an honest evaluation of your crowd and the lots available. If an auction lot being offered for consignment seems over-priced or too good to be true, it probably is. But if an offering and price-point map well to your crowd and fill a much-needed gap in your auction, no-one will blame you for bringing in some professional help.