Picture this: You're hosting a silent auction. Everything is running smoothly. That is, everything was running smoothly... until you let guests know they have ten minutes left to bid. Soon after, one guest approaches your team and asks to remove their bid on a high-value item. What do you do?
With a good understanding of your silent auction's rules and general best practices, you can handle situations just like this.
Admittedly, silent auction rules are more comparable to the pirate's code in a Disney film than the laws spelled out in the U.S. Constitution so more what you'd call guidelines than actual rules.
However, outlining a few guidelines before your next auction will help it run smoothly. Sure, some rules may make you unpopular when you enforce them. But in the end, most of your bidders will appreciate your consistency and quick response and feel safer bidding as a result.
In this guide, we'll discuss five helpful rules to outline before your next auction (and a handful of best practices to set you up for success). Let's dive in.
5 Essential Silent Auction Rules for Fair Auctions
The majority of nonprofit fundraisers involve few, if any, formal participation guidelines. However, you need to be clear and upfront about how your auction will run so all attendees can participate on equal footing and feel comfortable placing bids.
Every organization has its own spin on how it runs auctions, so there aren't any standardized rules across the nonprofit sector. The following sections discuss five categories to consider when outlining guidelines for your next auction, to help you get started.
1. Bidding Rules
There are two main components to consider when creating bidding rules. First, recognize that some challenges can be eliminated or mitigated by simply choosing the right mobile bidding software, such as:
- Placing bids with bad handwriting, raising the wrong paddle, or writing down the wrong name. With auction software, guests can submit bids on their phones, computers, or tablets.
- Bidding in incorrect bid increments. Silent auction software won't allow guests to palace a bid under an item's minimum bid increment.
- Stealing bid sheets. This is one of many reasons that bid sheets, in general, should be avoidedwhen you don't have bid sheets, they won't be stolen.
- Canceling bids. Make it clear that all bids are final before the first bids are entered, and your silent auction software will enforce this by not allowing a bidder to remove their own bids.
- Closing final bidding. Your platform might have a countdown timer to drive participation until the final few moments.
However, there is also expected participant behavior that can't be mitigated using software. You'll need to clarify rules for:
- Paying for items bid on.
- Providing accurate contact information.
Outlining these additional bidding guidelines will bring much-needed order to your auctions. With silent auction rules, all your guests can be sure that everyone else is following the same bidding procedures they are. This can make them feel secure, and maybe even competitive, when placing bids.
While bidders are contributing to a charitable cause, there's still a monetary exchange involved. This means that guests who win items count as the buyer for items and your nonprofit is the seller just like when you sell someone a t-shirt from a store.
Your guests aren't the only ones who need to follow silent auction rules! Your nonprofit should establish and share seller guidelines to maintain transparency and earn your bidders' trust.
Set guidelines relating specifically to items, as well as to the seller (your nonprofit) more generally. For example:
- All item descriptions should be true and accurate. This includes both descriptions and photos. Be sure to report any flaws, alterations, or damages to bidders.
- You will establish the fair market value of auction content to the best of your ability. There is a chance that those who donate items might overestimate the items' market value, since they can use that number for tax purposes. Do your research!
- You won't manipulate the bidding process. This includes placing bids or causing bids to be placed with the express purpose of artificially inflating the bid price.
- You will honor the transaction contract. This includes accepting payment for auction items that are won and delivering all auction items paid for.
- You will provide a receipt of purchase. All winning bidders should get a receipt at the end of the auction that lists all purchases with the fair market value of each item vs. the purchase price. The receipt should also identify you (the nonprofit) as the seller.
These guidelines are important for guests to trust you enough to participate in the auction. That said, you may also be bound by seller guidelines or an Acceptable Use Policy (AUP) outlined by your mobile bidding software provider even if you only quickly scrolled past it when not-actually-reading the Terms and Conditions. Check out Handbid's AUP here as an example.
Knock out two birds with one stone (and remain compliant) by referencing your provider's AUP when outlining seller guidelines!
There is a ton of gray area around legal compliance for auctions.
Generally, there aren't major laws dictating how your auction should function. But, you may run into state-specific tax rules.
We can't provide the specifics to you here unless you're seeking an article listing out the parameters for each of the 50 states, which you're (hopefully) not. However, there are a few specific tax considerations that can be helpful to research before planning your auction. For example:
- Will you be required to charge sales tax?
- Is sales tax charged for all items or only some?
- How is sales tax handled for bundled items?
Another tax-related consideration is whether items purchased by bidders are tax-deductible. Because the act of purchasing involves making a donation to your nonprofit, you may think the answer is yes.
However, whether a bidder can claim a deduction is unique to every individual. While you can declare your tax-exempt status (if you have one) and your TaxID, do not tell bidders that their purchases are deductible. Instead, we recommend you tell them that any purchases above the fair market value of items may be deductible and advise the bidder to consult with a tax advisor.
4. Checkout Rules
Let's be honest, the last thing you want is to reach the end of a long auction event and be staring down a long line of (hopefully) subtle sighs and tapping feet, waiting to pay for their items and head home.
Mobile bidding software will drastically improve the user experience, as guests will be able to check out directly from their phones once the auction is over. However, set a few checkout guidelines to ensure the process goes smoothly:
- Require credit cards to be on file before bidders place any bids. That way, you'll already have a payment method in place for all won items. You can also require participants to input a credit card once they hit a certain benchmark such as $100 before they can place any additional bids.
- Equip staff and volunteers with tablets. Do you have any loved ones that still use flip phones? Probably. Strategically station staff and volunteers equipped with tablets around your auction space. They can tell guests without smartphones which items they've won and for how much.
- Number items for quick distribution. Assign each auction item a number and train your crew to find items based on this system. Then, guests will give their number at checkout to receive the item. We recommend keeping it simple such as assigning all gift certificates a number in the 100s, all physical items a number in the 200s, all bundles a number in the 300s, and so on. These categories help your team grab the correct item fast.
- Require guests to show that an item has been paid in full. Before you send a volunteer running for an item, ask guests to show you the PAID IN FULL invoice on their phone. Not only will this show you that the item has been purchased, but it'll give you the code for the item. The last thing you want to do is to send a volunteer off to grab a large grill and have them drag it up to the checkout only to realize that the guest won a grilling gift card, not the heavy home item.
Bonus! We wrote an entire ebook about achieving a rock star checkout (since rock stars always get paid). Access it here for more tips.
5. Opening and Closing Times
When guests first sign up for your auction, let them know exactly when bidding opens and closes. This helps guests organize their schedules and can be especially helpful for your virtual auction attendees (since these events can sometimes last several days).
After setting your auction up for an exciting start, make sure to finish strong by providing your guests with a time warning when you get close to your auction's end. Letting your guests know when they have ten minutes left to bid can ensure they get their last-minute bids in, driving extra revenue.
Your team can share these time updates in several ways. At in-person auctions, you can make an announcement, but you'll also want to follow up with a text or push notification to ensure everyone receives the message. For fully virtual auctions, you can stick to the text and push notifications.
Try to avoid extending auction close times, but if you must, be sure to give all bidders adequate notice. Nothing frustrates a bidder more than to think they have won an auction item but then find out the time was extended and someone else outbid them!
4 Silent Auction Best Practices for a Successful Event
Outlining a few guidelines before your auction will create a strong foundation for the event and give you a plan for action in case roadblocks occur. It's a baseline best practice for a functioning event.
But, what about taking your auction to the next level‚ hosting a truly successful, fundraising-goal-surpassing, guest-impressing event? Consider incorporating these best practices into your planning.
Setting starting bids and bid increments is more of an art than an exact science. Some nonprofits approach this question by thinking about how they can get the most value for each item. But, this could cause them to set bid increments that are too high and lead to reduced engagement.
If your goal is to start a bidding war, which it should be, both to create a fun event and to reach your fundraising goals‚ avoid setting high bid increments. Instead, consider what increments will attract the most attention.
In most cases, this means bid increments that are as low as your nonprofit can bear.
First, determine your starting bid. This should be around 30%-40% of an item's fair market value (FMV). You'll want the starting bid value and the expected revenue from bids to roughly equal the item's FMV.
You can decide how much bid revenue you need by subtracting your starting bid from the FMV:
[FMV] - [Starting Bid] = [Bid Revenue]
Then, divide your desired bid revenue by the number of bids you want the item to receive:
[Bid Revenue]/[Number of Bids] = [Bid Increments]
Don't be afraid to play around with this formula and adjust the exact totals you get from it.
3. Gamify Your Auction
Auctions can get pretty competitive! An engaging auction drives feelings of friendly competition, encouraging guests to bid more, bid quickly, and even bid strategically (such as saving a big bid for the last minute). Tap into these feelings and boost your auction's engagement with immersive gamification tools.
Gamification turns an activity into a game through added incentives, such as decorative badges and awards. Some online auction platforms come with built-in gamification features, including:
- Leaderboards. As part of your auction's competition, why not let your biggest supporters show off a little? Leaderboards can get your biggest spenders excited and eager to compete with one another to move up a few more places (while earning more for your nonprofit in the process).
- Fundraising thermometers. Visualizing large amounts of money and how they compare to other amounts is hard for the human brain. Use fundraising thermometers to give your guests a visual representation of your fundraising progress. This helps them see how close you are to your goal and can persuade them to give a little more to help you reach it.
- Notifications and sound effects. These can immerse your guests further into your auction. For example, if a guest gets a notification that they've been outbid and logs in to their auction app to see a red screen with an alert, they might just bid more next time to avoid seeing the losing screen again.
Mobile bidding apps and text notification tools take gamification features to the next level, helping you create an auction that encourages more bidding at every corner. Plus, at live events, you can display some of these key features on screens to continue engaging guests even when they put their phones away.
4. Have a Plan for Removing Bids
So far, this article has highly recommended emphasizing that all auction sales are final and that bids can't be canceled. This is for good reason. Removing bids can quickly get complicated. That said, your nonprofit should have a plan in place for if the situation comes up.
If a guest asks to remove a bid, you have three options:
1. Remind them that bids are final. You don't want unhappy bidders, but sometimes the best approach is to point to the agreement guests made earlier that all bids are final. Of course, there are times to be a stickler for the rules and times to treat things on a case-by-case basis. Use your best judgment for each scenario.
2. Encourage them to wait it out. If a guest asks for a bid to be removed early or midway through your auction, you have the option of telling them to just wait it out and hopefully get outbid. However, if there are ten minutes left and they want their bid removed, you'll likely need to choose between options one or three.
3. Remove the bid. Avoid this when possible, since opening up the possibility of removing bids can lead to a chain reaction. Sometimes your second-place bidder will be happy to take an item off your winner's hands. But in other cases, if the winner doesn't want an item anymore, the second-place bidder might just think the same thing.
There are ways to prevent these situations from ever occurring in the first place. Some silent auction software platforms let you put spending limits on certain bidders, preventing them from overbidding or canceling their bids last minute.
5. Get Guests to Register Ahead of Time
Knowing how many guests to expect can help your auction's staff accurately distribute their time and resources.
While some auctions are equipped to handle a few last-minute sign-ups, you can save yourself and your team a major headache by encouraging guests to register in advance. By doing so, you'll be able to:
- Create a faster checkout process. Checkout lines can turn into a bottleneck if your auction team isn't prepared. Have guests register a credit or debit card on file before your auction. That way, they'll be able to pay quickly, pick up their items, and move out of the way for other guests picking up items.
- Equip your event team. Your event team is likely composed of staff members and volunteers. But how do you know how many volunteers to recruit? When your guests all register in advance, you'll know how big your audience is and can recruit and train the right number of volunteers to meet your guests' needs.
You can speed up the registration process for regular auction attendees by using a platform with universal accounts. Then, when previous guests sign up for events in the future, they won't need to re-enter their personal or financial information and can get straight to bidding!
Though silent auction rules are often more guidelines than anything else, they can help your event stay on track and form an agreement between you and your guests. These guidelines, partnered with a few silent auction best practices, can help take your next event to a new level.
For more help planning your next stand-out silent auction, check out these resources:
- Charity Auctions: The Ultimate Guide [+Software Tips]. Learn more about how to plan and set up your charity auction with this ultimate guide.
- Silent Auctions: The Complete Guide for Smarter Fundraising. Interested in running a silent auction? Learn the ins and outs of auction planning in this comprehensive guide.
- Online and Silent Auction Software: 8 Top Providers Reviewed. Online and silent auction software can transform your auction for the better. Check out these top providers.