9 Questions to ask when Considering Prizes on Consignment for your Auction

Navigating the world of fundraising auctions, especially when it comes to securing valuable prizes, can be quite the undertaking.

Many organizers grapple with the challenges of sourcing great items for both live and silent auctions. This is where 3rd party fundraising prizes, also known as Items on Consignment (IOC), come into play as a popular and viable solution.

1. What are 3rd Party Fundraising Prizes/Items on Consignment?

These items are supplied by external providers under a 'sale or return' arrangement.

Essentially, if the prize (aka item) successfully sells at auction, the charity receives a portion of the sale price, typically the winning bid amount minus the cost to purchase the prize from the supplier. If there are no bids, there is no cost to the nonprofit, and the fundraising prize is returned to the provider.

Pros and Cons of Using 3rd Party Fundraising Prizes/Items on Consignment:

Pros:

• Instant access to a diverse range of proven prizes that might be challenging for nonprofits to obtain as 100% donated items, such as luxury holidays.
• Simplifies the effort for fundraisers as the supplier not only provides the item but also manages the booking process for the winner.

Cons:

• The nonprofit receives only a portion of the winning bid amount, unlike donated items where all proceeds, or all proceeds minus transaction fees are received by the nonprofit.
• High-value consignment items may divert funds away from donated items.
• Bidders in the auction may expect that 100% of the winning bid goes to the charity, potentially causing reluctance or confusion. (Tips on on to solve this later)

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2. How Many Supplied Auction Items Should You Include?

For a silent auction associated with a fundraising event, a good rule of thumb is to aim for approximately 1 fundraising prize for every 10 guests. Once you have a good idea of how many donated prizes you will secure you can determine how many consignment items to add. Adding consignment items can often be done at the very last minute, just before the auction launch. 

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3. How Does the 3rd Party Auction Prize/IOC Provider Profit?

Most providers offer a fixed cost price for the consignment auction item, which includes their margin. Any proceeds above this cost go directly to the nonprofit. Some providers, however, share their cost and profits differently for each item, while a few may take a variable percentage of the winning bid as payment.

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4. Who Sets Starting Bids and what does the Nonprofit receive?

Starting bids are often set to guarantee a specific amount for the fundraiser if the item sells with just one bid. This percentage typically ranges from 5% to 20%. Lower percentages entice more bidders with lower starting prices, while higher percentages ensure a higher minimum payout for the charity. The use of a reserve price including a minimum donation to the cause can deliver the best of both worlds - an enticing starting bid amount and a minimum guaranteed profit for the cause if the prize sells. 

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5. Is Prize Exclusivity Important?

Items with broad appeal, like exclusive holidays or dining experiences, tend to be the best sellers. These items, combined with the right price point, can be highly attractive to bidders.

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6. Should You Highlight the Cost Associated with the Prize?

While it's not mandatory, we recommend transparency. We believe it’s important to inform bidders when an item includes a cost to the cause.. They can then make an informed choice about which items to bid on. 

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7. Which Prizes Should Be Included in Your Auction?

Providers typically offer a wide range of item types. Request recent winning bid data and advice on best-sellers from your provider. They can help you select prizes that complement your donated items and audience profile. For more information about how to secured donated auction prizes see this guide.

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8. What Is the Item Booking/Fulfilment Process?

a) Winners typically receive instructions on how to book their prizes, usually as an automated message from the auction software.

b) Be aware of any time limits for booking and usage, which often apply to consignment prizes.

c) In case winners attempt to book after the time limits, inquire about the provider's policies if they are not clearly laid out.

d) Learn about the provider's policies regarding changes and refunds, as these can vary.

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9. How easy is it to add these prizes to my auction?

You will likely be able to add sale or return auction prizes from your auction software. GalaBid’s items on consignment can be viewed, selected then instantly included in your campaign all via your campaign’s dashboard. You can create an auction campaign on GalaBid here.

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In Summary

3rd party fundraising prizes/Items on Consignment can be a valuable resource for streamlining your auction efforts. While there are various pros and cons to consider, they can be a time-saving solution for busy silent auction planners. 

To find out exactly how GalaBid’s items on Consignment service works see this guide which includes a short video.

Check out GalaBid’s latest catalogs here.

And lastly, if you have any questions or would like some guidance on incorporating supplied prizes into your GalaBid auction campaign reach out to our support team via online chat or send us an email at helpdesk@galabid.com

Written by Dee Brannick, Co-Founder GalaBid

Dee Brannick is a seasoned fundraising technology expert and the co-founder of GalaBid, a pioneering force in the industry since 2011. With a remarkable career spanning the United States, Australia, and the United Kingdom, Dee has been a dedicated supporter of fundraisers for nearly two decades.

In 2008, while in New York, Dee played a pivotal role in enabling the Robin Hood Foundation raise an astounding $28 million on the evening of their benefit event, through fundraising event technology. 

Dee's extensive global experience encompasses thousands of in-person gala events, virtual events, and standalone online auctions. Her passion and commitment to enhancing the fundraising landscape have made her a trusted authority in the field.

Connect with Dee on LinkedIn to stay informed about the latest advancements in fundraising technology and industry insights.

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