Rules, Do’s, and Don’ts for a Successful Silent Auction
Fundraising is an extremely critical part of running a nonprofit. Nonprofit founders and volunteers are passionate about what they do, and tend to want to roll up their sleeves and get down to business themselves. But no matter your goal, gaining revenue can often take your mission farther than elbow grease can, especially for larger initiatives that require larger financing (and perhaps greater amounts of people). This is why fundraising events are essential!
As such, fundraising strategy brainstorming should occupy a healthy portion of every meeting. One of the more popular ways to raise funds in a nonprofit is through something called a silent auction.
Whether you are just learning about them or your brain is already spinning with silent auction ideas, there are some rules and general guidelines to follow to make sure that everything is fair, in compliance, and fun for everyone. In this article, we will walk through exactly what you need to know.
- Quick Reminder: What is a Silent Auction?
- Why Does Your Silent Auction Need Rules?
- The 4 Basic Legal Rules
- 5 Do’s and 5 Don’ts for a Silent Auction
- Final Thoughts
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Quick Reminder: What is a Silent Auction?
A silent auction is a variation of a standard auction - except there is no cowboy hat-wearing auctioneer jibbering out the bids in real-time. Instead, a silent auction is, well, silent.
Here is how it works:
Each item, or "lot" in auction terminology, is laid out in its own space on a table. A bidding sheet is placed next to the item with the starting bid (or "reserve"), the bidding increments, and a buyout price.
Auction-goers move around to various items and write down their bid for the lot onto the bidding sheet, along with their name.
After a preset amount of time, the auction closes, and the bidding sheets are collected.
An administrator contacts, or sometimes announces, the winner of the auction for each item. Whoever bids the most for a given item wins it!
Sometimes, buyers can simply accept the buyout price, which prevents anyone else from bidding and wins them the item.
Three Attendees, One Wheelbarrow
Let’s do a quick walkthrough of an exemplary silent auction.
The item listed is a Black and Decker wheelbarrow. The wheelbarrow retails for $100, so you set your minimum bid amount at $50. The first bidder comes by and offers the minimum. A second person comes by and bids $100. The third person bids $150, and then bidding closes. The third person wins the item, issues payment, and then takes the silent auction receipt to the pick-up table to secure their wheelbarrow.
It is as simple as that!
Mary doesn't know why she hasn't thought of having a silent auction before!
Silent auctions have been around for a very long time and are a favorite among nonprofits. They allow organizations to raise funds in a fun way. A silent auction is like a game, and as is the case with most games, there are some rules you need to follow.
Why Does Your Silent Auction Need Rules?
Since your silent auction is a fundraising activity, there needs to be regulations in place to protect the buyers, the sellers, and your organization.
There are two types of rules for a silent auction, each serving their own purpose:
Legal rules exist to protect your organization from liability, or from charges like fraud and profiteering. Legal rules are the nitty-gritty in your otherwise fun event. They are not glamorous, but you have to make sure you get them right to avoid any nastiness down the line.
It is important to note here that you should speak with a lawyer about your state’s laws regarding silent auctions. This is particularly important when it comes to sales tax. Because it varies state by state, and indeed in accordance with whether your organization is nonprofit, not-for-profit, or for-profit, there is no set list of guidelines you can check up on. It is specific to your location and situation.
The general guidelines of your silent auction exist to make sure everything runs smoothly, and also to determine what happens in the case of reimbursement, broken objects, and more. You are dealing with people’s money, so there cannot be any miscommunication or inaccuracy. It has to be a fair game for all participants, especially those who are so generously opening their wallets to fund your cause.
The 4 Basic Legal Rules
It is always best to consult a lawyer before dealing with anyone’s money, but here are four baseline legal rules to establish before your silent auction begins:
1. The buyer accepts all risks and hazards associated with their purchase
This is a blanket liability release that protects your organization from any lawsuits that may arise due to the use, or misuse, of any item or service a purchaser acquires at your auction.
If someone wins an ATV and then breaks their arm after falling off of it, you certainly do not want the liability of that injury coming back to your nonprofit.
2. Age restrictions on certain items for sale
Alcohol and other age-restricted items are often great additions to your silent auction. Buyers love to bid on fancy bottles of whiskey, liquor store gift cards, or a winery tour in Napa Valley (if you do happen to host a silent auction with a wine tour, don’t forget to bring the Springly team along!).
But, for the safety of those too young to understand the risks associated with these items, and for your organization’s own legal protection, it is imperative that you require a government ID before allowing any buyer to leave with them.
3. The buyer understands that items are listed at fair market value
In an auction, the starting bid is often placed somewhere in the range of 50% of the fair market value of what that item or service would be on the open market. Make it clear to your patrons that items have not been appraised by a professional, and that they accept the market price as shown.
On a positive note, explain to guests that any amount paid over this fair market price may be tax-deductible as a donation to your organization.
4. All items are sold "as is"
Any time something is sold, there is a chance that it is missing some key function or is malfunctioning in some way. While you should be upfront about the condition of items at your silent auction, you should also make it clear that items are sold "as is" - that is, exactly as they are, no exceptions.
This protects your organization from any liability should your volunteers fail to observe that there is something broken on an item, especially a large item like an antique table, or if a vendor falls through on a service.
Before you set up your silent auction, consult a tax professional to learn your state's rules about sales tax for auctions in the context of a nonprofit.
5 Do’s and 5 Don'ts for a Silent Auction
Beyond the legal stuff, it is always a good idea to have a list of other tried and true guidelines that will ensure your silent auction runs smoothly. These serve to make certain everyone has an equal shot at buying their desired items. It also ensures that, once they do buy them, the transfer goes seamlessly and everyone in the exchange knows what to expect.
Here are five silent auction do’s and don'ts to make your fundraising fun and fair:
(1) DO: Have Bidder Registration
Registering your bidders before getting your auction started gives you an opportunity to collect information on your buyers. You can, with permission, use this information for ongoing fundraising campaigns via email or phone, or to recruit volunteers.
It also makes finding winning bidders much easier when the time comes to give them the good news. If they had to step out from the auction early, but ended up winning an item, you can contact them using their registration information.
Peter is feeling zen about his silent auction with all these do's and don'ts in his back pocket!
Registering bidders also empowers you with the opportunity to make sure everyone sees and understands the rules before bidding starts. To register bidders, collect their names and contact information, and have them sign a list of your rules.
(1) DON’T: Pester For Contact Information
Getting contact information is certainly one of the benefits of holding a silent auction, and you can definitely accomplish this in the registration process. However, the primary goal of any silent auction to raise money and, of course, have fun.
Do not make your registration process too long or invasive. Most people are totally fine with giving out an email and a phone number, but any more than that and you run the risk of appearing desperate for members.
(2) DO: List Bidding Process Rules
In your list of rules, you should have a section detailing how bidding works. Many who enter your silent auction may need a refresher on how it works, and this is a great place to do that. Outline your silent auction minimum bid guidelines, what the bidding increments are, maximum prices or bid amounts, the buyout price procedure, and the timeline of the auction.
Simply listing the ending time of bids is the perfect way to make sure no one accidentally places the highest bid too late, which causes confusion. It is also a good idea to post a silent auction rules sign visible in your event space to prevent any ongoing confusion.
There are tons of resources online that will give you a free silent auction rule template, so be sure to check those out!
(2) DON’T: Complicate Your Rules
It is easy, when planning a silent auction or any other kind of fundraising event idea, to get carried away. The funny thing about nonprofits is that they are operated through passion. While this is amazing 99% of the time, it can lead to overcomplication of certain things.
The silent auction has been around for a very long time, so it needs very little tweaking. Don’t add prize wheels or bidding stages, or try to maximize your earnings with any special bidding rules. Keep to the basics, have a concession stand or a bar (if it is an adults-only night) available, and let people have their fun.
(3) DO: Describe the Checkout Process
Remember, most silent auctions hosted by nonprofits aim to collect money to aid in their goals. To collect this money, you will need simple and smooth checkout procedures - especially an online checkout option - to make life easier on your winning bidders. Whether payments are being made in-person or online, make sure you:
List the credit cards and other payment methods you accept (on that note, make sure you accept many different types, as credit cards especially offer some major benefits to your organization! If people wish to bid on large items, they may not only be able to afford them, but offer up more if the sky's the limit monetarily).
Give a timeframe for tallying up bids and getting everything in order after the auction and before checkout.
Denote the conditions for getting the item. Does the winner have to pick it up the same night? Where do they pick it up and when?
Remember to talk to a professional about sales tax in your area. Once you collect payment be sure to record everything accurately to make sure nothing slips through the cracks.
Pro Tip: To facilitate the registration/online payment part, and therefore your budget management, we strongly advise you to rely on a digital solution. Springly (that’s us!) is a solid choice.
(3) DON’T: Be Vague About The Timeline
Checking out at a silent auction is arguably the most important part. In order to make sure everyone gets their winnings and makes payments, you should be very clear about when the bidding ends, when checkout starts, and when checkout ends.
This way, there’s no confusion when people come to the checkout counter at 9:03, only to realize it closed at 9.
Also include on your list of rules for your silent auction a section about what to do if your attendee misses checkout time. Typically, this is as simple as listing contact information for your organization and letting them know they can reach out there to schedule another pick up time or ask any questions.
(4) DO: Consider an Online Silent Auction
With smartphones and the digital age comes a new way to do silent auctions. Instead of setting up tables in an event space and having patrons move from table to table, you can list your items on an online auction fundraiser site and allow registrants to bid silently from a mobile app. There are a few great silent auction softwares where you can set this up super easily:
These sites empower your organization to reach a wider audience, which means bigger bids and the ability to list more items for sale. Online silent auction rules can also be listed at registration with an "I accept" box, making life easier for your patrons.
Emily is feeling ready for her first silent auction!
(4) DON’T: Take The Human Touch Out of Your Silent Auction
One risk with running a fully online silent auction is that, since it takes place remotely, your patrons do not get a chance to chat with one another and discuss your organization. This can be mitigated with communication before and after the silent auction, addressing the goals and the benefits of the money that will be, or was, raised.
Additionally, most online auction websites allow you to post messages and details along with every item for sale. This is a great place to describe what the money from each item can go to, or give a story about the teammate or member who donated it.
(5) DO: Organize Your Items
Organize your for-sale items by type to allow for a more streamlined bidding process. Someone who loves gardening can bee-line for the gardening section, saving them from the automotive section which they find rather boring, and vice versa! This not only helps foot traffic flow, but it can even improve bids by focusing enthusiasts in the area where they are more likely to spend the most
(5) DON’T: List Too Many Items
There is a common miscalculation that many silent auction hosts make when it comes to listing items for sale. The equation in their minds is "more items equals more money". Unfortunately, the equation isn’t that simple.
In reality, there is only so much money that a given audience can donate in a night. Upping the number of items does not suddenly make everyone richer or more generous! More items in the auction means a lower average sale price for each item, since patrons will always be subconsciously tallying how many items they are currently winning, and how much money they will have to spend if they win all of them. Silent auction attendees will typically keep that number below a precalculated amount.
Adding a ton of items to your lineup can actually hurt your bottom line as well. If there are too many listings, attendees might not even be able to get to them all. This creates a situation where they are bidding more conservatively on the items the can get to, while never actually getting to bid on the items they were planning to check out eventually.
A good rule of thumb is to keep listings to roughly 50% of attendance. If 100 people are expected to come to the auction, list 50 items. This keeps things nice and competitive while not overcrowding any items.
Now that you know how to run a silent auction, you are ready to get to fundraising! All you need to do is ensure that participants know what to expect, and that your staff does too (especially from a legal standpoint), and you really cannot go wrong. Make sure that your bidders, essentially your supporters, are valued and taken care of, and you will be one step closer to ensuring your silent auction fundraiser runs smoothly.
Have fun and enjoy!
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💡What is a Silent Auction?
A silent is just like a regular auction, but instead of bids being shouted out loud by an auctioneer, they’re written down on a sheet of paper by the bidder. Find out more.
🔑What are the Rules for an Efficient Silent Auction?
The buyer accepts all risks and hazards associated with the items
Age restrictions on certain items
Items are listed at fair market value, but not appraised; buyers should consult a tax professional to find deductible amounts
All items are sold "as is"
📝What are the Dos and Don'ts of a Silent Auction?
5 General Guidelines for Silent Auctions:
Have Bidder Registration
List Bidding Process Rules
Describe Checkout Process
Consider an Online Auction
Organize Your Items