Fundraising Auction Guide - Consignment Items

The Advantages of Consignment Items:

The most common reason many organizations do not accept consignment items, is their internal accounting procedures. Whether it is a large organization mandating this limitation onto its various chapters, or a small single organization accounting for their consignment items as an expense to their bottom line, the auctions that do not accept consignment items often do not do as well as the auctions that do accept consignment items. Obviously there are many fundraising auctions that do extremely well with only fully donated items, and there are exceptions that prove every rule, however our comparisons of thousands of auctions over the past 5 years indicates that consignment items tend to enhance the auction and increase the overall money raised.

We encourage every organization to accept consignment items, because our experience tells us that consignment items do not hurt your event, and at a minimum they enhance your inventory of items and improve your fundraising.  Consignment items often bring a ‘recognized value’ that is not easily matched by fully donated items. Obviously there are those wonderful donations made by celebrities and wealthy patrons that are priceless, and impossible to compete with by any consignment item, and we always encourage every nonprofit to seek those out. But not every organization can deliver those types of unique and unusual donations, and it is to those organizations that we advise to seriously consider the advantages of consignment items.

We have seen the argument made that consignment items hurt the auction because they do not bring in as many dollars as the fully donated items and therefore pull dollars away from the ultimate success of the event because bidders use up their precious dollars on consignment items instead of the fully donated items.
We believe this to be an argument that has little to no data to support it.  In fact after watching the results of thousands of auctions our internal data indicates that people tend to bid on items they want, not on items they think contribute the most to an organization.

People attend fundraising auctions because they want to BOTH support the organization as well as purchase desirable items.  Over the years we have heard hundreds of stories about auctions that have not come close to meeting their fundraising goals because few of their auction items were bid on. The fact that many items, regardless of donated or consignment, often fail to sell at auction is proof positive that people bid only on items they find interesting and want to purchase. 

The idea that there is a ‘finite’ amount of money in the room and consignment items take away dollars from that ‘finite’ pool is an argument that has no supporting evidence and is counter to anything we have actually seen in our experience. There may be a ‘finite’ pool of money in any auction audience but those dollars will only flow to your organization if you have items that will attract bids. Consignment items often attract bids by virtue of their tangible value. The trick therefore is NOT to exclude consignment items, but rather to find a balance between fully donated items and consignment items such that your fundraiser has an inventory of compelling product and every item is bid on.  It is also important to find consignment items that are priced well below their retail value as well as being highly attractive and desirable.  

The advantages of consignment items for auction are:

• There are always local companies and businesses that are willing to provide items on consignment so your selection increases dramatically and easily.

• Generally you can get commitments for more than qty 1 of any item so you have the ability to sell multiples, or satisfy several of the top bidders, making everyone a winning bidder to the benefit of your auction. Generally, self-made or self-provided donations do not come in multiple quantities. (It’s tough to get that wine tasting dinner offered more than once.) But consignment items often come in any number you need. Those ‘Gift of the Month Clubs’, or those ‘golf putters’, or even that ‘trip to Cancun’, are all items you can auction off as often as there are bidders. Feel free to ‘double or triple down’. 

• It is much easier to find sponsors for consignment items since there is little to no effort required from the sponsor other than the commitment. There are many sponsors who want to contribute but work schedules and a hectic life don’t really allow for personal donations that require effort and time. A commitment for sponsorship towards a consignment cost solves that dilemma.

• Business’s are often more willing to sponsor a consignment item for auction. Sponsoring an item can be less expensive than making an actual contribution so they meet their community responsibility at a lesser cost allowing them the ability to sponsor additional local organizations. 

• Most consignment items for auction come with their own ‘marketing/sales’ materials. Your overall preparatory work for the fundraising auction is lessened because display materials are generally provided.  For example The Auction Registry provides display materials for every item in their catalog.

• Consider combining or bundling some consignment items with fully donated items. For example some organizations have ‘Land Only’ travel packages on consignment but bundle them with fully donated frequent flier miles.

• Consignment items for auction are often the marquee items at your auction due to their uniqueness. Because consignment items for auction are not free they are often the ‘upscale’ item at the event.

• Consignment items generally have a defined ‘retail value’ which is always much higher than the consignment cost. This allows for ‘marketing’ opportunities, by taking the most attractive consignment items and advertising them in newsletters and other PR activities to draw in a larger audience. Remember, people bid on items they want to purchase and everyone is looking for a ‘deal’.

• Consignment items for auction are generally easier to value as a possible tax deduction. A consignment item generally comes with an invoice, or a receipt of payment.  On the other hand a fully donated item, or service, is much harder to value.  A hosted wine party, or garage cleaning, etc. has value as well, but is much more difficult to define specifically when tax time rolls around.

• Consignment items work well in online auctions due to their inherent ‘discount factor’ characteristics. Online bidders cannot always place a value on fully donated items like a wine tasting dinner, or week in someone’s timeshare condo in Colorado, but they can easily place a value on a fully paid trip to the Marriott Resort in Cancun.  If they can easily see a ‘deal’ it will draw more bidders.

• Consignment items for auction are more easily leveraged for greater dollars.  For example: let’s say that a patron signs up to sponsor an item like the ‘Wine of the Month Club which has a consignment price of $400. (This can apply to virtually any other item as well). The bidding for this item may start at $500 and may sell at auction for a price somewhere north of $500. As a result of the patrons sponsorship your organization will pull in over $500 but the sponsor patrons actual contribution was only $400, for which they can also receive a tax deduction. The patron was able to ‘leverage’ their $400 sponsorship into more than $500 for your organization which is 25% more than they actually contributed.