When soliciting items, you’ll come across certain “donations” that require a reserve, or a minimum bid, to sell the item. Now, although having reserves on your items is not ideal for your fundraising auction, it happens and it isn’t all bad. There are several reasons that an item could be assigned a reserve:
1. Your organization had to pay a firm dollar amount (though lower than retail value) to have this item at auction. There are companies that will “donate” extravagant items at wholesale prices to the nonprofit. The reason you need a reserve on these items is to break even! Avoid these items. Say the reserve is $2000, and you raised $2500, your organization only raised $500 for this item. You may say, “YAY!!! $500 is better than nothing.” The bad news is that you had a donor in your audience that evening that just gave $2000 to another company when they were intending to give it to your organization.
2. On the other hand, there are companies that will donate items to organizations and take a percentage (say 30%-50%) of the money earned. These sort of donations are MUCH better because your organization has a greater chance of raising more money on the items, and they are usually worth it because of the unique nature of the items. The reason that there are reserves on these items is because usually the donor knows the value of the items and is concerned about using their donations wisely – ensuring that they are actually raising organizations money rather than just practically giving away once in a lifetime opportunity.
3. Sometimes artists will put minimums on their work so that they maintain their own retail value. This is something that we need to respect. They’d rather have their work not sell than go for something below what it is worth. Again, this is a fundraiser – not a time to get good deals.
If you have items that have reserves on them, please reach out to me and I’d be happy to walk you through how to handle the reserve.
