By Thomas Claburn
InformationWeek
For many schools and other nonprofit organizations, silent auctions represent a necessary inconvenience. They're critical for fund raising, but they can be expensive, time-consuming, labor-intensive events to produce.
Web site cMarket has been trying to convince organizations to move their silent auctions online since 2003. And while schools and nonprofits tend to be slow to adopt technology, many of them see value in moving their fund raising onto the Internet. In 2008, cMarket expects to host more than 3,000 online fund-raising events for the likes of the United Way and the Muscular Dystrophy Association, as well as a slew of schools and nonprofits.
"Good fund-raisers need an online fund-raising auction component," said Jon Carson, CEO of cMarket and BiddingForGood. "The problem with the current silent auction world is it hasn't changed in 70 years."
Automaker Ford has been holding fund-raising events for the Juvenile Diabetes Research Foundation since 1983. Its current Ford Global Walk team helps with a variety of fund-raising activities around the country, including Walk to Cure Diabetes. For the past three years, Ford has run online silent auctions through cMarket.
Gina Roche-Kelly, national account manager of the Juvenile Diabetes Research Foundation, said that Ford used to host silent auctions at various facilities run by local employees and that recently the company has consolidated these events online. "We realized there's real potential here to bring everyone together on one online auction," she said.
The first year, Ford's online auction for diabetes foundation brought in $92,000, said Roche-Kelly. The second year saw $82,000, a decline she attributed to loss of workforce and economic conditions in the auto industry. Last year, Ford's auction was open to people outside the company, through cMarket's BiddingForGood community, and brought in $92,000.
BiddingForGood auctions benefit charities and nonprofit organizations. They provide an easy way for anyone to bid on auction items in support of positive causes.
It's the possibility of developing funding sources beyond an organization's core constituency that is perhaps the most intriguing aspect of cMarket's service. According to Roche-Kelly, the diabetes foundation saw that possibility realized. "It really does expand your audience," she said.
But running an online auction doesn't mean giving up on real-world events entirely. Miriam May, executive director of the Massachusetts affiliate of Susan G. Komen for the Cure, said her organization began using cMarket as a way to diversify its sources of income. Through Bidding for Good, which accounted for 40% of the bids, her organization raised an additional $22,000. (May is on the cMarket board of advisers.)
"This was not something we were doing," said May. "We didn't have this and then we had it."
May said she appreciates the auction data cMarket provided, which helped her organization identify popular items and the best times for bidding. She also gave high marks to the technology for being easy to use. "I think that's very important in the nonprofit world," she said. Many small organizations "don't have a full-time techie."
CMarket's services aren't free. It charges a $495 annual fee and a 9% performance fee for the first $100,000 raised. Carson says the benefits of running an online auction amount to $5 back for every $1 of fees.
Marie Lehman, a parent at the Menlo School in Atherton, Calif., said her school began using cMarket four years ago to raise scholarship funds. "We decided we didn't want to do the physical silent auction anymore," she said.
One problem, she said, was that people would send decoys to bid on items because bidders in the affluent community were sensitive about being seen spending large sums. Online, she said, "you can buy whatever you want and no one knows who you are."
Now, in addition to an annual live auction of eight to 10 items, in conjunction with an 800-person dinner and a fashion show, Lehman said the Menlo School favors cMarket's online system because it brings in significantly more than the school's old silent auctions.
There may be a reason for that. "The environment at a silent auction does not stimulate what behavioral folks call competitive arousal," said Carson. Online, he said, is different, more competitive. He said he has the research to back that up.
"The punch line for us is taking these auctions and turning them from art to science," said Carson.
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