Auctions vs. sweepstakes: What’s best for your nonprofit?

on October 22, 2018

Auctions can be a staple of many nonprofit events, such as dinners, galas, and even school fundraisers. But are they the right strategy for your nonprofit?

All that work curating the right prizes, making sure people are actively bidding, and all of the compliance issues… all just to walk away with one donation per item. It almost seems like you’re missing out on the opportunity to capitalize on the interest and support of the other bidders who are actively saying they’re willing to give.

For nonprofits who are looking to go beyond the typical auction, online sweepstakes are a great method for capturing the excitement of auctions, without losing out on the support of multiple bids.

Either way, there really isn’t a one-size-fits-all solution to adding incentives and competition to your event. So, let’s dig into the pros and cons of auctions vs. sweepstakes to learn about which may be the right choice for your nonprofit.inBlog_1_AuctionItems

The charity auction

Auctions are a great way to engage attendees at nonprofit events to bid on multiple prizes in order to raise money for your cause. They can create buzz at your live event and get people excited at the chance to win something, while at the same time making an impact for your cause.  

The prizes that you decide to auction off can be curated by your nonprofit, or donated by supporters or local businesses. But the key is to collect an assortment of enticing options that appeal to a wide range of supporters, in order to generate as much buzz — and bids — as possible.

That being said, there are a few things to consider when it comes to hosting a charity auction at your next event.

Benefits of an auction

The impulse buy

Auction items can oftentimes be things that your supporter wouldn't normally buy, but in the haze of an auction setting, they’re more inclined to make an impulse purchase or bid.inBlog_2_UrgencyKeeps the event engaging 

If you’re hosting a traditional dinner or lunch with an emcee, having an auction can give you something to talk about during the event. It adds a little momentum and allows you plenty of opportunity to engage with your attendees. You can remind attendees before the auction closes or on items that still are left without any bids.

Good draw for your communications

You’re most likely going out months early with personal invitations and social media shout-outs about your upcoming event. Including sneak peeks into the items up for bid on the event day can be a draw to get people to take the leap and register for your event.

Some drawbacks

Momentum gets lost

As the event goes on, the momentum of the auction tends to lose its luster. Either supporters bid once and then after seeing how much more they’d have to spend to get the high bid again, they lose interest. Or, one bidder is committed to winning a prize so they bid high securing their spot.

While this may seem like a good problem to have, your goal is to really maximize the amount of money raised during your event. When supporters stop bidding, it ends up capping your efforts and the excitement of the auction starts to wear off.inBlog_3_ChecklistsThoughtsLots of work

It’s no lie that charity auctions take a lot of work. Going out and finding services or retailers who are willing to donate their product on behalf of your cause is one thing. But you also have to find a venue, have a checkout process in place, decide if you need extra staff to manage the auction portion of your event, and deal with fulfillment and follow up at the end of the night for the winners.

Making sure you are willing and able to attack all of the facets of an auction will help your night run smoother and give less room for any surprises.

One winner and ultimately one donation

Perhaps the biggest drawback of the charity auction is you’re limiting the amount of money raised for your cause. Just like we mentioned above, sometimes the prize garners only one bid and that bid sets the tone making it less likely more people will bid. And, even if you do get bids on your prize, only the top bidder forks over the cash.

You have all of these attendees who are passionate about your cause, and they end up doing nothing more than eating your dinner and mingling with friends. They were most likely comfortable bidding up until a certain point but once the leader took the race, they decided to step back and their money that they willing to give is no longer on the table.

Sweepstakes

If you’re thinking about hosting a charity auction, it might be a good idea to think instead about turning that auction into an online sweepstakes. A sweepstakes is when you offer up a prize as a chance to win. An example would be ‘Every $50 donated is an entry to win movie passes for a year at the local theater.’

Sweepstakes can be used at nonprofit events to fulfill many of the same things an auction brings to the table — but they can actually bring in more excitement, and money, per item.

Benefits of a charity sweepstakes

Raise more money

With the auction, you have one winner per item and that winner’s bid is the amount donated to your cause. But when you introduce a sweepstakes for a method of entry, you are asking multiple donors to give at the chance of winning the prize.inBlog_4_Scenarios_v2So let’s say you had a bundle of restaurant gift cards up for bid at your auction. You have 10 people bid on that prize ranging from $50 up to $250. The winner is the $250 bidder but you had 9 people before that person who were just as interested in the prize. You made $250 in donations but the potential was there to raise so much more.

If you ran a sweepstakes with that same prize and said 'every $50 donated is a chance to win a restaurant gift card bundle,’ you could potentially have those same 10 people give $50 to be entered for a chance to win — raising $500 in total. With this method, you just raised $250 more for the exact same prize. And this is just for one single prize. Multiply this by all of the prizes you’ve curated for your online sweepstakes and you have a lot of money raised.

The power of online

We all know that connectivity is a huge part of the world we’re living in. That’s why if you take your event online, you can host your sweepstakes live during the event, but have your patrons donate via their mobile phones on site.

You can announce the next prize up for grabs and see in real time who is vying for a chance to win. It helps create urgency and a little friendly competition as well.

Additionally, if you’re hosting your online event on a platform that has embedded social sharing capabilities, your donors will be taken down a path that leads them to share on their social media accounts that they gave to your cause. This can lead to more awareness and potentially more dollars raised.

Multiple ways to play

Being that a sweepstakes is when you offer up an incentive as a chance to win, there are a couple different ways you can word the entry rules.

You could go with the 'Donate at least $25 to our cause and you’ll be entered to win a pampered massage package.’ This method is great for smaller donation amounts, and you can even make it so each donation of that amount counts for a separate entry. So, in this example, if someone gives $50, they’re entered twice. Same with this example as well. 

Or, you could cap the entries for a particular prize, such as ‘The next 10 people to give $200 will be entered to win a 3-night stay at a hotel with theater tickets and wine tasting.’ This approach can lead to more urgency since you have to be one of the first 10 donors.

inBlog_5_DataData collection

Another benefit of hosting a sweepstakes online is that you are collecting all of the donor data in a concise and easy to manage way. You’re now able to identify these supporters as attendees who gave money during the event. Now, you can speak to this group of people in a way that resonates with them.

Maybe you have another event coming up, or are holding an online sweeps that isn’t tied to an event. With the donor data in your hands, you’re able to message these supporters and engage them in a way that works for them.

Some drawbacks

One winner

With auctions and sweepstakes, there usually is only just one winner per prize. However, with a sweepstakes, you could offer up multiples of the same prize to keep things interesting as one way to solve this. For example, the next 10 people to give $150 will each win a year pass to the local movie theater.

All the fun legal stuff

Sweepstakes are subject to regulation in order to make sure they’re fair. And, these regulations can vary state by state. So it’s important to make sure that your sweepstakes rules meet all the legal requirements in your area.

In addition, if you are hosting your sweepstakes online through a platform or website that you don't control, it's important to double-check the platform's terms of use to make sure your contest or promotion plays by the rules and is permitted. So make sure you are either using a platform like CrowdRise that helps you manage all of the legal red tape, or that you have someone on board who you can rely on to make sure your online sweepstakes is legal and your nonprofit is protected.

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When you use CrowdRise, you’re able to take more of your event online, including your sweepstakes, and create more opportunities for engagement for your attendees. And with our featured product add-on that helps with all of the administrative aspects of sweepstakes, including drafting legal rules, you can be sure that you’re doing everything that's needed to make sure that your sweepstakes is legal and your organization is protected.  CrowdRise-Auctions-vs-Sweepstakes

Gary Wohlfeill

Gary Wohlfeill is the Director of Marketing at CrowdRise. He works with partners to develop highly engaging fundraising campaigns, and leads the marketing team in developing the CrowdRise brand. Gary has been named as having the “3rd best haircut of people under 6 feet tall at CrowdRise" and hopes one day to slip to 4th.

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