Whether online, in-person, or hybrid, the nonprofit auctions of today rely on software to track and store data. For hybrid events, managing revenue coming in from multiple sources through a variety of methods can quickly get out of hand if your nonprofit isn’t prepared.
Your nonprofit should never doubt where its hard-earned fundraising money is coming from. Publicly tracking live donations can even boost excitement at events by sharing how close your supporters are to fundraising goals. For hybrid auctions, live reporting high bids can spur bidding wars, engaging both in-person and online guests to participate.
Here at Jitasa, we help nonprofits of all shapes and sizes with their accounting and financial needs. That means we’ve helped nonprofits track their revenue from all sorts of fundraisers, including online, in-person, and hybrid auctions. From this experience, we’ve developed four best practices to help your nonprofit monitor its next auction’s revenue:
- Use Auction Software
- Track Sponsors and Items
- Take Security Measures
- Follow-up After the Event
The specifics of each step will be dependent on your nonprofit’s size and the scope of your hybrid auction. However, each of these tips revolves around core principles of forethought and organization that will apply to almost every nonprofit hosting an in-person, online, or hybrid auction fundraising event.
1. Use Auction Software
Specialized auction software helps your nonprofit manage and host its auction. While your nonprofit could theoretically host a live auction (or even find workarounds to host a hybrid alternative) without auction-specific software, monitoring the event through the night and compiling final reports will require far more labor and effort than that required for software training.
Auction software not only helps organize all elements of your nonprofit’s event, but the right solutions also keep your finances secure. After your auction, your software should make it easy to pull revenue reports to draw accurate revenue and expense conclusions.
Different auction software solutions specialize in different auction components, meaning you might need to do some research before finding the solution that will match your exact needs. As you choose your auction software, take into account:
- Event Size. Most auction software is designed with certain sized nonprofits and events in mind. Before investing in a solution, assess your nonprofit’s annual revenue, your auction’s expected fundraising revenue, and how many guests you predict will attend your event. You might find a highly recommended auction software is more robust than your nonprofit’s needs, and a cheaper software with fewer features will work just as well.
- Adaptability. Your auction software shouldn’t limit what kinds of auctions your nonprofit can host. For example, an online bidding app should work just as well for guests at your venue as it does for guests tuning in from home. Examine potential software solutions for additional features such as live streaming capabilities to further improve your hybrid auctions.
- Reporting Functions. If you want to monitor your revenue in real time (and you likely do), your auction software needs to accommodate live donation updates from multiple sources. Make sure your software comes with data storage, filter views, and reporting features that will allow your team to understand your event’s finances both after and during your event.
Outside of auction software, additional software solutions such as event registration tools, financial reporting databases, and wealth prospecting solutions can further improve your ability to track and increase cash flow.
Whichever solutions your nonprofit decides to invest in, make sure your software is set up to work for you by monitoring the metrics that matter for your event. For example, at your hybrid event, you might decide to monitor whether more revenue is coming from in-person or online visitors to help determine whether your next event should remain hybrid or become fully virtual.
2. Track Sponsors and Items
While preparing your auction, you’ll need to keep track not just of direct revenue from bids, but also sponsor contributions. Your auction’s sponsors make your event possible by donating and contributing items for guests to bid on and money to make the event possible. Losing track of an auction item will not only cause your nonprofit to miss out on the money it could have raised, but will also result in an awkward conversation when your team thanks its generous donor.
Start tracking your sponsors and acquired items early. Ensure your team communicates where they are in the acquisition process with each sponsor to make sure nothing is missed. The general process is:
- Make a list of possible sponsors. Your auction’s sponsors will likely meet at least one of the following criteria: their business is currently doing well, has overlapping interest with your nonprofit, and has supported similar events in the past. The more criteria met, the more likely a sponsor is to say yes to your solicitation for auction items, but don’t be afraid to vary your list to give your nonprofit a larger selection. Prioritize high priority sponsors but also create a place for mid to lower priority sponsors.
- Research and tailor ask for sponsors. Your ask, especially for high priority sponsors, needs to be personalized. Research the interests and businesses of each potential sponsor and practice your ask first on mid and low priority sponsors to refine your approach. If they say no, thank them profusely for their time anyway.
- Document received contributions. Some donors may give their promised item immediately while others may take their time. For each yes you receive, monitor where they are in the contribution process so no items slip through the cracks. Once the item is in your possession, be sure to write down its description and market value as soon as possible.
Your auction team should be in regular communication with your nonprofit’s bookkeeper for step three to track all contributions. As Jitasa’s guide to nonprofit bookkeeping explains, bookkeepers are responsible for recording all financial transactions, and a member of your team with sufficient organization and mathematical skills can take the role if need be.
For more complicated financial transactions, your nonprofit may need to consider hiring an accountant or using a third party. For example, at the end of your auction, you may notice some discrepancies between several items’ winning bids and the money paid out. Whether you begin to dive into the why behind your nonprofit’s finances, you should bring in an experienced accountant to ensure your nonprofit stays on track financially.
3. Take Security Measures
Any and all money that passes through your nonprofit’s hands needs to be secure. This is for the protection of your finances and in order to stay accountable to your supporters. Financial accountability and security are essential for nonprofits, and it’s your nonprofit’s responsibility to protect your donors.
In addition to keeping your donors’ financial information safe, security measures also ensure your nonprofit can trust all revenue reports at the end of your auction. Your approach to security should be comprehensive and include:
- Investing in PCI-compliant software. PCI-compliance means that your payment processor or other software has met a certain level of security standards defined by the Payment Card Industry.
- Creating procedures to enact in the event of a security breach. Bloomerang’s report on nonprofit cybersecurity estimates that 68% of nonprofits do not have any documentation ready in the event of a hack or other security breach. While the goal should be to never have a security breach, it is likely panic will set in if something does go wrong and you’re not prepared. Your nonprofit should write out a policy document ahead of time for how you will proceed in the event that the worst happens.
- Establishing a system of internal controls within your organization. Your nonprofit’s finances should be organized so there are always multiple sets of eyes on key financial transactions and decisions. This helps your nonprofit to catch mistakes and also helps create a culture of transparency.
Regular financial review can additionally help your nonprofit ensure all revenue is accounted for. Routine audits and checks for financial discrepancies will keep your nonprofit fully informed about its finances, which makes it easier to identify a mistake when one does crop up. Running through an event’s budget, revenue, and expenditures afterward simultaneously keeps your auction secure and helps your team plan an accurate budget for your next event.
4. Follow-up After the Event
Your event team’s work doesn’t end until all of your auction’s loose ends have been tied up. This includes thanking guests and sponsors, ensuring items are delivered to winners, and creating a comprehensive report on the auction’s success as a fundraiser.
Auctions do more than just raise money. They provide an opportunity to build connections with donors and local businesses that can open the door open to future support. However, your auction still does need to succeed as a fundraiser to be worth throwing.
Set a measurable financial goal before your auction to define financial success for the event. As this guide explains, effective budgets are realistic and measurable. Every event your nonprofit hosts should have clear revenue source and expense estimates. The numbers you choose can be determined by analyzing finances from past events, current trends for the event type, and what similar organizations are achieving.
For your hybrid auction, use your software’s reporting features to understand what parts of your auction succeeded and what could be refined to maximize future success. For example, you may realize that some items didn’t get as many bids as you would have hoped due to having bid intervals that were too high. Connections like this can only be made through extensive, data-focused follow-up.
Hybrid auctions are complex events with many moving parts. While a few things might slip through the cracks, ensure that your revenue tracking is never one of them. Invest in software solutions that will improve your auction team’s ability to manage during the event and follow-up after. Don’t overlook other practices your nonprofit can invest in to maintain financial stability and accountability either like structuring secure financial organization, hiring an accountant, and keeping dedicated records of transactions.
Jon Osterburg has spent the last nine years helping more than 100 nonprofits around the world with their finances as a leader at Jitasa, an accounting firm that offers bookkeeping and accounting services to not-for-profit organizations.