Rules for a Silent Auction

A silent auction is an inexpensive but lucrative way to raise money for a charity or nonprofit organization. In a traditional live auction, you may have to pay an auctioneer to conduct the proceedings, and the items are typically donated, big-ticket goods, such as large-screen televisions or vacations that include accommodations and airfare. Items in silent auctions, however, while also donated, are usually slightly less significant things, such as gift cards, jewelry or small electronics. In a silent auction, the bidders write their bids on paper lists beside each item rather than bidding in a group setting.

Advantages of a Silent Auction

One of the primary advantages of silent auctions is they don't require a great deal of money to coordinate, especially convenient for charities and nonprofit organizations. Furthermore, the organization can use volunteers for the affair rather than paying a professional auctioneer. This leaves the bulk of the proceeds for the charity or non-profit. Another advantage of silent auctions is they provide an opportunity for the organization's supporters to stay involved and get to know each other. Those who donate an item for the auction receive recognition, and the attendees can mingle and socialize as they browse the auction items and make bids. In contrast, a live auction requires that everyone pay attention to the auction, offering little chance to socialize.

Auction Rules

Silent auctions typically provide a cost estimate for each of its auction items, informing people what they might pay elsewhere for the same good or service. Make it clear in the rules where the estimates came from. They're usually based on fair market value, though sometimes the donors provide the cost estimate. The rules might also state that items over a certain value, such as $500, use an appraised value. You can decide what type of estimate explanation works best for your situation, but be sure to clearly explain everything in the rules. Note in your rules that all sales are final and that the items are sold as-is. This keeps bidders from trying to back out after making a purchase. Clarify the purchase procedures in your rules. Let the bidders know they must pay on-site and pick up their items before they leave. Explain that if the winner fails to pick up his acquisition, the item becomes the property of the organization -- even if the bidder has paid for the item. Also spell out exactly how long the auction is in effect. State when the final bids must be made and let bidders know that a volunteer will periodically announce how much bidding time remains.

Bidding Rules

Spell out the rules on how to make a bid. In most silent auctions, there is a form beside each auction item, with lines for bidders' names and the bid amounts. Every subsequent bidder writes his name on the next line and enters a higher bid. Some auctions, however, include a flat purchase amount on the paper next to each item. Bids lower than the stated purchase amount are accepted until someone agrees to the stated price. The first bidder to write his name beside the stated amount agrees to pay that amount and wins the item; no other bids are accepted after that point, and a volunteer usually removes the item and the bid sheet. If, however, no one agrees to the flat purchase amount, the person who has bid the highest wins the item. Be sure to state that the highest bidder wins, not the last name on the bid list. Some people don't pay attention and inadvertently bid lower than the previous bid. If some items in the auction require the purchaser be of a certain legal age to take advantage of them, include a rule stating that a valid identification card will be necessary to purchase the items. These are usually things such as liquor, gift cards to wine bars and overnight trips.

The Rules and Legalities

It's best to have an attorney review your auction's rules and add any legalities she feels are necessary for your protection. Because it doesn't take much time, most attorneys will donate their services for this, so ask for the donation with a donation receipt in hand. Most silent auctions include some sort of hold-harmless rule stating the organization is not responsible for any liability resulting from the purchase. For example, if someone wins a zip-line adventure and is hurt while engaging in the activity, the hold-harmless rule would prevent him from suing your organization. You will also want to make it clear in your rules that bids are considered a legal agreement to purchase the item, so only serious bidders should participate.

Tips

Have each bidder sign a copy of the rules before he bids to help reduce your organization's liability should any problems arise. Also have several volunteers stationed around the room to answer questions and notify bidders when the auction is drawing to a close. If possible, invite the item donors to attend the event to answer questions about their donated goods or services. A few of the donors might find something in the auction they wish to bid on as well, giving them the opportunity to aid your organization not only with their donated items, but also with a winning bid.

About the Author

Based outside Atlanta, Ga., Shala Munroe has been writing and copy editing since 1995. Beginning her career at newspapers such as the "Marietta Daily Journal" and the "Atlanta Business Chronicle," she most recently worked in communications and management for several nonprofit organizations before purchasing a flower shop in 2006. She earned a BA in communications from Jacksonville State University.