Online Auctions Bid for the Greater Good
Before a nonprofit can list items on eBay as charity auction goods, MissionFish, which handles security for eBay's charity auctions, checks the organization's background and current standing with the IRS and other government agencies.
May 19, 2004 4:14 AM PT
Thanks to eBay and its competitors, online auctions have become a common way for individuals and companies to sell goods. More recently, nonprofit organizations have begun to see the light as well, supplementing their fundraising efforts by auctioning big-ticket items and services online.
The move toward Internet auctions has been aided in large part by eBay's efforts. At the end of 2003, the auction giant established Giving Works, a program designed to let buyers and sellers contribute to nonprofits and other charitable causes. About 2,400 nonprofits have signed up for the program so far.
Hani Durzy, eBay Giving Works spokesperson, said in an interview with the E-Commerce Times that the program is evolving successfully, with about US$30 million raised for charities to date.
"Like everything else on eBay, the success of Giving Works will depend on the community's reaction," he said. "Our hope is that it will continue to develop as time goes on, with charities seeing it as an efficient way to raise money and buyers finding it an easy way to donate to a charity."
Why Go Online?
One of the latest online charity events will unfurl its wings on eBay May 27th. The event, organized to raise money for the Prostate Cancer Foundation, will feature items like dinner with Diane Sawyer and three hours with Magic Johnson.
Of course, selling these high-impact intangibles is quite different from selling pottery or old comic books, and eBay has enlisted outside help to ensure everything goes according to plan. Auction details of the aforementioned event will be handled by Silent Partners Inc., a firm that assists nonprofits that want to make the leap into the online auction arena.
Silent Partners focuses primarily on helping charities write better correspondence to donors and automating operations for nonprofits, but as its clients began inquiring about online auctions, the company saw the need to start an online division.
Scott Merrin, Silent Partners president, told the E-Commerce Times that his company has seen remarkable interest from charities that want to get into the online-auction space.
Silent Partners differs from a typical eBay trading assistant because the company not only lists items and offers links to an organization's site, but also procures the items to be listed from a database of more than 13,000 options.
One reason why nonprofits have been so eager to jump online lately is that the success of online auctions is becoming better known. Merrin said he has observed that bidders are willing to spend far more money than they usually would, simply because they are helping a cause. Conversely, buyers can benefit from such events because some of the items on offer would be impossible to secure without the involvement of a nonprofit.
In many ways, it seems, online charity auctions are handled much more smoothly than other types of online auctions and even real-world events.
Merrin noted that real-world silent auctions involve a great deal of work: gathering donated items, renting a space and taking care of the financial aspects of the event. By comparison, an online event handled by a company like Silent Partners removes many of those cost issues and event management headaches. In addition, it gives the charities and their items much wider exposure.
"With a virtual event, you can have a million people looking at your items instead of just 500," he said. "That translates to far more donations."
Sellers that are not affiliated with a nonprofit also have the opportunity to donate profits from their auction directly to an organization of their choice, as long as that organization is listed with eBay. Sellers can link to the nonprofit organization and specify what percentage of the sale should be routed to it.
As with all online auctions, fraud can be a concern, but every participant in an online charity auction should know there is a concentrated effort to prevent this crime. For eBay's charity auctions, security is handled by MissionFish, a service of the Points of Light Foundation that approaches trust and safety issues from a variety of angles.
Before a nonprofit can list items on eBay as charity auction goods, MissionFish checks the organization's background and current standing with the IRS and other government agencies. The company ensures the charity is in good standing in tax terms and is not on any suspected terrorist lists. It also turns down nonprofits that promote hate or intolerance, according to Sean Milliken, MissionFish's executive director and CEO.
When an organization applies for charity auction status at eBay, the auction giant transfers the request to MissionFish, which conducts primary research. If the charity passes muster and an online auction proceeds, MissionFish works to protect the nonprofit by making sure buyers are legitimate. For big-ticket items in particular, the company verifies bidder identification and checks the individual's financial standing.
Additionally, for items that include meeting a celebrity, MissionFish does extensive background checks to ensure the celebrity's personal safety.
Milliken added that even with these measures in place, eBay and MissionFish are realistic. "In an open marketplace where buyers and sellers are relying on feedback, there will always be a chance of abuse of trust," he said. "That's why we take extreme measures to protect the nonprofits and the buyers."
He noted that his company's fee includes a small transaction charge that is deposited in a reserve account. If fraud occurs, the account is available to reimburse the injured party. Milliken said that of the more than 6,000 transactions MissionFish has supervised, it has only had to dip into the fund three times.