Charities are increasingly turning to black-tie benefit auctions, using donated items, as the fundraising tool of choice to attract a generation that has learned to bid on eBay. But as benefit auctions proliferate, and their offerings turn more elaborate to entice buyers, more bidders are getting a shot at luxury at bargain prices.
Many of the country's most prominent annual charity auctions are scheduled in the coming weeks. So some bidders will have their paddles in the air and their eyes on the bottom line.
No organization tracks the number of charity auctions nationwide, but live auction sales climbed to $240-billion in the United States last year, up 11 percent from 2004, according to the National Auctioneers Association in Overland Park, Kan.
Benefit Auction Specialists, a company in Manassas, Va., that conducts charity sales across the country for schools, medical charities and other groups, said business was up about 40 percent from three years ago, with its average total per sale nearing $200,000.
Late last month, the Naples Winter Wine Festival auction in Florida reaped $12.2-million. And the celebrity-packed Robin Hood Foundation auction and dinner in New York City last year raised $32-million.
For all the glitz and glamour, there is a science and even a formula to charity auctions, according to organizers, auctioneers and veteran bidders. The same types of offerings generally soar: the private dinner prepared by a superstar chef (usually someone like Eric Ripert or Daniel Boulud), the coveted bottle of champagne or - that blockbuster of school auctions - the chance for a child to be principal for a day.
But most items, like a trip to a popular resort, end up selling for about 15 percent off their retail price or fair market value, said Fred Reger, a founder of Benefit Auction Specialists. And in silent auctions, in which bidders place bids on sign-up sheets, the deals can be greater, with luxury listings like Coach bags or skybox sports tickets selling for as much as 35 percent off.
A quick look at an event's format can provide clues to the likelihood of bargains. People seated at dinner tables for an auction almost always bid more aggressively than those sitting in rows, said Richard Brierley, a Christie's auctioneer and wine specialist. That results not only from the availability of liquor, he said, but from the peer pressure from tablemates.
Low bids aren't always unwelcome, said Steve Ketchum, a managing director at Banc of America Securities.
"It's okay to bid 30 cents on the dollar for something that's unloved, that, for whatever reason, isn't selling anyway," he said. But, he added, "people lose sight of the fact that this isn't about the object they covet."
Some people are opposed to bargain hunting at charity auctions. Isabelle Geday, a New Yorker who bids thousands of dollars annually at the auction for the Lycee Francais de New York, where her daughters are enrolled, said she would rarely consider buying something for less than its appraised value and wouldn't like to be seen doing it. "No, no, no," she said. "Why would you do that?"
Auction bargain hunting can have drawbacks when it comes to tax breaks. By law, said Marc Albaum, a New York tax accountant, bidders can take a charitable deduction only for the amount they pay that exceeds an item's fair market value.
In light of that, overpaying for some of the pricey experiences - like $30,000 for a round of golf with Tiger Woods - can be a good tax move for some donors, because the IRS values the item as a round of golf, period.
Bargains aren't always just about price. Some charity art auctions give buyers the rare opportunity to get works by hot artists who have waiting lists of collectors.
One tip when buying art at a charity auction: Check to see if it has been donated by an artist or by a dealer. Artists tend to donate high-quality works, but tend to overstate their fair market value, Reger of Benefit Auction Specialists said.
Indeed, a buyer should research the price of any big purchase at auction, since a donor may have a tax incentive to inflate value.
"There is usually no one to judge the items coming in for sale, so the items can be good, bad or indifferent," warned Helaine Fendelman, a past president of the Appraisers Association of America and author of several price guides for furniture, silver and folk art.
For some buyers, the biggest discounts may come in the days after the auction. As many as 10 percent of the buyers at any sale wind up not paying, organizers say. So an item may become available again, this time at a bargain price.
The problem of nonpayment arises often enough that the South Beach Wine & Food Festival, which conducts fundraising auctions every February to finance student scholarships, requires credit card registration for its live bid auction and even for its silent auction, for less costly items. Organizers of such events, where wine is on hand, say bidders may become overenthusiastic.
"Once in a while, believe it or not, we have to chase people down" who fail to honor their bids, said Lee Schrager, the director of the South Beach festival. "And it's for charity."
CHARITY AUCTION TIPS
Here are some tips on finding auctions that are more likely to have good deals:
- Because of liquor and peer pressure, people seated at dinner tables for an auction almost always bid more aggressively than those sitting in rows, said Richard Brierley, a Christie's auctioneer and wine specialist.
- Look for larger sales (20 or more items), where interest may flag.
- Single-theme food or travel auctions often offer many similar items, so prices might be lower.
- Auctions that offer trips that have stiff restrictions on when they can be taken often reduce the number of bidders.
- Items at private secondary school auctions, where parents do most of the bidding, don't tend to sell at low prices, but those for churches and colleges often do, auctioneers say.
- Auctions that are scheduled to start only after a series of speeches, or after a dinner, mean many potential bidders leave before all items are auctioned.
- NEW YORK TIMES