Auctions

 Dear Harriete,

How would you handle the following situation? You have donated your artwork to an auction benefiting a charitable organization (actually a picture of it that invites the winner to visit your studio and pick a similar item) and the director of the auction lowers your stipulated minimum bid without your consent and someone wins your work at that unauthorized price.
Signed,
Auction alienated

Dear Auctions alienated, 

First, let’s clarify a few terms used in your question and related to Fundraising Auctions

• A “minimum bid” is the starting point in the bidding of a “live” or “silent” auction.
• The “reserve price” is the lowest price at which the artwork will be sold.
• The “bid to own” is written at the bottom of the bidding sheet. It is usually full retail. If the bidder decides to place a “bid to own” early in the auction, no further bids are accepted. This is the winning bid.

Second, written documentation should accompany any work donated by an artist to a fundraising auction. The document should include information about the work including the artist name, contact information, your website, the title of the work, date, and complete description. In addition, state the “minimum bid”, “reserve price” and the full retail price (which is usually used as the “bid to own”). If the fundraising auction doesn’t have formal paperwork, then submit your own paperwork.

In your case, it appears that you did state a “minimum bid” which was changed or ignored. At this point, after the auction, you have a few options depending on your relationship with the fundraising auction and your concern about your reputation. These options are listed below in order from easiest to most difficult.

Option 1.
The simplest option would be to make a note to yourself (in writing) that you will not donate work to this fundraising auction sponsor in the future. Take it as a lesson learned, so next time that you are asked to donate work, ask in advance if they will honor “minimum bids” and your “reserve price”. Make sure that it is clear that you will not donate work to any auction that does not have minimum bids and a reserve price below which the work can not be purchased. Put this in writing to be absolutely clear.

Option 2.
When the auction winner comes to your studio, you honor the donation and hope that the customer will actually buy additional work to offset your loss.

Option 3
You could write a letter to the fundraising sponsor to express your concerns in the most polite manner possible. I would suggest that at least two people proofread your letter to make sure that your concerns are communicated in a professional manner without creating hostility or misunderstanding. State that you participated in the auction with the expectation that the sponsor would honor your minimum bid (attach a copy of your documentation for the minimum bid). Explain that the minimum bid stipulated on the paperwork was changed without your consent and that the winning bid was below the authorized price. Perhaps you might try to work out a compromise.

Option 4
Similar to Option 3, a letter to the sponsor could state that you will honor the unauthorized price this time but you will not participate in their fundraising auction in the future.

Option 5
The most difficult or hard-line option would be to send a letter stating that you can not honor the unauthorized bid price. You may offer an explanation that the unauthorized bid price is so low that it creates an unexpected financial hardship (to make your case more sympathetic).

If you do decide to adopt this option, know that it may create bad feelings with the fundraising sponsor – and other people may hear only one side of the story. People do talk and bad news seems to travel further than you think. Your potential customer who thought they had a “winning bid” will be very disappointed and you probably will lose this person as a customer.

RECOMMENDATION
While your donation was intended to be supportive of the fundraising auction sponsor, they allowed your work to be “won” at a bid that you did not authorize, whether consciously or inadvertently. Therefore, I would be inclined to at least tell the sponsor of the mistake as in Options 3 and 4.

If possible, I would honor the winning bid.

ADDITIONAL RECOMMENDATIONS
Read FUNDRAISING AUCTIONS: Issues and Checklist for Artists found in the Professional Guidelines.

This Professional Guidelines topic is intended to more fully inform artists about the impact of fundraising auctions on their work and careers, what questions need to be asked prior to and after donating work, and to recommend how artists can maximize the benefits when participating in auctions. Ultimately, we believe, the behavior of the artists can and should change the way fundraising auctions are conceived and conducted.

This is one of four Professional Guideline documents about Fundraising Auctions, each addressing a different perspective.

• Fundraising Auctions: Issues and Checklist for Artists
• Fundraising Auctions: Issues and Impact for Galleries
• Fundraising Auctions: Issues and Recommendations for Collectors
• Fundraising Auctions: Issues and Alternatives for Art Organizations  

Artists need to learn how to be better advocates for themselves and other artists.

Recommendations of the Professional Guidelines Committee

Reserve Price Policy
The Professional Guidelines Committee recommends that the reserve price for work in an auction be 80% of the retail price. The artists (and/or gallery) should be offered 40% of the retail price for the donation. The art organization will receive at least 40% of the retail price for fundraising and the collector has the possibility of receiving a 20% discount. If bidding for work does not reach the reserve price, the work should be returned to the donor.

ADDITIONAL ISSUES TO CONSIDER
As mentioned in the previous paragraph, the Professional Guidelines recommend that the artist receives 40% of the retail price when work is donated to a fundraising auction.

What we did not discuss in response to your question, was how much this particular auction sponsor was offering the artists that donated work.

Often, there is considerable pressure on an artist to donate work outright – receiving no percentage of the winning bid. Only the most generous auction organizers offer a percentage of the selling price to the artists. Since the work offered at auction typically sells well below the retail price, even with a percentage, the artist only receives an amount far below the wholesale value.

Even if the artist is offered the full wholesale value for work donated to a fundraising auction, artwork sold at discounted prices in auctions may affect your retail values elsewhere. Every artist should maintain control over the selling prices of his or her work. Since auctioned artwork often sells far below the retail price, maintaining control of pricing is impossible. The result of this discounted selling price is that the value of an artist’s work and the ability of a local gallery to command full retail prices for the entire body of an artist’s work is adversely affected. (For more information about Discounts read the Discounts document in the Professional Guidelines.)

Signed,

Harriete Estel Berman

This post was updated on December 17, 2021