Fundraising Auctions & Conflicting Interest

Hi Harriete,

Could you shed some light on a situation or point me to an appropriate resource? I have a bracelet that I would like to donate for a cause. I make each silver bead myself and each one is unique. However the bracelet  is similar to another one of my bracelets selling at a local retail gallery. I am concerned about underselling the gallery.  This might happen when the non-profit group that rececives my donation then sells the bracelet for their fundraiser. What is the ethical thing to do in this situation? Thank you,
A reader of ASK Harriete

Dear Reader,

Your concerns are well founded.  Fundraising Auctions compete with your gallery and undermine your retail prices. This is especially true when you live in a community where fundraising auctions sell to the same audience as the gallery.

Artists often discuss fundraising auctions and their impact on the artists, but rarely do we examine the impact on galleries. Fundraising Auctions usually sell work far below the expected retail price which definitely has an impact on galleries trying to sell at the retail price.  It may signal to other potential buyers to avoid the gallery and just wait for the next "non-profit" auction.  

The Professional Guidelines offers a document titled, Fundraising Auctions: Issues and Impact for Galleries that discusses this issue at length. 

One of the main problems with fundraising auctions is the undermining of normal retail prices for artists and galleries.  The unintended consequence of auctions is the continual erosion of sales at retail prices. We all want to support art organizations, but a different fundraising model needs to be considered. 

Recently, in a Facebook conversation, Heide Lowe of Heidi Lowe Gallery had a suggestion. Each year she chooses an organization, makes a piece, and decides to allocate a percentage of her profit from that piece to the organization.  She doesn't just give the piece away to an auction.  "I keep track of the profit and send a check to the organization at the end of the year. This works much better for both the organization and me."

This approach has several advantages.

• The items can be marketed as a donation to an organization which can be a great selling strategy.
• Heidi Lowe is still in control of the retail price.
• This special item has a limited impact on the rest of her inventory.
• Her cash donation impacts her profit, but she does cover her expenses. 
• It limits the number of requests and auctions in which she participates, but she still has a visible form of charitble giving to her community. 

Note that in this example Heidi Lowe allocates a portion of the profit, not the revenue. It is important to recognize that if artists or galleries can't recover their expenses, you can't stay in business.

Artists and makers could apply a similar strategy or make work specifically for an auction that is unlike items going to their gallery to avoid competition. We also see this strategy applied by companies like Newman's Own where they donate all after tax profits from the sale of our food products to charity. In other words, they pay themselves and cover their expenses first. They understand that the very survival of their company depends on it. 

If you decide to participate in an auction, I suggest that you at least request a minimum winning bid (close to retail) -- and otherwise the work does not sell.

Harriete Estel Berman

Find all four documents about Fundraising Auctions in the Professional Guidelines.

Fundraising Auctions: Issues and Checklist for Artists

Fundraising Auctions:Issues and Recommendations for Collectors

Fundraising Auctions: Issues and Impact on Galleries

Fundraising Auctions: Issues and Alternative for Art Organizations