What NOT to do when the auction winner doesn’t pay

At a benefit auction a few years ago, a woman in the back enthusiastically bid in the live auction. She enjoyed bidding a little too much.

After buying the trip to Hawaii, her husband let her have it — verbally.

In tears she told my auction team member that she couldn’t buy it.

“Ma’am,” my team member gently reminded her, “You’ve already bought it.”

“Sell it again,” she cried, “He’ll divorce me if I take it home.”

Has this happened to you?

If not, you just haven’t run enough benefit auctions.

It’s bound to happen, like crashing a motorcycle. When I took a bike safety class a few years ago, the instructor said, “It’s not a matter of IF you’ll lay down your motorcycle. It’s a matter of WHEN.”

The same is true of your gala auction sales. At some point, a buyer will renege. Your once-thrilled auction winner doesn’t pay.

The conversation might sound like this:

• “I thought XYZ came with this item and it doesn’t. I don’t want it.”
• “The restrictions are too restrictive. We wanted to use this over summer/winter.”
• “I thought you were selling the next item.”
• “I couldn’t understand the auctioneer.”
• “The auctioneer said XYZ was included. It’s not.”
• “My spouse said we can’t afford it.”
• “I’m embarrassed to say I was tipsy and got overly involved.”

I’ve seen or heard a lot.

• The band member who bids on a $5k package and is mortified when the auctioneer actually sells it to her. (She crawled under the banquet table to hide before being outed.)
• The guest in the back who wildly waves her bid card to catch the attention of her friend seated across the room. She can’t understand why the auctioneer thought she was bidding.
• The has-been celebrity who was paid to attend a gala, bids aggressively on an item (perhaps to still look relevant to the crowd?), and then reneges. At first, he offers to pay $1k of the $6k purchase. Then he talks to his lawyer. “My attorney said it’s a charity auction and I don’t have to pay for this.” (Not true. The law is on your side, but that’s another day’s topic.)

So, what should you do when it happens?

Here are some classy options.

1. If it happens during the event and the benefit auctioneer is able to offer it again, she should do so. For instance, I resold the Hawaiian vacation mentioned above.
2. Sell it after the event in an online auction. At an auction last month, one of the bidders approached the charity after the gala. “I thought I was bidding on a 6-person dinner,” the bidder said, “but it was a 2-person.” A $2500 donation disappeared. Fortunately the charity had the ability to sell items in an online auction.
3. See if you can get a partial donation. “Now that our gala has ended and everyone has gone home, we don’t have an easy way to turn this donated item into cash,” you might say, “And we were really counting on this! Could you give us a partial amount, like $X?”

One thing you shouldn’t do is publicly “out” them.

Here’s a disappointing story worth reading. It’s about a high-rolling donor who pledged millions to Florida charities. He never paid.

The journalist interviewed several people. One nonprofit explained that it wasn’t the organization’s policy to state the names of reneging bidders.

My advice? Take that approach.

It might be tempting to call out the offender, but a small comment can have major impact.

Here’s a tweet I saved from a couple of years ago. A nonprofit was stiffed by a winning auction bidder. The nonprofit took fast action, announcing his name on their website.

Then someone (below) took notice and posted it on Twitter.

laurie_pringle: Just saw an animal rescue website that outted someone for defaulting on a fundraising auction item… Wow!
– Monday, 22 February 2010, 7:24 pm

Notice that Laurie Pringle didn’t mention the name of the charity.

Silence is golden in such situations. Or — if you’ve got an even better alternative — share your idea below in the comments.