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What Is A Minimum Bid Auction & Is It Right For Your Nonprofit?

Author: Adie M.

A minimum bid auction is one of the options available when you’re considering fundraising platforms for your nonprofit organization. It is one of the most popular auction types for charities of all kinds - including nonprofit organizations in the healthcare space, e.g. Red Cross, as well as faith-based organizations like the Salvation Army

Minimum bid auction gavel

Top Strategies and Tips for Minimum Bid Auctions to Support Nonprofits

Here’s what you need to know about minimum bid auctions and how they can benefit your nonprofit in 2021 and beyond: 

What exactly is A minimum bid auction?

A minimum bid auction is a competitive sale that is tied to a particular, non-negotiable minimum bid. This means that the item in question (e.g. a trip, a car, a hot air balloon ride, etc.) will remain unsold until the minimum bid is reached. 

It is important to note that a minimum bid differs from a starting bid. A starting bid is simply the monetary value point at which your auctioneer will start proceedings. They can then continue to facilitate the sale until the minimum bid is reached or exceeded. 

For instance, if a benefactor offers a room makeover to the value of $2000 to auction off for your charity, you could place the starting bid at $500 but instruct the auctioneer not to bang the gavel until the bid stands at $2000 at the very least. 

The benefits of hosting a minimum bid auction

A minimum bid auction is an excellent way to get the highest possible income for your charity without scaring off potential bidders with an opening bid that is too high for their liking. In fact, the lower your starting bid, the higher your end bid is likely to be. 

How so? Well, there are a lot of psychological triggers at play during an auction. According to findings by Professor Adam Galinsky, online auctions almost always yielded higher returns if they started at a more approachable bidding point. 

When you lower the barriers to entry, you will naturally attract more bidders. This way, you entice bidders to invest their time and resources and get in the game, so to speak. The more bidders you have, the more exciting the bidding action is likely to be, which, in turn, encourages everyone involved to remain involved by upping their bids. 

It can, however, feel quite daunting to open at a very low-value point when you are hoping to accrue a fair amount of money for your charity. As such, a minimum bid serves as a type of safety net that ensures that you’ll generate the funds you need without losing out on potential bidders at the start. 

DID YOU KNOW? Auctions work because it speaks to our human need to avoid scarcity. Generally speaking, humans tend to place great value on things they think will run out. Auction items are scarce because they're unique and scarce in time. I.e., you only have one opportunity to secure the item in question. Once you're outbid and the auction ends, you can no longer obtain the item.

Auction paddles

Is it a good auction method for nonprofit & charity auctions?  

Most definitely! When donors provide a charity with items to auction off, they are very likely to follow up on how it went and whether the nonprofit received good ROI. As such, a minimum bid auction is not only a good way to ensure that your organization clears sufficient charitable funds. But, it also keeps your relationship with your donors on an even keel by showing that you value the contribution they made. 

How To Set Starting Bids 

In most cases, a benefactor is likely to share the value of the item they donate to be auctioned ahead of time. However, your fundraising team will probably have to determine starting bids and bid increments in conjunction with the auctioneer. 

Here are a few tips on how to do so: 

Determine the FMV (fair market value) of the item in question

What would a bidder pay for it if they were to purchase it outright from a standard provider? I.e. if they signed up for the trip at a travel agent or bought the car from a dealership. 

Even if your donor shares the market value of an item with you, do your own research to make sure by checking online and consulting experts.

Set your minimum bid

This should be somewhere in the vicinity of 30 to 40% of the FMV of the item.

Dip below that to determine your starting bid

Your starting price has to be low enough to entice lots of bidders. The more engagement you have on an item, the more likely you are to reach your minimum bid. 

But, don’t go so low as to leave potential bidders wondering whether there might be something amiss with the item. Find the sweet spot in between. 

Be clever with your bidding increments

Your end-game should always be to start a bidding war. And, the best way to do so is to set the bidding increments as low as you can go without cringing. People are far more likely to keep bidding (especially on mobile and online platforms) if they don’t feel that the jump is too high. This is what you want your bidding increments to do. 

Ask for advice from the experts

If you feel a little overwhelmed by the idea of hosting a minimum bid auction and setting your goalposts, simply reach out and ask for advice from an expert. 

Many seasoned auctioneers and auction companies are more than willing to assist nonprofits and charities. They can provide some valuable tips when it comes to generating optimal bidding yields. 

Successful fundraising


A minimum bid auction is a great option for nonprofit organizations of all kinds. It ensures that your charity gets an optimal return on investment on the pieces you put up for auction. This way, you can raise more funds to do your good work. Whether you choose an online charity auction or prefer to host one in person, this approach paves the way for fundraising success.