Money & Compliance
How to budget a silent auction
Gross is what you announce. Net is what your cause actually gets. Here is every line item, which ones you can eliminate, and how to work backwards from a net target.
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In 30 seconds the short answer
- Budget backwards from a net revenue target, not a gross one. Gross targets license spending against money you haven't raised.
- Item value needed = (net goal + expenses) ÷ 0.65.
- Venue and catering are usually the two largest costs, and both disappear if you run online only.
The 5-minute version the whole method, condensed
- Set a net target tied to something concrete. “We want to net $15,000 for the playground.”
- Add your estimated expenses to get the gross you need.
- Divide by 0.65 to find the combined item fair market value to procure.
- Divide by your average item value to get an item count — and notice how different 75 strong items is from 150 weak ones.
- Cut the avoidable costs: venue, catering, purchased inventory, printing, paid marketing.
- Keep the unavoidable one: payment processing scales with money actually collected.
- Record in-kind gifts at value on both sides so next year's chair sees the real cost.
Most auction budgets are written after the fact, if at all. Somebody totals the receipts, subtracts what was spent, and reports a number to the board — who reasonably ask why the $22,000 raised turned into $14,000 delivered.
Budgeting an auction properly takes about an hour and it changes decisions rather than just recording them. Most usefully, it tends to reveal that the event portion of a fundraising event is where the money goes.
Part of the complete guide to running a silent auction. Set your target first — see fundraising goals.
Start with net, not gross
"We raised $22,000" is a gross figure and it is the one that gets announced. The number that matters to your cause is what remains after expenses.
Setting a gross target invites you to spend against it, because every expense looks affordable relative to a number you have not yet earned. Setting a net target does the opposite: every proposed cost has to justify itself against the money it removes from the mission.
Say it as: "We want to net $15,000 for the playground." Not "we want to raise $15,000."
Converting a goal into items
Auctions hosted on 32auctions tend to realize around 65% of the combined fair market value of their items. That gives you the conversion:
Item value needed = (net goal + expected expenses) ÷ 0.65
A $15,000 net goal with $2,000 of expenses implies about $26,150 in combined item value.
This is the number that makes procurement measurable. Track fair market value as items arrive and you will know weeks in advance whether you are on pace, rather than discovering it the week of. See getting items donated.
Every line in the budget
| Line | Online-only | With an event |
|---|---|---|
| Auction platform | Free to start; optional add-ons | Same |
| Payment processing | Standard rate on payments collected | Same |
| Venue | — | Often the largest single cost |
| Catering and beverages | — | Usually second largest |
| Printing (bid sheets, catalogues, signage) | Minimal | Meaningful |
| Decor, AV, entertainment | — | Highly variable, highly cuttable |
| Purchased or consigned items | Avoidable | Avoidable |
| Shipping to winners | Can be passed to winners | Usually not needed |
| Insurance and permits | Rarely | Sometimes required |
| Marketing | Usually $0 using your own channels | Same |
| Staff time | Real, often uncounted | Real, often uncounted |
Confirm current add-on pricing and processing rates on the pricing page before you budget — do not work from memory.
Which costs are avoidable
Roughly in order of how much they cost and how easily they go:
- The venue. Running the auction fully online removes it entirely, along with catering, decor and AV. For a first auction, or a committee of three, this is usually the right call — and it removes the constraint that only people in the room can bid.
- Purchased items. Buying inventory to auction converts a fundraiser into retail with worse margins. Solicit donations instead; the whole model depends on donated goods.
- Printing. Online bidding with QR codes replaces most printed bid sheets and catalogues. See QR codes.
- Shipping. Pass it to winners at cost, or offer local pickup as the default. See shipping.
- Marketing. Email, social and word of mouth cost nothing. Paid promotion is rarely the constraint on a community auction — reach through existing supporters is.
What is not avoidable: payment processing on money you collect online. That is a genuine cost of getting paid, and it is far cheaper than the alternative of chasing cheques.
What ratio to aim for
Expenses as a share of gross revenue is the standard measure, and fundraising events are routinely the most expensive thing a nonprofit does.
A fully online silent auction can run at a very low expense ratio, because almost every cost line disappears and the ones that remain scale with money actually collected. An event-based auction is a different proposition entirely — venue and catering are committed before a single bid is placed, which means they are committed before you know whether the auction works.
The useful question is not "what percentage is acceptable" but "which of these costs would I still pay if I knew the auction would underperform?" Anything you would not pay under that assumption is a cost you are carrying on optimism.
Counting in-kind properly
A donated venue is not free. It is an in-kind gift with a value, and treating it as zero makes your event look cheaper to run than it is — which matters when the donation does not repeat next year and the committee has no idea what the real cost was.
Record in-kind contributions at value on both sides of the budget: as revenue and as expense. Net is unchanged, the picture is accurate, and next year's chair inherits a realistic baseline. Your accountant may also need this for financial statements.
A worked budget
| Line | Amount |
|---|---|
| Net revenue target | $15,000 |
| Estimated expenses | $2,000 |
| Gross revenue required | $17,000 |
| Combined item value needed (÷ 0.65) | $26,150 |
| Items at an average value of $175 | ~150 items |
| Items at an average value of $350 | ~75 items |
That last comparison is the most useful output of the whole exercise. Seventy-five good items is a very different procurement job from a hundred and fifty mediocre ones, and it is usually less work for more money. Fewer, stronger items is the general lesson — see how to bundle auction items.
Budgeting mistakes
- Budgeting gross. It licenses spending against money you have not raised.
- Committing to a venue before knowing your item pipeline. Fixed costs committed against unknown revenue.
- Buying items to fill the catalogue. Retail margins, fundraiser overheads.
- Treating in-kind as free. It hides the real cost from next year's chair.
- Ignoring processing fees until reconciliation.
- Not counting staff time. You do not have to charge it, but you should know it.
Key takeaways
- Set a net revenue target, not a gross one. Gross targets license spending against money you have not raised.
- Item value needed = (net goal + expenses) ÷ 0.65. That converts a target into a procurement plan.
- Venue and catering are usually the two largest costs and both disappear if you run online only.
- Buying items to fill a catalogue turns a fundraiser into retail with worse margins. Solicit instead.
- Payment processing is the one genuinely unavoidable cost, and it scales with money actually collected.
- Record in-kind gifts at value on both sides of the budget so next year's chair sees the real cost.
- Fewer, higher-value items is usually less work and more money than a larger weak catalogue.
Start with the cheapest possible cost base
Create your auction, add items and share a link at no cost — no venue, no printing, no credit card. Optional add-ons and standard processing fees are the only costs.
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Frequently asked questions
How much does it cost to run a silent auction?
A fully online auction can cost almost nothing: the platform is free to start, and payment processing on money you collect is the main unavoidable expense. Adding an event introduces venue, catering, decor and printing, which are typically the largest costs and are committed before any bidding happens.
How do you set a silent auction budget?
Start from a net revenue target rather than a gross one. Add your estimated expenses to get the gross you need, then divide by 0.65 to find the combined item fair market value to procure, since auctions tend to realize about that share of item value. That converts a financial target into a procurement plan.
What are the biggest costs in a charity auction?
Venue and catering, by a wide margin, for auctions attached to an event — and both are committed before you know whether the auction performs. Purchased inventory is the next largest avoidable cost. Running online removes the first two entirely and reduces printing to near zero.
Should a nonprofit buy items for a silent auction?
Generally not. Buying inventory to auction converts a fundraiser into a retail operation with worse margins, since you pay full cost and recover only what bidding produces. The auction model depends on donated goods, where the entire sale price is revenue rather than recovery.
Should donated venues and services be counted in the budget?
Yes, at value, on both sides — as in-kind revenue and as expense. Net is unchanged but the picture is accurate, so next year's committee inherits a realistic cost baseline rather than assuming the event is cheap. Your accountant may also need this for financial statements.