Sweepstakes Prizes - Consignment vs Donated
What’s the best way to get a prize for a sweepstakes?
When it comes to running an online sweepstakes fundraiser for your nonprofit organization, finding a great prize is key! It’s important to choose a prize that accomplishes two things: one that excites your donor base, and catches the attention of new donors.
There are a lot of options that fit this criteria (for prize ideas, check out our blog post, How to Choose the Best Prize for your Nonprofit). Depending on your donor demographic, it may be difficult to get the perfect prize donated to your nonprofit to keep costs low.
So, what happens when you don’t have a generous supporter or well-connected board member to donate a stay at their luxury Aspen vacation home for a week? We got you covered.
At TapKat, we highly recommend acquiring prizes on consignment. Not only does this eliminate financial risk for your nonprofit, but it also means no upfront costs, and potentially more flexibility for your winner. Not only that, but when you work with a prize provider to acquire a prize on consignment, you’re actively building a relationship with a person or company that wants to support your mission — and those relationships come in handy!
Let’s take a closer look at the perks of getting a prize on consignment for your TapKat sweepstakes fundraiser.
The Benefits of Acquiring Your Prize on Consignment
When you source a prize on consignment, it means that the prize you choose will be purchased at the end of your campaign from proceeds raised in the sweepstakes, assuming you meet the minimum dollar amount to award the prize. If you don’t meet the minimum, your organization will split the funds raised (minus your expenses) with the winner.
The consignment prize plus the minimum dollar amount eliminates the financial risk of buying your prize up front. It also ensures that your sweepstakes will raise money for your organization rather than just breaking even.
A consignment prize means no upfront costs for your nonprofit
This is one of the most exciting aspects of a TapKat sweepstakes – no financial risk. We have designed our sweepstakes fundraisers to help your nonprofit raise the money you need without incurring upfront costs. And you can ensure that your sweepstakes will always end with money in the bank when you set a minimum raise threshold.
The minimum raise rule means more cash for your nonprofit
The Shelby American Collection, a nonprofit car museum in Boulder, Colorado, acquires a new Shelby Mustang for their sweepstakes each year. Now imagine a scenario where they have to purchase a $75,000 Mustang at the beginning of their sweepstakes. What if the sweepstakes raises $80,000? They take home only $5,000… and after all the work to get the fundraiser up and running, it’s probably not worth their time. But this won’t happen with a TapKat sweepstakes.
The minimum raise rule is a way to ensure that your nonprofit takes home significant funds. Let’s put that Mustang back on consignment and set the sweepstakes minimum at $200,000. If the Shelby American Collection only raises $70,000, no sweat: they don’t give away the car, which is not a problem thanks to their consignment agreement with the Ford dealership. Instead of a car, the prize becomes 25% of the total raise.
In this example, the Shelby American Collection takes home $52,500, and the grand prize winner receives a check for $17,500. Not bad!
On the other hand, let’s say the Shelby American Collection raises $1,500,000 on the sweepstakes (which they actually did, in 2021). They purchase the Mustang, which is just a fraction of their total raise. The winner drives home in a new car, and the museum flourishes. A big win for everyone.
A prize on consignment could mean more flexibility for your winner
Finally, some consignment prizes give winners some flexibility to customize their prize. Say your prize is a really great mountain bike, which is on consignment from a local bike shop. When you draw the winner, the bike shop may give them the chance to select the color of the bike, size, or even the option to throw in some of their own cash to upgrade to a different model. If you know mountain bike riders, they are very particular about their bike choices!
How to Arrange a Consignment Prize for Your TapKat Sweepstakes
A consignment prize can greatly leverage the fundraising potential for your TapKat sweepstakes. By arranging a consignment prize, you get to choose a prize that really speaks to your base versus accepting whatever prize is handily donated by your supporters (their generosity is amazing — but sometimes their donated prizes don’t activate your donor base as well).
Many nonprofits raise substantially more funds on the TapKat platform with prizes on consignment. And because their prizes are sourced directly from vendors (as opposed to from supporters), nonprofits avoid wearing down their donors with big asks for prizes year after year.
Prizes on consignment
For consignment prizes, your organization enters into an agreement with the prize provider that states that the prize will be reserved until the end of your sweepstakes. TapKat can provide an example of this agreement for you, and once signed by the prize provider, your nonprofit has the option at the end of the campaign to purchase the prize.
What is a prize provider?
Prize providers can be any source that agrees to these terms. For the example given in this article, it could be a private owner of the bike or your local bike shop.
What does this approach look like in real life?
Let’s look at The Shelby American Collection once again. Each year, they acquire a prize on consignment for their annual TapKat sweepstakes. Each year, they work with a Ford dealership (the prize provider) to select a new Mustang for their prize. The agreement states that if the sweepstakes raises at least $200,000, The Shelby American Collection has the option to purchase the car. If the sweepstakes doesn’t raise at least $200,000, the dealership will go ahead and sell the Mustang to a customer.
Since The Shelby American Collection has space in their building, they choose to display the Mustang so that everyone who visits the museum can see it (and enter the sweepstakes!) Doing this also gives exposure to the prize provider. We highly recommend keeping the prize on display at your nonprofit, if possible, because simply showing it off in real life helps to increase donations.
How to Get the Consignment Conversation Started
It might seem like a big ask, but in our experience, most prize providers are more than happy to put up a prize on consignment for a nonprofit.
Most dealerships and retail stores are used to nonprofits coming to them and asking for big donations, which isn’t always an easy thing to give. But simply asking them to allocate a prize for your fundraiser (which you will later purchase) is a much easier “yes” for many prize providers.
Most prize providers have images of the prize on hand and will allow you to use them on your TapKat sweepstakes page and in online promotion. High quality images of your prize make a huge difference, so be sure to ask if you can use them! Find out if they are willing to help out with marketing via email, social media, or in-person (say, if they have a local shop). You never know how they may be willing to help!
The Cash Prize Alternative for Sweepstakes
Typically any prize worth over $5,000 that isn’t donated should have a cash alternative in case the winner decides they would rather take home cash instead of the prize. This scenario can arise for a number of reasons: say the donor just wanted to support your organization and isn’t really interested in the prize. Or maybe the winner doesn’t need it (imagine if the winner lives in New York City and they just won a car… that might be more trouble than it’s worth to them!) Life circumstances can change during the duration of a fundraiser, so it’s a good idea to offer the cash alternative.
Typically, the cash alternative will be about 75% of the fair market value of the prize. And since you’ve arranged for a consignment prize that you are not obligated to purchase, the cash prize is no problem for you!
To assist you in acquiring a prize on consignment, TapKat has created an example consignment agreement that you can edit and take to any prize provider. Please email hello@tapkat.com and we will be happy to share this document with you and help you get started with your TapKat sweepstakes.
