Q:  Our organization recently sponsored an auction. Someone donated two tickets to an upcoming concert. The act was popular and the tickets quickly sold. Unfortunately, the person who donated them was notified that the show was cancelled. Ticketmaster is refunding the money to the donor and the donor is willing to give us the cash to pass on to the bidder, but none of us really knows how to proceed here. What are our legal and moral obligations?


A: This is an ethical and PR issue more than a legal one. The bidder will undoubtedly understand that the situation was not of your making. Still, you want to keep that person happy so that he or she speaks well of your organization and how you handled the cancellation. Equally importantly, you want the bidder to remain committed to your organization into the future.

Generally when something like this happens, winners are immediately offered their money back with many, many thanks for their generous support of your organization. I would certainly start with that approach, especially if the tickets were sold under their market value. In that case you would still minimally profit from the difference between what the bidder paid and the cash refunded from the concert promoter.

If the purchase price for the tickets at the auction was above the actual cost of the tickets, as you make the offer to return the money, you can volunteer to provide the winner with tickets to another show of his or her choice instead. (If ticket prices tend to vary widely, you can provide a menu of performance options that fall at or below the price of the original tickets.) And, obviously, if the original show is to be rescheduled, you can express your willingness to handle the exchange if the new concert date will work for the bidder. If the person is willing to take one of these options, you will again at least walk away with something.

What you are hoping for is that the person will tell you to just keep all or most of the money. In the instance where tickets were purchased under market value, you might add to your effusive thanks that you are sorry that the bidder will not be able to take advantage of the extraordinary deal he or she got. Then, off-handedly state something like, “Isn’t it amazing that what we typically spend for an evening’s entertainment has the power to do “X” for the clients of this organization?” Pause to let the comment sink in before moving on to ask how you can satisfy the individual.

In the case where the bidder paid more than market value, you can stress your appreciation for the fact that he or she paid so much (you might state the amount) over the actual price of the tickets, which you know the bidder did because he or she recognizes what your organization is able to accomplish with gifts of that size.

Note, that while I’m suggesting these approaches, you must first and foremost be sincere about your willingness to immediately refund the total purchase price. Whatever you choose to do, act quickly. You want to go to the bidder before the bidder comes to you. And, if the bidder tells you to keep the money for your program, when once again thanking him or her, be sure to remind the person that the full amount of this donation is now tax deductible – a nice, unexpected win.