Q: I work for a nonprofit in Ohio that is producing a fundraising event that will include a live auction. I was wondering if we are legally obligated to use a certified auctioneer to conduct the auction.
A: The short answer to your question is no. As is the case in many states, you do not need to use a certified or licensed auctioneer so long as you adhere to certain conditions. Despite a general ban against unlicensed practice – “No person shall act as an auction firm, auctioneer, apprentice auctioneer, or special auctioneer within this state without a license issued by the department of agriculture. No auction shall be conducted in this state except by an auctioneer licensed by the department.” (4707.02 of the Revised Ohio Code) – there are exceptions. In Ohio, the exception that applies to your organization is:
(B)(5)(b) Sales at an auction sponsored by a charitable, religious, or civic organization that is tax exempt under subsection 501(c)(3) of the Internal Revenue Code, or by a public school, chartered nonpublic school, or community school, if no person in the business of organizing, arranging, or conducting an auction for compensation and no consignor of consigned items sold at the auction, except such organization or school, receives compensation from the proceeds of the auction. As used in division (B)(5)(b) of this section, “compensation” means money, a thing of value other than participation in a charitable event, or a financial benefit. (Emphasis mine)
What this means is you can’t use an auction company to run your event, unless the auctioneer that will be facilitating it is licensed in your state, you pay the company a pre-determined fee regardless of the success or failure of the auction or the company donates its services. The use of consignment companies– which are in the business of providing popular auction items such as works of art, sports memorabilia or trips to vacation destinations – is forbidden without the employment of a licensed auctioneer because, by definition, they take payment for their services out of the proceeds of the auction. How so? Consignment companies ensure you have items to auction, but they are not donating them to you. They retain the ownership of those items until they sell. At that point, they take a portion of the sale to cover their costs. And any items that don’t sell they take back.
I doubt that either of these requirements will be an issue for you. First of all, legitimate auction companies are going to be sure that its auctioneers are licensed. This includes those that specialize in providing consignment articles around which the auction can be advertised. Second, many nonprofits prefer to use volunteer celebrities, such as popular newscasters, to serve as their auctioneer because of the added draw their names engender. (Note: this does mean that you cannot pay a celebrity to serve as your auctioneer and expect a free pass from the state!)
While you don’t have to hire a licensed auctioneer, there are advantages to doing so. Such a person will keep the process moving in a way that someone who doesn’t do this regularly probably can’t. Anyone who has sat through a never-ending auction will appreciate having a professional at the helm. And, since running auctions is what auctioneers do day-in and day-out, they can be particularly helpful in the planning stages of your event. They tend to know what is most likely to sell given different audiences, so they can guide your search for the most appropriate items to put up on the block. They know pricing, so they can be helpful setting starting and reserve bids. They also know how to read bidders, so they know when to push to run up the bidding and when to drop the gavel. Such experience is likely to ensure that your organization will walk away with more money at the conclusion of the event than it might otherwise.
However you decide to proceed, I wish you luck with the live auction portion of your fundraiser. For others – outside of Ohio – be sure to check your own state regulations regarding the use of non-licensed auctioneers.