Collecting payment at a charity auction: on the night or by invoice?

The hammer falls, the room applauds, and not a penny of it is in the bank yet. Collecting payment is the least glamorous part of a charity auction and the part that quietly decides what the night actually raised.

I’m Kevin Durham, a charity auctioneer and event host. Twenty years on the mic and over £10 million raised have taught me that auction totals shrink in the gap between the stage and the finance team’s spreadsheet, and that the gap is an admin problem, not a bidding one. This is guidance from the floor, not legal or tax advice.

Should you collect payment on the night or invoice afterwards?

Take payment on the night for everything you can, and invoice only by exception.

It is not suspicion, it is momentum. A guest who has just been applauded for winning a lot wants to pay. The same guest on a Tuesday morning has a diary full of other things. The Fundraising Regulator’s code asks for procedures to count, record and bank donations without delay, and the easiest way to keep to that is to have the money before the room empties.

Keep a short list of genuine invoice cases: a company that needs a purchase order, an overseas guest whose card will not clear, a large lot going by bank transfer. Agree the payment date out loud at the desk and write it on the record. An undated invoice is a donation that may or may not arrive.

When is a bid at a charity auction legally binding?

Under the Sale of Goods Act 1979, a sale by auction is complete when the auctioneer announces its completion at the hammer’s fall, and until that announcement any bidder may retract their bid.

Two other parts of the same section matter at a gala. Each lot is treated as a separate contract, so one unpaid lot does not unravel the night. A reserve can also be notified in advance, worth putting in writing.

Having a right and enforcing it are different things, and for a charity the second is rarely worth doing. So the paperwork before the auction matters more than the law after it. Register bidders, capture a name, a mobile and an email, and make sure the room understands how bidding works first.

Setting up the payment desk

Put the desk where people walk out, not next to the stage, and open it before the auction, not after.

Staff it with two people minimum. Charity Commission guidance on internal financial controls asks for at least two to handle and record cash, for money to be banked as soon as possible without expenses taken out, and for card readers to be kept secure and reconciled.

A few things I insist on:

• One person holds the master lot sheet and nobody else writes on it.
• The desk never opens during the live pledge. Guests queuing at the back kills the quietest, most valuable part of the evening.
• Silent and live auction winners settle at the same desk, or you will double-charge somebody. My guide to running a silent auction covers the closing process that feeds it.
• I announce the desk from the stage, by name and location, twice.

The code’s events standards ask for a plan covering all situations you could reasonably expect. A reader running out of battery at 10.40pm counts as reasonably expected.

What do card readers cost a charity auction?

Expect to lose roughly 1.5% to 1.75% of every in-person card payment, plus whatever the reader itself costs.

On a £20,000 auction that is roughly £300 to £350 of fees. Budget for it rather than finding it in January. International guests mean a chunk of the room pays non-UK rates.

Do not quietly add the fee to the bidder’s bill. If you want the winner to cover costs, that is a premium and it belongs in your published terms. I have written separately on whether a buyers premium earns its keep.

What should a charity record for each lot?

Record the lot number, the winner’s name and contact details, the hammer price, how it was paid, and the date the money reached the bank.

Charity Commission guidance asks for records of each fundraising event showing how much was collected and what it cost. Build it from the lot sheet up and the total reconciles itself.

Then the tax point that catches people out. HMRC’s guidance is blunt: a payment for an item at a charity auction is not a gift to charity, it is a purchase. Auction income is not Gift Aid income by default, and it should not go in the same bucket as the pledge sheets.

HMRC allows a narrow route where a bidder treats part of the payment as buying the item and Gift Aids the excess, but only where the item can be bought elsewhere and the bidder knew its value when bidding. So the retail value has to be announced before bidding opens and written on the lot record. Print the values in your auction catalogue and have me read them from the stage.

Telling the room where the money goes pays anyway. At one MS UK event, the year before I came in, an external auction company grossed around £13,000 and the charity saw about £1,300 of it. When I took the room, I said at the start which lots gave the charity 100% and which only paid out above a reserve. The live pledge that night raised £8,300, all of it to the charity. I did not trash anyone. I just turned the lights on.

How do you chase an unpaid lot politely?

Send a thank-you with the amount and a payment link the next working day, one friendly reminder about a week later, then make it a phone call from someone the bidder actually knows.

Tone decides this. The code requires fundraising to be legal, open, honest and respectful, and rules out undue pressure and unreasonably persistent approaches. Two written nudges and a call is not persistent. Six emails and a text at 9pm is.

Give the deadline a reason the bidder can see: the charity has to pay a supplier, or tell the lot’s donor it has been honoured. And let the table captain or the trustee who invited them make the call rather than the finance officer. The person who filled the table has a relationship. The spreadsheet does not.

What if a bidder refuses to pay or disputes the amount?

Check your own record first, then decide whether the money is worth the relationship.

Most disputes are honest. Two paddles went up together and the spotter called the wrong one. The bidder thought the price was per person. Someone bid for their table and three people at it have since gone quiet. If your record is genuinely unclear, offer the figure the bidder believed they were committing to, write the resolution down, and move on.

Flat refusal is a contract question. An unpaid lot is a simple contract debt, and an action on a simple contract cannot be brought more than six years after the cause of action arose, so no panic in week three. A money claim is possible: court fees start at £35 for claims up to £300, £70 for £500.01 to £1,000 and £80 up to £1,500.

In twenty years I have never seen a charity come out ahead by suing a gala guest. The fee is the small part. The cost is trustee time, awkwardness with whoever brought that guest, and the story travelling. Agree a write-off threshold with your board beforehand, so the decision is policy rather than argument.

When a lot should be re-offered

If the bidder retracted before the hammer, nothing was sold, so the lot can go straight back up. After the hammer, do not re-offer to the room.

Go quietly to the under-bidder instead. They know the price, and a call saying the lot is available at their bid beats putting it in the next newsletter at a discount. Never name a non-payer publicly.

Dated lots need a faster decision. Hospitality, match tickets and experiences with an expiry date are worth nothing once they lapse, so set a cut-off: unpaid after two weeks and the lot goes to the under-bidder. Tell the donor what happened. Most offer to donate it again next year.

What I ask a committee before the hammer falls

Three questions, every time. Who is on the payment desk, and have they used the reader before. What do the terms say about when payment is due. Who makes the call if a lot is still unpaid in a fortnight.

Committees that can answer those three bank close to their hammer total. The ones that cannot leak a few per cent to drift.

If you want to talk through how your auction and payment process is structured, call me on 07596 851647. I would rather talk than trade emails, and the first fundraising consultation is free.