Although stores are generally associated with businesses and corporations rather than nonprofits, various mission-driven organizations run stores to generate sustainable funding. Just think of the gift shops in art museums or bookstores run by schools or colleges.

However, running a nonprofit store presents unique obstacles that your organization may not have experience handling. Key among them is inventory management. Much like with product fundraisers, it’s crucial to keep the items you’re selling well-stocked to meet customer demands.

If you’re feeling out of your depth, don’t worry — this guide will cover four tips for managing your store’s inventory. Let’s get started!

1. Set up an inventory organization system.

When you’re first starting your store, most or all of your inventory may be on the floor. In that case, it’s less about storage and more about creating visually appealing displays that draw customers in and entice them to make a purchase. Once your store grows and begins to store more inventory, that’s when it becomes complex.

Effective inventory management begins with an organized storage system. Start by purchasing physical storage solutions for your backrooms, including:

• Shelving units
• Storage cabinets
• Storage bins
• Wire shelving

Additionally, purchase a label maker and label your storage systems accordingly. This will help you locate items in the future, making restocking more efficient. Since you’ll be selling and acquiring inventory constantly, don’t be afraid to invest time into organizing your storage well. This is especially important for nonprofits that accept in-kind donations (think food pantries or thrift stores, for example), as you may acquire stock at unpredictable times.

As you continue running your nonprofit’s store, feel free to rearrange your storage until it makes the most sense for your unique needs. For example, if you have any particularly popular products or items, it might make sense to move them into a storage compartment nearer to the front of your back room. By doing so, you’ll make it easier for you and other employees to restock this particular item.

2. Monitor inventory regularly.

To ensure your store is never significantly under- or over-stocked, stay apprised of your needs by regularly monitoring your business’s inventory. We recommend implementing a dedicated inventory management method to help you stay on top of your stock levels, such as one of the following:

• First-in first-out (FIFO). This is a common inventory management method wherein stores sell items in the order they are acquired. It’s most beneficial for stores that sell perishable goods, such as flower shops or bakeries, but it can be useful for other stores as well.
• Just-in-time (JIT). With the JIT technique, your nonprofit will only order enough stock to meet current customer demand. This is a great technique if your store has limited storage space and can’t afford to hold excess items for long periods. However, it requires you to have a good understanding of customer needs at all times.
• Economic order quantity (EOQ). EOQ refers to a formula companies use to calculate the ideal quantity of items they should purchase to meet customer demand while minimizing inventory costs. However, it assumes that demand and holding costs remain constant, making it an inventory management technique best suited for stores that expect steady and consistent customer behavior.
• ABC analysis. In ABC inventory management, you’ll determine the value of your inventory based on the items’ importance, ranking items based on demand, costs, and risks. “A” items are high-value, high demand, and high cost, whereas “C” items are low-value, low demand, and low cost, with “B” items falling in the middle. Based on this system, you’ll know which items to prioritize purchasing and restocking.

Ideally, you want your store to implement the perpetual inventory tracking technique on top of the aforementioned methods. This requires inventory management software (more on this later) that provides real-time information on your inventory levels, so you always have accurate data to back up your decision to order new products.

3. Analyze inventory trends.

As some of the techniques in the previous section alluded to, another crucial aspect of inventory management is analyzing trends in your products and sales. Track key metrics such as days sales in inventory (DSI), gross margin, and inventory turnover to obtain an informed perspective of your inventory.

In particular, you want to determine your:

• Most popular items. Stay informed about your popular items to ensure your store always stays stocked to meet demand. You may also conduct surveys and research into why these items are so attractive to help you offer similar items that will also sell well.
• Least popular items. Similarly, knowing which items don’t sell well will help you keep your inventory moving. You can stock a smaller number of these items or even choose to discontinue them if your audience shows especially low interest.
• High sales periods. This could refer to a time of day, day of the week, or a specific period in the month or year where sales are the highest. Knowing these periods allows you to strategically time your marketing efforts, ensuring that you offer discounts and promotions when customers are likely to buy.

After your nonprofit becomes more comfortable with analyzing this information, you may consider tracking other inventory trends for further insights. For example, you can calculate your inventory turnover ratio, track overstock incidents, assess supplier performance, and consider inventory aging and obsolescence.

4. Purchase inventory management software.

Usually, inventory management comes packaged as one of many features within larger point of sale (POS) systems. According to ThriftCart, POS systems usually have these core inventory management capabilities:

• Real-time inventory tracking. With barcode scanning and an inventory database, nonprofits that use POS systems can track their stock levels in real time so that they always know when they’re running low on merchandise.
• Inventory syncing for physical and online stores. A common challenge for organizations that run both brick-and-mortar and online stores is ensuring that they don’t accidentally sell products they don’t have. A robust POS system will include inventory syncing features, ensuring that you only sell items you have in stock.
• Discounting and promotions. If you need to move products that haven’t sold, discounting and promotions are the way to do it. With this feature, you can easily mark down items that you want to sell while providing customers with an excellent buying experience.
• Receipts. While not directly related to inventory management, receipts are important for your customers’ records. Plus, if a customer makes a donation on top of their purchase at your nonprofit’s store, eCardWidget recommends sending them a tax-compliant donation receipt within 48 hours. A POS system not only makes receipting possible but also extremely convenient.

Once you purchase software, be sure to train your staff on how to use it. Schedule an onboarding session with the software provider, asking questions about areas you need clarification. Then, put together a guidebook to ensure everyone knows how to operate the system and use it for accurate inventory management. You can also use it as a helpful resource for future team members during their onboarding.

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Nonprofit fundraising takes many forms, and stores are a great way for nonprofits to generate a sustainable stream of income. With proper inventory management, you’ll ensure your store runs smoothly, raising an increased amount of funds to further your mission and aid your beneficiaries.

Imagine this—you’ve just kicked off your nonprofit’s exciting auction event. Bidding starts and the event rolls along. You’re busy mingling with guests, discussing your mission, and handling logistics. After the auction ends, you take a look at your fundraising results.

The numbers are disappointing, and something clearly went wrong with the event. Why?

There are all kinds of reasons why this might happen, and many of the most common have to do with the auction items up for grabs. Maybe there weren’t enough items, or the items that were available weren’t appealing enough to everyone to spur competitive bids. Maybe some lower-price items were highly appealing to large groups of donors, but your big-ticket items got little attention, causing your revenue strategy to fall apart.

Now imagine an auction that strikes the perfect balance between types, numbers, and values of items for its unique audience—this one will naturally do a better job at reaching its revenue goal.

Your auction item ideas and final catalog inherently play critical roles in your event’s success. Let’s walk through the essential steps and tips you’ll need to succeed with procurement.

Step 1: Lay out a procurement plan and timeline.

Start by laying out some guidelines for your procurement process. Collaborate with your event planning team to answer these questions:

• When will the auction happen?
• What is the auction’s revenue goal?
• Does the auction have other goals related to the number or average value of bids?
• Are we hosting a live auction, silent auction, or both?
• What format will the auction be: in-person, virtual, or hybrid?
• Do we have a specific target audience in mind, or is this event targeting a broad audience of our organization’s supporters?

Lay out a rough timeline for procurement, including specific deadlines for completing procurement, finalizing the catalog, and beginning to promote the items to attendees before event day. The time you’ll need might vary based on the scale of your event, but, generally speaking, you need a lot of time for effective procurement. Try to get started on this process as early as possible.

Next, recruit a procurement team. A mix of event staff, volunteers, and a board member or two will be helpful. Each individual will need to be comfortable reaching out to potential item donors, sponsors, and consignment companies, with one team member overseeing the effort to keep it on track and lead the catalog creation and pricing processes.

Step 2: Review your donor data.

Before you start brainstorming actual items to procure, it’s important to review your data. Insights about your target audience will be invaluable for guiding what can otherwise become an overwhelming or too open-ended process.

Review your nonprofit’s CRM or donor database to look more closely at your event’s target audience as a group. Note any trends or highlights related to information like:

• Past event attendance—specifically auction events if possible
• Average giving levels and/or lifetime value
• Duration of relationship with your organization
• Marital and parental status
• Location, if hosting an in-person auction

If you’ve hosted auctions in the past, be sure to review event-specific data like:

• Past auction performance and revenue KPIs
• Items which received the most/least bids
• Items which generated the most/least revenue compared to their market values
• The donors or sponsors that provided items
• The target audiences of past auctions

Look for connections between these points of data. Think through what they might mean for your current auction—what types of items have either a proven track record with your audience or would likely appeal to them based on their interests and budgets?

Step 3: Create an item wishlist.

Now comes the fun part! Sit down with your procurement team, review your data findings, and start brainstorming items and experiences that you think would make for a winning auction.

Don’t limit yourself too much here, but do try to identify items that span a range of price points. Most silent auctions lead with one or two big-ticket, ultra-desirable items or packages, then a spread of mid-level items, and a smaller set of more accessible items and packages to ensure that all bidders can feel involved. Live auctions typically feature 12-15 higher-quality items to drive maximum engagement from a target audience.

The goal is to create a robust list of “nice-to-have” items that you think would fit well with your audience and goals. You can put a few “must-haves” on your list, but keep in mind that during the actual procurement process, you most likely won’t be able to secure everything.

Once procurement is underway, you’ll get a better sense of how your catalog is shaping up and can direct more intense focus to specific items or price ranges as needed.

Step 4: Create an auction item procurement packet.

To prepare for the procurement process, create helpful resources for your team. Winspire’s auction item procurement guide recommends creating “item procurement packets” of go-to- resources that your team will need out in the field. These resources include:

• Item procurement letters that clearly detail information about your nonprofit, its mission, the auction, the in-kind donation process, and tax deduction instructions.
• In-kind donation forms to standardize the collection of donor/sponsor names, addresses, contact information, items, estimated values, descriptions, and other details. Copies of these forms can easily double as receipts or gift substantiations if needed.
• A copy of your wishlist for team members to easily discuss other potential donations should a prospect say no to the first ask or express interest in helping further.

These resources should cover your bases for procurement team members to hit the ground running but don’t forget backend logistics, too. Create a central spreadsheet to input prospect information, associated items, and data collected from the donation forms as in-kind gifts are secured. This sheet should be accessible to everyone to avoid inadvertently double-asking a prospect or forgetting to procure “must-have” items.

Step 5: Review your donor, sponsor, and community contacts.

Take a look back at your list of previous auction item donors. Screen your nonprofit’s list of contacts—including individuals, large companies, local companies, and other nonprofits.

Review this list of prospects against your item wishlist and make some connections. Try answering these questions:

• Which donors or organizations would likely want or be able to donate which items?
• Do we have any close but informal relationships with companies that we could tap into? For instance, do we receive many matching gifts from a local company that hasn’t yet sponsored an event?
• For items that we can’t easily procure all in one go (like themed baskets), would any prospects be willing to donate money for us to purchase those bundled items instead?
• Do other nonprofits in the community (like zoos, theaters, or museums) have unique experiences or packages to offer?
• If there are big-ticket item ideas or experiences on our wishlist that we aren’t likely to receive as donations, do auction item consignment companies offer them?

From here, you may wish to divide your prospect among different team members to take a more organized approach. If anyone has an existing personal or business connection with a prospect, make sure that they own the procurement process for that prospect.

Step 6: Stay organized as you solicit items.

Start working down your list of auction items and prospects. With their item procurement packets in hand, your team should be well-equipped, but make sure to provide some guidance for non-fundraisers and volunteers if needed.

Stay organized by asking all team members to immediately report the results of their conversations with prospects and the information from their in-kind donation forms. Your central procurement spreadsheet should be the source of truth for the process, and this info will be essential for:

• Completing your procurement process and well-rounded catalog
• Donation collection logistics
• Item pricing
• Donor stewardship and gift substantiation

Remember, when it comes to item procurement, time is your friend. Try to begin the outreach process as early as possible before your auction so that you have plenty of breathing room to contact prospects multiple times, find new prospects, or come up with alternate item ideas if needed.

Step 7: Begin the item pricing process.

As the auction items begin arriving, dedicate a member of your procurement team to get a headstart on the pricing process.

Striking the right mix of starting bids is a delicate process but extremely important for the ultimate engagement and revenue that your auction will generate.

Item pricing is complex and warrants its own in-depth explanation. To recap the fundamentals you’ll need to understand, take a look at this graphic:

For each item, start by determining its fair market value (FMV), or what a person would reasonably expect to pay for it on the open market. For bundled items and experiences, roughly estimate and add up the FMVs of the component parts. For consignment travel packages, the vendor will likely provide pricing guidance, but most of the time, any amount you raise over the item’s list price goes back to your nonprofit.

Next, determine which items will have buy-now options. For many auctions, this option is ideal for your most valuable items to maximize earnings, but be careful not to discourage engagement by using it on too many items. It’s recommended to set these options at 150-200% of the item’s FMV so that the barrier is high enough to be profitable for your organization but not so high as to completely discourage bidding.

All items should receive a starting bid amount, which should be 30-50% of their FMVs. You can play around with this range based on each item’s rarity and desirability, aiming higher for high-competition items and a bit lower for common or lower-price items. For consignment packages, set this starting bid at 100-120% of its list price to ensure your nonprofit will generate revenue.

From here, set a minimum bid increase for each item. This should be high enough to ensure new bids are substantial, but not so high that it deflates the total number of bids the item receives. This requires careful strategy—another reason why it’s a good idea to get started on procurement early! A reliable rule of thumb is to set the minimum increase at roughly 10% of each item’s FMV.

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Item procurement is certainly a high-stakes process, but it’s completely learnable. Its best practices are likely already familiar to you as an event planner or fundraiser, so lean into that experience to ensure your approach is organized and strategic. In no time, you’ll be promoting your items and preparing for your most successful auction yet. Best of luck!