Roewen Wishart discovers how a well executed matched giving program can double a nonprofit’s rewards.

Roewen Wishart discovers how a well executed matched giving program can double a nonprofit’s rewards.

Did you think the term leverage died with the passing of the global financial crisis? The leverage of matched donation programs appeals to some donors. In these programs, a source donor or government funder matches gifts by other responding donors, commonly in a fixed ratio to a capped amount. Both the source and responding donors may like that the cause will receive a multiplied amount, while some like the feeling that their gift will be multiplied and others like both elements.

Matched or challenge donation programs have an established record of success in tertiary education overseas, and they are a common formula in capital campaigns, particularly involving government funding.

Variety in duration and donor decision making

There’s a wide range of matching programs. Woolworths matched all customer donations to the Salvation Army Queensland Flood Appeal dollar for dollar for a week in January 2011, giving a total match of $7.5 million. There was anecdotal evidence of donors choosing to give through Woolworths instead of directly, in order to maximise their own gift to the cause.

The Nature Conservancy’s David Thomas Challenge on the other hand will run for six years, with up to $10 million pledged to match private donations of at least $10,000 a year for three years.

David Thomas wished to motivate increased levels of giving for nature conservation and with two years remaining a total of $18 million has already been given to the six conservation organisations involved. New donors were more than 40% of those who responded, while established donors were only eligible if their new pledge was a substantial increase on past gifts. The median percentage increase over past annual giving was 340%.

Never overshadow the vision

Matching donations are not limited to major gifts. Jonathon Wright, manager of public and community fundraising at Plan Australia, outlines how the overseas aid organisation uses matching in its mail appeals.

“For many years Plan has benefited from matching funds to raise money from the public for programs that are co-funded through the Australian government or the United Nation’s world food program,” says Wright. “The match amounts are a multiple of the monetary value which Plan contributes through its essential staff, logistics and quality assurance costs, such as monitoring and security.”

“For some years we have used this benefit as an attractive extra element in mail appeals for additional gifts from our regular monthly donors. Using past donation patterns, we identify some of our regular donors who are more likely to respond. We’ve recently started using the match element in cold acquisition mailings.

“The matching is always second in importance to the merits of the projects themselves,” stresses Wright. “We think the use of the matching formula probably increases average gift size, rather than increasing response rates. If people are not going to donate, having a match is not going to change that.”

Despite being from an entirely different sector and dealing with larger gifts, Elizabeth Ann Macgregor, director of the Museum of Contemporary Art, expresses similar views.

“When we began our campaign for an extended building for our growing collection in 2007, we started with a pledge of $10 million from Simon and Catriona Mordant and David Coe,” says Ann Macgregor. “We used the size of that commitment to encourage more private donors to match the generosity of these gifts, but didn’t describe any specific matching formula. We raised a further $7 million from a little over 30 donors.”

“We simply stated our need to raise half the required total from private donations, with the hope that the other half would come from government,” she says. “But we never turned that message into a one-for-one match. In fact, the three levels of government each made a large funding commitment in the following years, but after most of the private donations were pledged.”

“Governments don’t appreciate organisations trying to push them towards any specific matching formula,” adds Ann Macgregor. “For private donors and government, it was the vision, not the arithmetic of matching, which made our campaign successful.”

Long-term effects?

A randomised field experiment by Stephan Meier in 2007 studied the effect of matching donations. The study compared actual giving by two groups of university students to student benefit funds. One group’s donations were matched at either 25% or 50%, while a second statistical control group’s donations were not matched.

The study found that donors who would be matched had a higher response rate and gave higher average gifts, compared to both the control group and their own prior giving. But when matching ceased the number who stopped giving increased and the average donation decreased, when compared to the control group.

Counting both the matched period and afterwards, the control group gave more on average. This behaviour may be explained by various attitudes or inferences by the donors which “crowd out” their “pro-social motivation to give”.

The experiment had some artificial constraints: only the students’ donations were studied, the value of the match itself was ignored, the donors apparently didn’t have any stewardship by the benefit funds, and the size of donation was very small.

We might expect that good stewardship decreases the risk of reduced donations when matching ends. The study is relevant to workplace giving programs with matches, if the beneficiary charities have limited opportunity for direct stewardship communication with donors. And the study suggests some caution about matching programs which are very short.

A possible contrast to this result comes from Bush Heritage Australia, one of the David Thomas Challenge’s beneficiary organisations. It analysed three years of donations by a sub-group of responding donors before their gifts for the challenge.

It compared the same donors’ total giving in the three years including the first challenge donation and two years thereafter (sometimes this totalled three challenge donations, but often not). Total giving in the three years after was 3.5 times the same donor’s gifts in the three years prior and 36% of the increase was later gifts, which were not for the challenge.

Practical tips for challenge design When developing a matching challenge by approaching a source donor, pay attention to the motivations of that donor. Just considering the motivations of the responding donors or the benefit to your organisation is not enough. Plan what you want to achieve with the responding donors. Do you want to increase on their past giving? Motivate multi-year pledges? Acquire new donors? Each of these could suggest different pre-conditions for your program. If the match has a maximum total, consider carefully what you will communicate if the proposed match is over-subscribed. You may need to explain this possibility from the start. Keep the tracking of the donations and match amounts simple – try to avoid multiple specific projects with donations and/or matches tied in different amounts to those projects. If using a matching challenge in any repeated direct marketing, plan a randomised test of your target audience with and without the match element. Remember the FIA Code of Ethics and Professional Conduct when describing the match. Your promotional material must be “accurate, truthful and not likely to mislead”.