Matching-Gift Drives Can Help Bring in Big Sums, but Their Frequency Worries Some Fundraisers

It’s difficult to sort through a pile of direct mail without coming across a letter that promises a chance to “double,” “leverage,” or “stretch” your donation to a charity thanks to a wealthy donor’s matching gift. But do such gifts really work as well as their near-ubiquity suggests?

The answer seems to be yes, with a few caveats. While many fundraisers say matching gifts bring in bigger sums than other appeals, they can go awry, particularly when they are used to raise money for a donor’s pet project instead of an organization’s priority. Fundraisers, meanwhile, say they worry the frequency of “matches” could dilute their power.

‘Like Kerosene’

Matching campaigns work because they provide that extra push that gets hesitant donors to stop mulling and sends them in search of their checkbook, say fundraisers.

“They can be like kerosene,” says Peter Wilderotter, president of the Christopher and Dana Reeve Foundation.

His organization relied on several matching campaigns to get through the economic downturn. He says the chance to have a donation matched got people giving early in the year, and sometimes in larger sums than they might have otherwise.

Just how much larger depends on the circumstances, of course.

Research by John List, an economics professor at the University of Chicago, suggests that direct-mail appeals promising a match may raise 20 percent more than other solicitations.

That’s been the experience of Save the Children, the international aid group. Matching campaigns often raise about 20 percent more than a similar solicitation without a match, says Diana Bogue, director of special gifts.

Conditional Matches

Many fundraisers say conditional matches—in which donors offer to give up to a certain amount for every dollar raised up to a predetermined limit, and in which the gift really does depend on the charity reaching its goal—work better than those in which the initial gift will be made regardless of the charity’s fundraising success.

The International Rescue Committee, which runs eight to 10 matching drives a year, accepts only conditional matches.

Susan Kotcher, vice president for development, says she believes they are more effective because matches can be described more directly in e-mail and mail solicitations. With strict matches, the aid group can make it clear that a dollar or more will be received for every dollar contributed, rather than using more vague language that says, for example, the gift will help “inspire” other donations.

But not everyone agrees about the superiority of conditional matches. Mr. List, of the University of Chicago, says he assumed that conditional matches would raise more money, but a study proved otherwise.

He compared three solicitations: one with no pledged money available, one in which a donor agreed to provide money to start a new project to which others could contribute, and one in which some of the initial gift was conditional on the charity raising matching support. The solicitation that included mention of the unconditional gift raised slightly more money.

“Having the unconditional gift seems to send a strong signal of charity quality, a signal that the event or cause is a good one,” says Mr. List. “And then people respond.”

Downsides of Matches

While they can work well, matches can also detract from other fundraising efforts, and disappoint.

Ron Schiller, a former chief fundraiser at NPR and the University of Chicago who is now senior vice president at Lois L. Lindauer Searches, says that matching drives flounder when they drum up money for a program that’s more important to a donor than to the institution. Nonprofits should not let the “cart lead the horse,” he says.

Another challenge can come when a donor imposes too many restrictions: on the time frame of the campaign, on whom the charity can solicit, and on the number of gifts needed to meet the match, among other criteria. Restrictions are not always a bad thing, but they can make the campaign unwieldy, say fundraisers.

Temple University ran into such challenges when it accepted a $1-million matching gift for a new athletics facility. According to the terms of the gift, the university had to raise all of the matching money from other board members.

But a new athletics facility wasn’t high on the list of every university trustee, says David Unruh, senior vice president for institutional advancement. The university fell short of the $1-million goal, raising about half that amount.

“It came from a very noble and important place, but by limiting the solicitation constituency, it meant we only had 36 people we could go to,” says Mr. Unruh. Still, he says, the drive at least got more trustees thinking bigger about their giving.

Mr. Wilderotter says charities have to be willing to turn down matching opportunities.

The Reeve foundation, he says, recently rejected several million dollars that would have supported a new prize for scientific research. The nonprofit wasn’t sure the prize would be an effective way to stimulate research, and officials didn’t think they could raise the matching money.

“It’s tough to say no,” says Mr. Wilderotter. “But if you look at the history of grants gone bad, there are many examples of universities in particular accepting huge amounts of money and then both the donor and the university walked away from each other, never speaking to each other again.”

Awash in Matches?

While matching gifts have been around for decades, some charities have stepped up the campaigns in the recession’s wake. That’s contributed to concerns that matching gifts could lose their punch.

Water for People, an international group, says this year will be its last running a challenge campaign. Doug Spencer, the organization’s director of resource development, says he worries the campaign doesn’t have the same buzz it once did.

The campaign started in 2008 with one loyal donor contributing $500,000, which the charity used to inspire additional giving. (The gift did not require Water for People to raise matching money.)

Last year the campaign challenge rose to $1-million thanks to two other big donors. From a total dollar perspective, it has been successful, bringing in more than $800,000 in 2009 and 2010, respectively, and more than a $1-million last year.

But it’s been less successful in attracting new donors. Last year, only 4.5 percent of contributors to the challenge were first-time donors to Water for People; in 2010, that figure was 2.7 percent.

“There’s not really new excitement,” says Mr. Spencer, who adds that the charity is “ready to try something different.” And the organization expects that so, too, are many donors.