Matching Gifts and Challenge Grants: They’re Not the Same

“Double your impact,” they said. But what does that really mean?

Doubling your impact is referring to the opportunity for a nonprofit to raise twice as much toward a particular campaign with what is called a matching grant.

A matching grant is a charitable practice whereby a major donor or group of donors offers to match donations given to an organization up to an agreed amount. The amount of money given to the organization is determined by how much is given by other donors in response to the matching gift and is usually valid for a specific period of time.

Challenge grants vs. matching grants

Although they are sometimes mentioned interchangeably, matching grants and challenge grants are two very different things.

Here’s what I mean:

A challenge grant is defined as a charitable practice whereby a major donor or a group of donors gives a gift or commits to give a gift on the condition that it will stimulate other gifts or challenge others to give.

The difference is the organization receives the full amount of the challenge gift regardless of how much other donors give. The challenge gift is usually given up front and it’s not contingent upon whether or not others give.

Whereas with a matching grant, the amount of money given is determined by how much is given by the other donors. The generous donor matches the amount of money raised up to a certain amount. 

Speaking the language

Once you understand the difference between these two specific gifts, it’s important to use the correct terminology in order to make sure the messaging is clear to your audience.

Since matching gift funds are only given to the organization if other donors give to that project, it is acceptable to say that the matching gift will literally double every gift given. It’s also acceptable to say that the impact of the donor’s support will be doubled by the matching gift.

And to help increase engagement and urgency, it’s also good to emphasize that whatever portion of the match is not met will literally be lost.

But with a challenge grant, you wouldn’t say that the gift would double or match every gift given because a gift has already been given. In this incidence, it is acceptable to say that the donor’s gift will make “twice the impact,” simply because the gift given will be combined with the challenge grant.

So… which is better?

Let’s imagine that you have a strong campaign and you’re raising funds for a specific need. There is a clear sense of urgency and you can see that your donors are inspired. Which type of gift is better?

In almost every case in which we’ve performed a head to head split test between a challenge grant and matching gift, whether it’s acquisition campaigns or cultivation campaigns, the matching gift wins.

Why do you think that is?

I believe it’s because the language is stronger. The fact that the matching gift is contingent upon the donor’s giving simply lends itself to a more urgent feel. Both are good, but matched gift is better.

And now that you know the difference, it’s time to double your impact!

Get more valuable insights on how matching gifts enhance your fundraising efforts through this Dunham Institute course, Matching Gift Strategies.


More Insights from Dunham+Company: “Tap Into the Heartbeat of a Major Donor”

Ready to take the next step? Dunham+Company is here to help your organization have more impact and establish deeper relationships with your donors and supporters.

 

 

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