Matched funding: When the whole is greater than the sum of the parts
More people are likely to donate to charity and give more money if they know their donation will be match-funded, a new report has found. Alex Day, Director of the Big Give, blogs about research they recently commissioned about the power of match-funding.
As funders, grantmakers or philanthropists, one question we may often ask ourselves is how do we ensure that our funding is leveraged to create maximum value for the causes we are supporting?
This is a question that Sir Alec Reed CBE asked himself in 2008 after being inundated with requests for support from charities to The Reed Foundation (his family’s foundation which derives its income from owning 18% of shares in the Reed Specialist Recruitment Group). In an attempt to truly “sweat his assets”, he decided that he would use his philanthropy to try to attract more money to the table by offering to double donations to said charities via the Big Give donation platform. He allocated £1 million of match-funding to double donations in a campaign which he called “The Christmas Challenge”. It worked. The match-funding proved extremely popular and ran out in 45 minutes. The Christmas Challenge has sinced raised over £71m for more than 2,500 charity projects (N.B. The 2016 campaign takes place from 29th November - 2nd December on theBigGive.org.uk).
Sir Alec Reed is not on his own. Match-funding is increasingly being used by funders and philanthropists (e.g. Department for International Development, Higher Education Funding Council for England, The Gates Foundation) as a tool to encourage people to give. But how effective is it? The evidence is somewhat inconclusive and nuanced, and although it has been widely studied in the US, in the UK very little systematic research has been carried out. The Big Give, alongside Charities Trust and Royal Bank of Scotland, co-commissioned Dr Catherine Walker (former Head of Research at Directory of Social Change) to conduct research to explore how match-funding is used in the UK today, to assess its effectiveness as an incentive, and to understand its impact on the donors, charities, companies and philanthropists using it to maximise charitable donations.
The research included reviewing literature, analysing 138,000 donations made through the Big Give online giving portal, surveying 1,215 donors who made a gift on the Big Give website in 2015 and conducting interviews with thought leaders from companies, trusts and foundations, charities and experts involved in match-funding. The research found:
· More people give when their donations are match-funded. 84% of survey respondents felt that they were more likely to give if matching was offered. Literature regarding match-funding also showed mixed results but that response rates to charitable appeals increase between 22-110% and overall campaign revenue increased by 51-120% when matching was offered.
· Some donors give more when their donations are match-funded. The average matched gift made through the Big Give is 2.5 times higher when a match is offered (£333 average matched gift vs. £132 average unmatched gift). In addition, one in three surveyed donors said that they gave a larger gift because matching was applied to their donation and nearly half of these gave up to 50% more.
· Match-funding is currently the most likely factor to make donors give more. Match-funding was rated the most likely factor to encourage donors to give more, scoring more highly than emergency appeals, and Christmas or other religious or cultural festivals.
· Matching can give an extra boost to charities fundraising. Matching can help charities both to engage new supporters and to re-engage less engaged/lapsed supporters. For example, half of charities who take part in the Big Give Christmas Challenge report gaining new donors from the campaign.
· Match-funding success depends largely on contextual factors. ‘The ask’ needs to be optimised for match-funding to work most effectively. The success of match-funding depends on:
o How you ask: a match ratio of 1:1 (i.e. £1 donated = £1 matched) seems to be the ideal
o Who you ask: Specific donors seem to react better to match-funding. From the donor survey and donation data, middle-aged, male, high earners respond to match-funding most strongly.
o When you ask: Both the end of the tax year and major holidays, including Christmas, increase people’s propensity to give and may increase the appeal revenue.
o What you ask: Response rates to match-funding campaigns increased when donors were told that overhead costs of the charity had been covered. It also increased when ‘seed money’ had already been donated. Naming who was matching the gift also showed to have an impact in increasing donations (e.g. citing the Gates Foundation as the match-funder was found to generate more and larger donations).
Clearly, the findings of the research point towards match-funding being a successful and popular way of incentivising greater giving to charitable appeals when done well, enabling the development of giving. Findings from both the literature and this research suggest that matching can be a brilliant booster. However, there are specific recommendations made in the research report for those involved in match-funding:
· Get ‘the ask’ right. Besides the contextual factors, match-funding campaigns are not guaranteed to succeed without fundraising know-how and some effort.
· Make it as easy possible: Ensure that all parties are clear on the process and likely outcomes.
· Be innovative: There is no ‘one size fits all’ model and the right model needs to be adapted depending on the funder, charity and donors.
· Make it a genuine partnership with all parties: Not all charities are ‘match-ready’ and funders could include activities such as capacity building or ‘hands on’ vetting of charities supported to ensure this is the case.
· Beware over-use and over-reliance on match-funding: As with any funding stream, experts and practitioners warn of the dangers of over-using match-funding or relying on it too heavily.
When these recommendations are heeded, the evidence suggests that match-funding can be a funding and fundraising vehicle which creates a situation where the sum is truly greater than the parts. In the words of Bridget McGing (Deputy Director, Pears Foundation) who was interviewed as part of the research: “Match-funding can provide a well needed boost to charities who, in the current climate, are struggling to bring money in. It’s like giving them a new superpower, a new weapon, a new challenge to get their teeth into. It can reinvigorate their fundraising.”
The full match-funding research report, entitled ‘A Great Match’ can be downloaded at: https://www.thebiggive.org.uk/match-funding/
About the Big Give Christmas Challenge
The Big Give Christmas Challenge, which was founded by the entrepreneur Sir Alec Reed CBE, has raised over £71 million for more than 2,500 charities since it launched in 2008. Donations of up to £5,000 can be doubled to particapting charities during the 2016 campaign by visiting theBigGive.org.uk between Tuesday 29th November and Friday 2nd December.