A New York Times report on donor incentives highlighted recent research which suggests that seed money is a better investment for charities than matching gifts. 

Research by John List, previously a member of President Bush’s Council of Economic Advisors, and Dean Karlan, an economics professor at Yale, found that match offers had a material impact on influencing donors to give.  In an experiment, 2.8% of people who received a match offer made a donation, compared with only 1.8% in a control group – an increase of 20%.  However, the size of the match had no effect.

A separate experiment looked at the effect of ‘seed money’ on donor behaviour.  Seed money refers to when charities raise a large portion of their target amount before officially launching a campaign. 

The researchers found that the more upfront money the charity claimed to have on hand, the more additional money it raised.  And when compared with the matching gift research, “the study suggests that seed money is a better investment for charities than generous matches”.