Charity say that donation is matched: how does this work?

Question

I regularly give money to a few charities. Naturally these charities ask me to give again from time to time. In the past few years I noticed more and more often that some charities encourage me to donate with a message such as:

And because of the importance of this cause, our kind donors have agreed to match every donation made during this crowdfunding campaign, so any contribution you make will be worth twice as much.

(there are variants: sometimes instead of "kind donors" it's "an anonymous donor", etc.)

I'm pretty sure that this is true since some reputable charities use this argument.

I'm curious how this works:

• Who are these donors who give a variable amount of money based on the amount given by everybody else? I would guess that these are some kind of organizations?
• How do they check? Does the charity need to give them proof of the gifts?
• Why some people want to donate in this way?

Answer 1

The amount is pretty much fixed in advance, and the sponsor is acting to prop up donations to the charity.

A made-up example, with convenient large numbers:

• The Richie Rich Corp. Foundation has budgeted 1 million dollars to give to Poor People Charity.
• Poor People Charity proposes to the Richie Rich Corp. Foundation to make a fraction of their donation conditional as part of a matching donation campaign. They probably sign a contract to that effect.
• Poor People Charity sends out announcements and targeted ads about this matching donation campaign, with a maximum match of 1 million dollars and a specified end date, to induce individual donors.
• At the end of the matching donation campaign, if Poor People Charity has received 800 thousand dollars from individual donors, the Richie Rich Corp. Foundation formally gives a matching 800 thousand dollars to Poor People Charity. The terms of the contract are fulfilled.
• A few days later, the Richie Rich Corp. Foundation makes a separate donation for the remainder of its million (so 200 thousand dollars in this case) to Poor People Charity.

So nobody has lied, everything is on the up-and-up, and the Poor People Charity now has 1.8 million dollars instead of just 1 million. And the Charity has no interest in lying to the Foundation about how much money it collected from individuals.

Answer 2

Who are these donors who give a variable amount of money based on the amount given by everybody else? I would guess that these are some kind of organizations?

Could be individuals or organizations; I don't see why it would have to be one or the other.

How do they check? Does the charity need to give them proof of the gifts?

Most likely the charity gives some report of the gifts received, and would not lie about it - meaning they should report accurately and be able to back it up with receipts. The matching donor may just trust them, however,

Why some people want to donate in this way?

So that other donors would be incentivized to donate as well, knowing that their donation is effectively doubled in power.

Answer 3

There are multiple approaches unfortunately lumped together....

Challenge grants: "If you get some number of donations and/or some amount of donations, I promise I will make a large donation."

Matching grants: "For every dollar donated within this time period, I will donate a dollar, up to some maximum." It used to be common for large employers to have a fund which would match employee contributions to charities in certain specific categories; mine would match donations to 401(c)3 organizations classified as arts, museums, or education... and in the dim past they actually matched 2:1, so if we gave $100 the charity got $300.

There are a few other common variants.

For this to actually motivate people to donate, the individuals being challenged or matched have to believe that the charity really will lose some or all of that big donation if the goal isn't met. That company matching fund I mentioned definitely worked that way; if we didn't contribute, they wouldn't.

Unfortunately that connection has fallen apart in many fund drives: they are "matching" from money that has been promised unconditionally, or that is coming from donors whom we're pretty sure will give most or all of that amount even if the challenge isn't met or sufficient matched donations don't come in. Those aren't really matches, they're marketing, attempts to build up excitement in the fund drive in the absence of a real challenge or match. I find these fake matches extremely annoying... but the organizations I grumble the most about are ones that I don't actually need encouragement to support, so my perception of what they need to do to fund themselves is different from theirs.

However, I do wish I was wealthy enough to hit them with real challenge and matching grants, where participation by others really does affect whether I donate a relatively small amount or stretch beyond that. Give them and their supporters their own reason to stretch a bit beyond their normal contribution and to feel good about doing so.

Answer 4

It happens quite often if a company likes a charity, and asks its employees to donate to the charity. They will then promise that for every dollar that the employees donate, the company will donate another dollar. That is first a nice thing to do, but it also encourages the employees to donate more, because the charity gets exactly two dollars if I donate one dollar. Or because they can force their company to donate money if they donate themselves.

In the UK, there is a different thing that many charities do: If you donate money to a charity that's often tax deductible. But to get the deduction you must fill out forms and it is quite inconvenient. Instead you can sign that the charity will receive the tax deduction: The tax deduction is 20%. So if you give 100 pound and sign this, the charity can "pretend" that you donated 125 pound, then ask the tax office for 25 pound (because 20% tax deduction of 125 is exactly 25 pound, so both you and the charity get the same money as if you had donated 125 and asked for the tax deduction yourself).

Answer 5

In addition to all the good answers here, note that anyone can match charitable grants.

For example, if you want to raise extra money for a specific charity, especially a small one, you can offer to match all donations (up to a certain amount, if you want to specify a limit) that are made in someone's name or during a certain time period.

This can be an effective way to increase donations to a charity that you value. After all, people may be more likely to donate if they know their donations will be magnified by another party.

As the person (or family, or organization) providing the matching donations, you can specify the "magnification" level. I've seen levels as low as a 10% increase (e.g. if you donate 10, I'll add 1) to as much as 500% (e.g. if you donate 10, I'll add 50). Contributing two times (200%) is probably the most common gift, but the goal is to help others, so whatever will wind up helping the most is typically the most desirable choice. Tripling a few donations made by others may be more or less effective than adding 10% to many donations. The recipient charity can often advise what will help the most.

Other charitable strategies include matching the 10 largest donations or matching the fist 100 donations. This is especially true for live fundraisers where one donation encourages another donation (much like a live auction).

Another creative type of strategy I've seen is for someone to donate something of value if a charity is able to obtain a certain amount of donations in a specific time period. The "amount" can be measured in number of donations or financial value of them. For example, I once saw someone offer their guest chateau for a week to the largest donor (which yielded a very large donation from another party). I've also seen people donate professional services (which can include technical services, BTW) to large donors. Gifts of original artwork are quite popular. I've seen original poetry, photography, in-home cooking services, landscaping, music lessons, homemade crafts, and a multitude of other gifts of appreciation used to encourage charitable donations. The sky is the limit when it comes to helping others.