Matching Gift Effects
Using funds to “match” contributions of others has become a popular way for philanthropic organizations to increase giving. Indeed, the rule-of-thumb convention among fundraisers is that matches work, and that larger match rates have greater influence. Researchers have set out to measure these effects.
In 2008, Dean Karlan and John List worked with a liberal non-profit to mail solicitations to over 50,000 individuals, who had given at least once since 1991. Individuals were assigned to one of two groups: a “match” group or a control group.
Within the “match” group, gifts were matched at $1:$1, $2:$1 and $3:$1. A $1:$1 ratio means that for every dollar the individual donates, the matching donor also contributes $1, hence the charity receives $2, subject to some maximum amount.
The offer to match increased both the revenue per solicitation and the probability that an individual donates. Simply announcing the availability of the match increased revenue per solicitation by 19%.. However, larger match amounts had no additional impact on propensity to donate or donation amount.
Dean Karlan and John List, 2006. Does Price Matter in Charitable Giving? Evidence From a Large-Scale Natural Field Experiment
At approximately the same time as List was studying match rates with the liberal non-profit, two other researchers, Steffen Huck and Imran Rasul, were investigating the effect of linear versus non-linear matching schemes at the Bavarian State Opera House.
25,000 Regular opera attendees were mailed information about a social program supporting disadvantaged youths and asked to donate to the program. Potential donors were randomly assigned to several treatments, including a linear matching scheme in which donations were matched either 100% ($1:$1) or 50% ($1:$0.50) and a non-linear matching scheme whereby only contributions above a threshold were matched.
The researchers found that straight linear matching schemes raised total revenues when the revenue from the match was included, but that matches partially crowded out actual donations. Results showed that if organizations are given the opportunity to use lead gifts as they wish, simply announcing the presence of the lead gift was more effective than providing the match.
Steffen Huck and Imran Rasul, 2010. Matched Fundraising: Evidence from a Natural Field Experiment.
The use of upfront money provides an important avenue for charities to influence donor behavior and acquire new gifts. The results on matches have clear practical implications for practitioners who are interested in maximizing their matching dollars.
If offered a restricted match, fundraisers are best off to utilize it at the lowest match rate possible, as it is sure to increase total revenues.
However, if given the choice, simply announcing the presence of the lead gift may be more effective than providing a match, since this approach will not crowd out giving.
Learn more about Seed Money Effects.
If you are interested in conducting experiments using matching grants at your organization, please contact us.