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Why Matching Gifts Work

Resource Center - Foundation

(Jan. 4, 2011) One reason why fundraisers tend to overlook matching gifts is that the evidence for their success has been largely anecdotal. However, that is now changing thanks to re­cent research, and the findings are encouraging.

John A. List, an economics professor at the University of Chicago, has conducted natural field experiments to help develop a baseline for assessing the performance of matching gifts. "People underestimate the importance of matching gifts," List says. "If you can say to people that their dollar is worth more than before, then a matching gift becomes more important."

In one study, which solicited responses from more than 50,000 prior donors to a single nonprofit, List and his col­league Dean Karlan found that matching gifts increase not only the revenue per solicitation, but also the response rate. (Interestingly, the study also found that larger match ratios-for example, offering $2 or $3 in matching funds for every $1 donated-did not spur donors to give more.) List's other experiments have shown that challenge grants increase the amount of contributions in door-to-door and direct-mail fundraising campaigns that he studied.

List cautions that his research on matching gifts predates the economic downturn, and he has seen one significant post-meltdown change already: a decline in the power of social pressure, which his research has shown plays an im­portant role in fundraising drives. "The onset of the recession was right in the middle of our capital campaign," List says. "What's pretty stark in our data is that, after the onset of the recession, people didn't have a problem saying ‘no.'"

Even so, List remains optimistic. "My first guess is to say that what we found before is what we'll find afterwards. I think what we're finding is that having a match matters a lot, and that varying it doesn't affect the giving rate."

People give for the "warm glow," which is independent of economic conditions. This is clearly seen when compar­ing stock market performance to aggregate individual giving over the past 35 to 40 years, List says. When the S&P has a good year, giving rates also go up, but when the S&P goes down, giving declines at a shallower pace. "Giving seems to be stickier downward and more flexible upward," List explains. "But people generalize from the positive case to the negative case, and that's not right."

James Andreoni, an economics professor at the University of California, San Diego, says that matching gifts are an effective way of lowering the barrier to an initial gift from reluctant donors. "A match encourages people who gave zero before to give a positive amount," he says. "And the evidence from fundraisers is that once you get people to start giving, it's easier to maintain them as contributors."

This is certainly an argument that fundraisers can take to their boards to persuade them to try a matching-gift program.

Special New Year's Offer: Increase Your Matching Gift Revenue

AFP has partnered with HEP Development, one of the leading experts on matching gifts, to provide AFP members with industry-leading products and services for matching gifts. 

In addition to offering free educational webinars on matching gifts, HEP offers a complete suite of matching gift products to equip you with the knowledge to make the most of individual gifts.  

There are many different types of matching gift programs, but the HEP database tracks the programs, keeps up with the changes, and enables our AFP members to access the very latest information about matching gift options.  Through a partnership with HEP, AFP members are now eligible for an exclusive discount on tools that enable you to realize your untapped matching gift potential.  

E-Match Donor Link
Gift Plus on-line
Matching Gift IPhone App

All three products are available at a discounted price of $995 until January 31, 2011.  Jump start 2011 with the tools to enhance your matching gift donations. 

Please contact Joan Graham at joan@hepdata.com or 954-598-4571 to take advantage of this special offer of matching gift tools or visit the AFP/HEP matching gift network for more information. 

Editor's note: Portions of this article were adapted from an article in Advancing Philanthropy.



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