What is a Matching Gift or Matching Fund?
A matching gift, also known as a matching fund or matching donation is a charitable gift made toward a non-profit organization by a matching donor (such as an employer) under the provision that an original donor (such as an employee) first makes a gift toward that organization.
What is the typical procedure?
As an example scenario, an employee of a bank which matches gifts decides to make a gift to his or her charity of choice. Since this bank is a matching gift corporation, it will match the donor's $100 gift to the charity at a 1:1 ratio, for a total of $200. In this manner, this donor increases the value of his or her gift simply by participating in the matching program, and will be recognized at that giving level by the charity.
Matching gift programs generally consist of five steps:
1. Individuals donate.
2. Nonprofits notify eligible donors.
3. Donors submit matching gift requests.
4. Nonprofits validate grant requests
5. Corporations cut checks.
In order to procure the matching funds, this employee would submit a form to his or her employer's human resources department
What are the lesser common matching gift situations?
Usually, matching gifts are equal to the amount given by the original donor, i.e. a 1:1 ratio. For example, if a donor makes a gift of $100 to an organization, the matching company will also give $100, making the total gift worth $200. While 1:1 matches are the most common, matching gifts can be of a variety of ratios, including 0.5:1 (the matching company giving $50 for every $100 given by the donor) and 3:1 (the matching company giving $300 for every $100 given by the donor).
Some matching gift corporations offer matching gift programs to the spouses of their company employees and retirees from their companies.
Some companies also offer volunteer grants where they offer monetary donations as a match for their employees’ volunteer work. In these cases, companies will donate either X dollars per hour of volunteering that an employee did on their own time or Y dollars after say 50 hours. This can be a major source of fundraising for a non-profit.
In 1954, the General Electrics Foundation created the Corporate Alumni Program to match donations to the colleges and universities that employees graduated from. This eventually broadened to other charities. The foundation is one of the most generous with a $25,000 match per employee or retiree.
Non-profit organizations encourage more giving and generally raise more funds when matching gifts are offered to prospective donors, due to the increased incentive associated with the match. It can be a challenge for non-profits to identify which companies offer matching gift programs, but effectively managing those interactions between donors and employers can materially impact a non-profit's fundraising results.
In 2014, corporations donated $17.8 Billion to nonprofit organizations. This is a 13.7% increase over 2013 corporate giving levels. In 2010, matching gifts represented ~20% of corporate cash donations. In 2016, over 65% of Fortune 500 companies offer an employee matching gift program.
A matching gift, typically a one-time charitable gift made by an employee and matched by the employer, should not be confused with an employer matching program, which has to do with the employee's 401(k) plan and retirement.