Monday, February 25, 2013

Matching Gift Campaigns and Transparency

A matching gift campaign, in which a large donor pledges to match funds that are donated by others, can be a very effective means of fundraising.  For a donor with large funds to give, a matching gift offer provides the ability not only to make a donation to help fund the organization but also to kick start the organization's other fundraising efforts.  For prospective donors, a matching gift campaign offers the appeal of doubling the power of their donation.  Despite the upside, I wonder to what extent charities are fully transparent about these campaigns.

As an example, I received an annual fund drive letter in December from a well-known national charity.  In it, there was a matching gift campaign appeal -- it stated that if I gave $20, the organization would receive $40 thanks to a matching gift promise.  The potential to double my gift was tempting.  I decided to read the fine print, which directed me to a website for full details.  I went to the website and discovered the matching pledge was limited to the first $500,000 raised.  I cannot say for sure the full amount raised, but let's make a rough estimate.  Despite the fact that most organizations see an uptick in giving in December, let's be conservative and presume this organization's donations were spread evenly across months.  In that case, based on the organization's most recent financial statements, it averages $5.8 million monthly in unrestricted public contributions (this excludes the matching gifts themselves, which were restricted).  In other words, the maximum $500,000 matching gift was almost certainly met.  In fact, presuming average monthly contributions were received in December, public donations were over 10 times the maximum.  Using the $5.8 million monthly figure applied to December, then, on average a $25 donation was only matched with an extra $2.15.  This outcome is probably not what most donors were expecting when they made their gifts.  I'm not saying the charity made any false statements (the disclaimer made things clear); however, I would also not classify the campaign as completely transparent.  If charities are interested in complete transparency to donors, they should be more up front about the extent of the matching offer and the likelihood any individual donation will actually be matched.  Perhaps this example is an outlier, but I worry it is not.

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