There’s a growing body of empirical evidence on what makes for effective matching gift programs and what doesn’t.

The following post –and the two that will follow this one–contain lots of research AND lots of valuable insight and good questions from Agitator readers.  So, if you’re interested in “mastering” this subject you’ll need to spend some time digging into the articles and research behind the links and also paying some serious attention to the comments.

Roger

In a year-end post, Please Don’t Eat the Poinsettia, I noted that the field of fundraising is filled with lots of myths, aphorisms and the equivalent of ‘old wives tales’.

Some are true, some are not, and many persist for which there’s little proof one way or the other.

I promised that in 2017 we’d explore some of these as we intensify our focus on evidence-based fundraising as opposed to myth-based or even experience-based fundraising.

And I asked readers to send along some fundraising ‘old wives tales’ or so-called ‘best practices’ you’d like us to explore.

Cindy  Courtier wrote to say she’d like us to explore Matching Gifts, noting, “They certainly raise money. However, 1. the organization probably would have received the ‘match’ as a regular gift, and 2. I wonder if it does generate ‘extra’ gifts, or do donors just choose this opportunity to give?”

Coincidentally, Cindy’s question about Matching Gifts dovetails nicely with Tom’s rant yesterday on year-end mailings:

“There’s nothing more heartless than being prodded give to help some organization meet its year-end target … what do I care about their ginned-up target? Or to take advantage of their ‘Last day only’ 47 to 1 match. Gimme a break.”

So here goes. Fair Warning: this is not for skimming. If you’re interested in understanding Matching Gifts, you’ll have to dig in.

An Agitator summary of some evidence-based research on Matching Gifts.

ITEM: Best Matching Gift Formulas

Three years ago, in Snickers Bars and Matching Gifts, we asked, Which Matching Gift Formula Works Best?

• 1:1 matching grant (‘An anonymous donor will match your contribution dollar for dollar.’)

• 2:1 matching grant (‘triples your donation’)

• 3:1 matching grant (‘quadruples your donation’)

The anecdotal (as opposed to evidence-based or scientific) ‘rule’ in our trade is that higher match levels are better than lower match levels. [See Tom’s post on the ‘rules’.]

So, you might be surprised to learn that a 3:1 matching grant offer is no more effective than a 1:1 challenge. And a 2:1 challenge is about the same as the 3:1 and 1:1 challenges.

These findings are based on real campaigns conducted and measured by economists Uri Gneezy and John List of the University of Chicago.

In their fascinating book — The Why Axis — they challenge some of the received wisdom of our trade with a series of field experiments. Thus, their findings explode the myth of challenge grant formulas that more is better.

(Sadly, despite evidence to the contrary, most fundraisers continue either in blissful ignorance or with deliberate misrepresentation, as you’ll see from my post two years later in Matching Gifts: Bonanza or Sham).

ITEM: No Match vs a Lead Donor vs Lead Donor + Match

Nick Ellinger, VP of Marketing Strategy over at DonorVoice, in a detailed post, How to Structure Your Matching Gift Campaign, summarizes the results of tests that may surprise you.

Most of the time matching gift efforts are set up along the line of ‘double your impact’ campaigns. Not in this case.

Nick reports that structuring a campaign to feature a lead donation may be more effective than the matching gift itself, and how a 50% match works just as well as a 100% one.

Here’s what happened. Three researchers — Huck, Rasul, and Shepard — looked at whether a lead donor increased the success of a campaign and how the structure of the match impacted that success. They did this for the Bavarian State Opera House.

Here were the six test treatments:

1. Control: No lead donor, no match commitment
2. Lead donor. No Match. A generous donor has already funded part of the program for 60,000 Euros. We need your help with the other part
3. 50% match: A generous donor will match your Euro with .5 Euro
4. 100% match: A generous donor will match you Euro with 1 Euro
5. Non-linear matching: A generous donor will match any gift made over and above 50 Euros. (Which is to say, if you donate 120 Euros, the donor gives 70. If you donate 70, the donor gives 20. If you donate 40, the donor gives nothing)
6. Fixed gift matching: A generous donor will match any positive gift made with 20 Euros of his/her own

Here are the results:

Yeah, not what Nick, perhaps you, nor I thought either.

Nick figured that because of decision science factors such as social proof and authority that the presence of a lead donor would help. But, presumably, there was another factor at work — that of anchoring. Putting forth the number of 60,000 Euros may have triggered the idea that a person’s gift should be closer to that number. (Mention of an amount this high may turn off some donors — although the decline in response rate in the test wasn’t statistically significant.)

What surprised Nick was that the matches didn’t help revenue per piece. The matches did increase response rates, but the average gift was significantly lower in all the matches. The authors of the study have the hypothesis that the match creates a bit of a crowding out effect — that is, the donor feels like their 50 Euros is 100 Euros, so they need not make the donation of 100 Euros to have the impact they wanted to have. This is certainly plausible and consistent with previous research.

What to make of this? If you’re like Nick and most fundraisers you’ve probably only tested matching gift language versus non-match control language. However, there is some evidence here that simply stating that a lead gift has been made can increase the anchoring effect and support the idea that a program is worth funding without resorting to a match.

Lead Gift More Effective in Direct Marketing Than Matching Gift

What about coupling the use of a lead donor with the argument that his/her lead gift cuts down on expense to the organization?

In a study titled Avoiding overhead aversion in charity, Uri Gneezy et al found that many people are averse to covering overhead expenses of a nonprofit, wanting to fund only the work of that nonprofit. As a result, donations decreased when the percent of overhead increased.

Then, the study looked at whether having a lead donor, matching donor, or lead donor covering overhead influenced an increase in donation rates. Here were the conditions:

• Control: “Our goal in this campaign is to raise money for the projects. Implementing each project costs $20,000. Your tax-deductible gift makes a difference. Enclosed is…”

• Seed money: “A private donor who believes in the importance of the project has given this campaign seed money in the amount of $10,000. Your tax-deductible gift makes a difference. Enclosed is…”

• Matching gift: “A private donor who believes in the importance of the project has given this campaign a matching grant in the amount of $10,000. The matching grant will match every dollar given by donors like you with a dollar, up to a total of $20,000…”
• Seed money to cover overhead: “A private donor who believes in the importance of the project has given this campaign a grant in the amount of $10,000 to cover all the overhead costs associated with raising the needed donations…”

Here were the results, in response rate and revenue per piece:

• Control: 3.36% with $.80 revenue per piece

• Seed: 4.75% with $1.32 revenue per piece

• Match: 4.41% with $1.22 revenue per piece

• Seed $ covering overhead: 8.85% with $2.31 revenue per piece

So, having a donor or donors cover the overhead of an endeavor raises the likelihood that someone will donate significantly, seemingly combining the benefits of authority and social proof from a lead gift and the direct donation to the cause from low overhead.

CAVEAT: As Nick Ellinger points out, “This approach, of course, leaves aside how the work of the nonprofit will get done without that overhead, but it is a concern expressed by some donors, so it is worth considering.”

ITEM: When to Use a Match

Some research sheds light on when to use a match and when not to. Karlan, List, and Shafir published a study in the Journal of Public Economics looking at match rates.

Normal studies tend to focus on whether the match works overall: yes, it does or no it doesn’t. This study, however, gives some guidance on when to deploy a match. It also cross-deployed the match with a test of urgency.

Here were the four test conditions:

• Matching gift with urgency (with a reply device and PS that said things like “NOW IS THE TIME TO JOIN THE FIGHT!”)

• Matching gift without urgency

• Control with urgency

• Control without urgency

(The study also includes other testing like match sizes and timing that is not relevant for our purposes here.)

The researchers found that urgency hurt the appeal in many cases (probably, they hypothesize, because there was no reason given for the urgency. Sound familiar?). But when it was combined with a match deadline, this negative effect disappeared.

As for the matching gift, there was evidence that it worked, but it only worked for donors who had made their previous gift in the past year. These donors were 3.2% more likely to donate with a match in place and their average gift went up. On the flip side, donors who had last given more than 12 months prior had their response rate drop when the match condition was in place.

Here’s hoping this long and more-detailed-than-usual post has been helpful. If you have actual test results on matching gifts I hope you’ll share ‘em with us.

Roger

P.S. My thanks to Nick Ellinger for his input and research. And, a special shout-out to his rant about the abusive use of the matching gift concept around #GivingTuesday. You can read it here.