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I know someone who holds off giving to a local food bank until she sees the annual announcement that a local corporation is matching donations.
You can tell her that large corporations budget charitable donations in advance and will probably give the same amount even if the food bank doesn’t reach its goal or that her desire to support the mission is unrelated to whether some big company gives. She doesn’t care. She just likes the idea of matching donations.
She’s not alone. We all do and have for a long time. Booker T. Washington gave credit to one of his supporters, industrialist Henry Huttleston Rogers, for using matching funds to help provide education for African Americans in the 1890s.
Today, matching donations are everywhere. Note that we’re talking about offers to match individual donations for a specific nonprofit, not the corporate programs where companies automatically match donations their employees make to a range of nonprofits. Here’s a look at the good, the bad and the ugly of matching gifts.
Back in 2015, the consulting firm M+R surveyed a small group of nonprofits and found that 81% used some sort of matching donation offer in their end-of-year pleas. Other studies have found that matches generate more revenue per donor and make it more likely that people will donate. One experiment found that simply including a match offer in the donation request increased the probability that someone will donate by 22%. It is important to note that not everyone agrees and the type of offer makes a lot of difference, but I’ll get more into that later.
For now, let’s look at the mystical psychological power that matches seem to have over us.
The BOGO Phenomenon
In the world of retail, a buy one, get one free offer has a hypnotic effect on shoppers. It’s like a magic wand that bypasses the part of their brains that make cost/benefit judgments and triggers their impulses. Dan Ariely, an economist from Duke University, demonstrated this by asking people which they would buy:
- One Hershey’s Kiss for a penny.
- One Lindt Lindor Truffle for 14 cents.
Three-quarters of them went for the higher value candy even though it cost more. Then he lowered the price by a penny, making the Kiss free and the Truffle 13 cents. This time 69% went for the truffle. No disrespect to the Kiss, but it was the word Free that changed people’s mind.
Philanthropy isn’t shopping, but they are both about purchases. In the case of charities, we hope we are helping to purchase a better world. When potential donors see words like “Double Your Impact,” it feels a little like the cause is getting something for nothing. Free!
We want to give where our money will do the most good. With 1.8 million nonprofits in America, how do we choose the right nonprofit? We could spend our days slogging through Form 990s and annual reports, but — and try not to be shocked — most donors won’t do that.
Instead, we use something called “quality signaling.” When it’s mating season, peacock hens look for the male with the most impressive tail feathers. On Election Day, two-thirds of voters cast their ballot for the tallest candidate. When it’s time to give to a charity, donors look at the quality of a nonprofit’s website, who’s on its board or whether someone they know volunteers there. Quality signaling is a way that animals use clues to guide their actions, whether those clues make sense or not.
Matching donations signal to our brains that a nonprofit is worth our support. If someone else puts up a lot of money, we feel more comfortable putting up a little money. It may signal that the matching donor must have done the due diligence, so we don’t need to.
The classic movie, “The Maltese Falcon,” is not really about a falcon from Malta. I hope I didn’t spoil it for you! Everyone wants the falcon statue. They’ll even kill for it, but the fact that it is a falcon is kind of unimportant. Alfred Hitchcock had a name for a pretty insignificant thing that drives the action. He called it a “MacGuffin.”
Matching funds are the MacGuffins of the nonprofit world — tools that drive donors to action, or at least get their attention. In the nonprofit world, the saying should be, “Out of sight, Out of money! There is so much information hitting us all of the time that individual charities are likely to be crowded out. Match offers give us a way to cut through the clutter and grab donors’ attention.
If a matching offer does nothing more than just give us a way to get donors to pause long enough to read our material and remember us, it has succeeded. It also gives us a way to build in a deadline: “Give by Friday to have your donation doubled!”
One intriguing bit of research supports the idea that matches are just a way to get one’s attention. Small match ratios (one-to-one) turned out to be just as effective as larger ratios (two-to-one or three-to-one).
The Bad and the Ugly
Matching fund offers have some problems that are worth considering.
Several studies question whether matches are actually effective. Many donors were going to give anyway; take them out of the total and matches often have minimal impact. Worse, there was a drop-off in donations after the match was removed in one study (opens as a pdf). Do matches just train donors to not give during other periods of the year?
This problem is more about the world of political fundraising, where campaigns falsely claim an “anonymous donor” is matching individual contributions. Officials have called some matching offers “scams” and threatened to crack down on the practice. Since the federal limit on donor contributions is $3,300 per election, pretty much any political pitch that talks about matching donations is kind of sketchy. As long as a nonprofit actually has a specific donor who has pledged a specific amount, it should be in the clear.
The Dreaded Pumpkin-Spice Syndrome
Starbucks announced in late August that it was bringing back pumpkin spice lattes for the 20th year. That’s cool. By early October, it will be everywhere, and we will be sick of it. No thank you, I don’t believe I care for any more pumpkin spice gravy on my pumpkin spice Spam.
When every nonprofit has a match offer, it no longer signals quality and it loses its marketing appeal. In fact, it becomes a problem because not offering one can become an excuse to not donate.
Matching donations belong in a nonprofit’s tool chest because they have a powerful effect on the psychology of donors. They need to fit within the larger context of your overall fundraising strategy, as well as the credibility of your brand.Return to Insights & Events