Do Matching Gifts Work?

This post was originally published on Double the Donation’s blog.

Everybody loves a good BOGO sale, right?

You know, a “Buy One, Get One” deal.

Retailers have used BOGO deals for ages to entice shoppers, giving them more value for their dollar. And interestingly enough, this tactic is also effective with charitable donations.

Nonprofits are always looking for ways to make giving easier and more enticing for donors, and matching gifts are a great way of doing just that.

Matching gifts allow donors to feel more of an impact with their charitable dollars. While I might be able to give only $100, I can feel encouraged by the fact that my gift will be matched, and suddenly my $100 has turned into $200 toward a cause I believe in.

So if a 1:1 matching gift increases my chance of giving (along with the amount that I give), surely a 2:1 or even 3:1 matching gift will increase those odds even more…right?

Maybe not.

A 2007 study from Dean Karlan and John A. List shows that while matching gifts do indeed increase the odds of giving along with the average donation size (19% and 22% respectively), increasing that matching gift to a 2:1 or even 3:1 ratio had no effect on either of these factors.

Turns out, donors are subject to the law of diminishing returns as well.

So while securing a 2:1 or 3:1 matching gift is great, it might not be the best way to structure a matching gift agreement. Rather, it might be more beneficial to spread the matching funder’s money across more gifts by keeping the individual match at 1:1. If the funder has agreed to match gifts up to $X, keeping the match at 1:1 allows more donors to be a part of the offer, while keeping the revenue generated the same for your organization (provided you can drive enough donations).

Check out the infographic below!

Why does this matter for nonprofits?

• Promote employee matching gifts to donors as it can result in an increase in the response rate and donation amounts.
• Include a tool on your donation page (like the one that Double the Donation provides!) that lets donors check to see if their employers will match their contributions.
• If your nonprofit has existing partnerships with companies in your area, encourage them to start a matching gift program that follows the above guidelines. If they already have a matching gift program, ask them to promote them to their employees. Lack of awareness is one of the biggest reasons that employees don’t submit matching gift requests. If your organization and your donors’ employers are informing them about matching gifts, they’ll be more likely to submit those requests.
• Donors who work for companies that offer matching gifts are more likely to give and make larger donations. When you know that your donors work for companies that match donations, you know that they are more apt to make larger and more frequent donations.