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Inside The Weird, Magical World Of Matching Donations

This week NonProfitPro published an article I wrote about the slightly wacky power that matching donations seem to have on nonprofit supporters. Here is the article in full. And if your nonprofit needs help using matches and other tools to make this a successful fundraising season, email us at info@storyboardhtx.com.

 

I know someone who holds off giving to a local foodbank 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. Tell her that her desire to support their 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 educations 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.


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. We’ll cover that at the end of this piece.


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. Duke University Economist Dan Ariely demonstrated this by asking people which they would buy:


One Hershey Kiss for a penny

-or-

One Lindt 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 Hershey 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!!!


Quality Signaling – We want to give where our money will do the most good. With 1.5 million nonprofits in America, how do we choose the right nonprofit out of the 1.5 million in the U.S.? We could spend our days slogging through 990’s and annual reports, but – and try not to look 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. Or 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 MacGuffin – 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 - a tool that drives donors to action, or at least gets their attention. In the nonprofit world the saying should be, Out of Sight, Out of Money! There is so much information hitting us all 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 peoples’ attention. Small match ratios (1:1) turned out to be just as effective as larger ratios (2:1 or 3:1).


That’s The Good. Now The Bad And The Ugly.


Matching fund offers have some problems that are worth considering.

  • They may not be as magical as all that. 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, one study found a drop-off in donations after the match was removed. Do matches just train donors to not give during other periods of the year?

  • They might be illegal. 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. Fun fact: 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.

  • They may suffer from 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.


The Final Word


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.


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