Matching funds are contributions to a project or organization that match the contributions of another sponsor or donor. The two primary applications of matching funds systems are federal elections in some regions, and charitable groups worldwide. Matching funds allow a certain portion of any donations to be doubled by the matching contributor, and can be an excellent way to involve more people in a charitable or non-profit cause.
Many charities will seek donors, foundations, or businesses that will be willing to put up matching funds for a charitable campaign or event. Usually, these funds apply only up to a maximum, such as matching contributions up to $5,000 US Dollars (USD). This limits the possibility that a business or donor will have to back out of a matching agreement because the fund they must match has grown beyond their means. Having a maximum matching amount lessens the chance that donors will be frightened off by a successful campaign, and instead be able to make a matching contribution within their means.
Programs that take advantage of matching funds may have more success attracting donors. Since donors are guaranteed that their donation will be, in effect, doubled by the matching pledge, they may be more enthusiastic about giving. Those inclined to give even small amounts to charity may be happier to give their $20 USD to a group in the knowledge that it will be turned into $40 USD by people willing to match the amounts.
There are many organizations that specialize in matching fund donations, including some governmental programs meant to provide for certain causes. The National Endowment for the Humanities in the United States provides grants and support to humanities-based projects, often through matching contributions. To apply for these donations, applicants must often submit extensive proposals that outline how the money will be spent and why it should be granted.
In presidential elections, the United States government provides matching contributions to certain candidates. In order to qualify, the candidate must raise at least $5,000 USD in 20 states. In a general election, a lower subsidy is permitted for qualifying third-party candidates, who receive matching donations in proportion to the percentage of the vote they won in primary elections. In addition, the candidates must agree to spending caps on the campaign, including personal expenditure. Candidates can opt out of the process if desired, which allows them to pursue a campaign with no spending limits. Federal matching funds allow up to $250 USD of each individual contribution to be matched.