What are Matching Funds?
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.
@allenJo - Once a year the leukemia foundation will sponsor a fundraising drive in our local community, taking their cause to the local radio station to announce their drive.
Typically they are trying to raise millions of dollars for their cause. Every year, even in times of recession, people give generously. The radio station will feature live testimonies of people who have survived leukemia and gone on to live healthy, productive lives.
They also have matching drives, which usually happen at the end of the drive when the fundraising event is very close to reaching its goal. The match is usually effective at pulling in a final, last minute rush of giving that puts the charity over the finish line in meeting its fundraising objectives.
My church was taking on an ambitious building program several years ago. The building was going to cost millions of dollars and we were trying to build debt free.
The people were faithful to give, but then a few businessmen stepped up to the plate. They offered to match $250,000 in contributions raised in a three week period. That was a great match and an incredible incentive for people to increase their giving.
Of course the problem with a match is that if you don’t hit the target figure, you don’t get the extra money. Fortunately that didn’t happen in this case. Everyone stepped up to the plate and gave over and above, hitting $300,000 in a three week period.
I think matching funds are a great way to give a little boost to a fundraising campaign. My husband and I are big fans of NPR and we have a standing pledge set up for every pledge drive.
We have been blessed to be well off financially and so our donation is substantial. They announce over the air that our donation will kick in if an equivalent amount of money can be raised. We have it set up so that the donation goes through whether the money is matched or not. But it almost always comes through and we have been told by the fundraising director that the size and frequency of pledges increases when there is matching funds being offered.
Our station is as strong as ever and we hope to continue to support the station as much as we can.
I have never been in the position where I needed to raise funds for an organization, but could see how matching funds would be beneficial.
Some people may be hesitant to give a small amount of money because it may seem like it won't do much good. When you realize your money is doubled, it would seem like it was going a lot further.
Having a limit set for the foundation or business who is donating the money is also a good idea. I wonder how many times a limit was not set and they had to come up with more money than they anticipated.
While this would be a good thing for the organization trying to raise funds, it might not be so good for the company donating the money.
I did not realize that the government gives matching funds to select candidates. I guess this shows that I am not that knowledgeable about the political process.
Depending on how much money a candidate does or doesn't have, I can see why this might be a tempting proposition.
On the other hand, if your campaign is ultimately going to be limited if you accept these matching funds, you also may be shooting yourself in the foot.
It really seems to come down to who is able to raise the most money. If they can do this without needing the matching funds from the government, I think this would be the way to go.
I would much rather have a campaign with no spending limits and not have to rely on help from the government.
One of my favorite radio stations has a matching funds campaign at least once a year. I usually send in a donation during this time, and like the fact that my money is being doubled.
While I understand their need to do this and keep the station on the air, it can get frustrating. Many times, I will listen to something else until the campaign is over.
The amount of air time that is devoted to this cause is huge, and I get tired of hearing about it. Once in awhile I will tune in to see how close they are getting to their goal, but don't listen for very long.
After about a week, the campaign is over and I go back to my regular listening routine. I feel good about supporting a station I like, but do get tired of the campaigning process.
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