Sunday, March 23, 2008

What Are Matching Grants? I'll Explain...

What are matching grants? Are they helpful to nonprofit organizations? How does one go about getting one?

What's the deal? I'll answer...

What are matching grants?

If your organization, let's say, submitted a grant proposal four months ago to We Save Vampires Foundation (WSVF) and your organization, Bloodsuckers Included Today and Everyday (BITE) exists to assist vampires' safety from angry mobs, assist in relocating vampires to locales with less humans and a lot of cloud cover, and work on vampires' rights. Let's say that BITE is only three years old and while WSVF has heard about BITE's important work and mission success rate (the rate at which the mission is being met and constituents or the cause is being served). Let's say, though, that in response to BITE's grant proposal, WSVF responded thus:

"We at WSVF are very interested in BITE and its important work. We see the importance
and need for the program that BITE is initiating and seeking grant money for, Vampires Were
People Once, Too. Simply, we will grant BITE $50,000 for its new program, if BITE can
raise a matching grant of $50,000 within a year's time."

In other words, matching grants are grants that are offered, really, as challenges. If a foundation (or any grant donor) offers its grant with the stipulation that in order to receive it, the recipient organization must raise another grant (or other grants, plural) to match their offer amount, this is a challenge or matching grant. Matching grants are sometimes offered as such in their Request for Proposals (RFP's) when a grant is publicly offered, or they're offered in response to a grant application, after a foundation's considered a request, such as WSVF did, above.

Are matching or challenge grants helpful to nonprofit organizations?

Your organization has not been singled out negatively. Most every nonprofit that raises donations through grants, is offered a challenge grant sooner or later, and then probably again, later.

Yes, in reality, no matter what your initial reaction is to receiving the challenge may have been, matching or challenge grants are good opportunities for nonprofit organizations. I know; you'd much rather have just received the grant money. Here's the thing; you actually have, with the requirement that you double what you just received. I know; getting the grant means you now have to go raise another grant (or more). Think of it this way; the grant donor that's offered a challenge or matching grant has just helped your organization set another fundraising goal that your group has already achieved once. The pressure that comes with knowing that when you raise more money you're already promised a specific amount is very powerful. Your organization can use this promised support as a positive motivation. A challenge or matching grant is a donation coming from a potential future donor (who your organization will want to develop a strong relationship with for potential future support. Perhaps their next grant will not be a matching grant but just support given after an application is submitted). Take advantage of all of your organization's fundraising efforts, so far, and follow through - raise all of the money.

How does an organization acquire a challenge or matching grant?

Let's return to our hypothetical scenario, above. WSVF (the potential grant donor) has promised $50,000 if BITE (the nonprofit applying for a grant for a new program) can raise an additional $50,000 within a year.

The grant application response letter, that BITE received, is quoted, in part, above. The letter will likely state when the $50,000 will be paid to BITE if it does raise the challenge grant of an additional $50,000 to their own. It probably also states why they'd like the additional grant money raised, but it may not. When a nonprofit receives any correspondence from a potential donor, about a donation, and does not understand it fully - definitely contact the donor and ask for clarifications. If the donor prefers contact through email, email them and ask every question that you have. If they don't mind phone calls, or encourage them, call and ask to speak to whomever signed the offer letter. Get clarification as to what the terms of the offer are, when their grant would be paid to your organization if you raise the match challenge, and ask why they're requiring the matching grant, before they'll donate.

Potential grant donors offer challenge grants for many different reasons. Their reason for challenging your organization may be (any one or several of the following):
- The grant donor always asks every grant recipient to match their donation - it's standard operation for them.
- They believe in your organization, its proposed use of the grant, and want to see if others in the community do, as well (which is sometimes referred to as community support, community buy-in, etc.).
- The potential grant donor wants to see your organization's ability to raise money, or specifically raise money for the proposed program, project, or item that you've requested grant money from them for. They think the proposed project, program, or item is a good solution to the issue it will help or solve, in your community.
- They may believe that your budget is short of what will really be necessary to successfully pull off whatever it is that your group wants the grant money for. They believe in the need for what you're proposing and in the good it will do - they just don't want to see it fail once it's underway.
- Etc.
I always remind readers that grant donors talk to one another. Not only are they in the same industry, they are curious about what other grant donors think of your organization. Maybe another foundation has funded your organization before, and they want to know what their experience was. Or, maybe they want to know what others have heard about your organization's reputation, accountability, successes, honesty, transparency, etc.
Once you understand where this potential donor is coming from, step up to the plate. Go back to the other potential grant donors that you've applied to for this program, and send them a very short but clear letter updating them. State that in response to the application you sent to WSVF (per our above example), they've offered a challenge to BITE and that if able to match it, WSVF will grant $50,000. Often other foundations will see even a challenge grant as a lead donation and give the match or part of it. A lead donation is one where once the first large donation is received for a campaign or new program, etc. other donors begin to give because they see someone they respect gave in larger amounts. Community buy-in can be demonstrated to other potential donors by simply receiving a challenge grant.
If your organization only applied for the one grant (and you should never just apply for grants from just one source - diversify and up your odds in getting a grant by applying to at least two potential grant donors for one need), research which other grant donors, who give to organizations serving your region, and who fund your cause and give money to whatever thing you need the grant for (e.g. new building (capital campaign), new program, children's' clothing, etc.). Apply to at least two other potential grant donors, stating clearly that a challenge grant has been offered to your organization, in what amount, and by which foundation (or whomever) in both their proposals and budgets.
Meeting the challenge and raising the matching grant involves submitting more grant proposals and is absolutely doable. It's done all of the time.
Above all, never forget that a challenge grant is not a foundation responding to your application with a clear "no". (And even a clear "no" is not a bad thing - every time you apply for a grant, you're putting information about your organization in front of a future potential donor. Apply to them again, if you receive a "no" now). A challenge grant is an opportunity and shouldn't be looked at as any less.


Ulrik Welle-Strand Horn said...

I am curious if it is common that two organizations give a matching grant for the same cause? More specifically, are there examples that you are aware of where industry and government makes a matching grant each and the organization then has to raise the the last part from private people?

Arlene M. Spencer said...

Ulrik, Hello, thanks for reading, and for commenting.

Yes, it is common for more than one grant donor to tell a nonprofit we'll each (two grant donors) give your nonprofit a matching grant if your organization goes out and raises another matching grant in the same amount as our single donations.

Who or what (an individual, a foundation, a corporate donor, a government agency, etc.) donates that other matching grant is not usually stipulated, such as perhaps a major donor (individual donor who gives in large amounts). If two grant donors pledge to give matching grants if your organization raises another third - and requires what type of donor that it comes from - I'd ask them why they put that requirement on the matching grant challenge. Often grant donors have a large amount of professional technical experience in the professional fields that they give grants for (causes, i.e. environmental) and may have a really good reason. Also, a government may have a restriction on it that any matching grant must come from the private sector that matches their grant. Third, they may use the term "private people" when indicating where the other third matching grant must come from but have a very specific definition of what that means and it may simply mean "not coming from another government agency of any kind". You need to have a fact clarifying conversation with your two pledged donors to understand the 'why' and meaning of their jargon. It's OK to ask - they are offering to partner with your organization if they are challenging it with matching grants.

Good luck and congratulations,

Kenita said...

This was a GREAT blog! Thank you!! We just received a matching grant for our organization, H.O.P.E, Inc., today and I found your information to be very helpful.

Arlene M. Spencer said...

Oh, I'm so glad for H.O.P.E.! Congratulations! Hoping to help out nonprofits to achieve their goals is exactly why I write this blog, so I truly appreciate your sharing that it helped you to do what you hoped to. Best to you and the organization, Arlene