Donor Match-Making – Legal Considerations for Matching Gift Campaigns

Matching gift campaigns are a popular fundraising strategy used by charities to incentivize public donations with donations offered by one or more “match donors.”

Types of Campaigns

The core of a matching gift campaign is that a “match donor” offers to make a donation in connection with donations made by the public.  Generally speaking, there are three basic types of matching gift campaigns.

  1. Matching Gift. The traditional matching gift campaign is where a “match donor” pledges to match public donations, dollar for dollar, often up to a specified donation cap and/or for a specified time period.  With this type of campaign, the amount of the pledge that must be paid by the “match donor” is contingent upon the total donations received from the public in response to the campaign.
  2. Challenge Grant. A challenge “match donor” grant is one that is paid only if and when a charity raises a specified total dollar amount of funds, or receives funds from a specified number of individual donors.  With this type of campaign, the fulfillment of the pledge by the “match donor” is contingent upon hitting the target donation goals from the public – this structure is not a dollar-for-dollar match, but all-or-nothing.
  3. Fixed Lead Contribution. A fixed lead contribution is one where a contribution that has already been made by a “match donor” is promoted with the goal of encouraging others to join in giving towards a larger specified financial goal.  This type of campaign is often used to fund a capital campaign (e.g., the construction/ expansion of a building), or to build or significantly grow an endowment.  The fulfillment of the lead contribution is not contingent upon public donations.

Key Legal Considerations

The following are key legal issues to consider when conducting matching gift campaigns.

  1. Communicate clearly about the way in which the matching gift campaign works. All material information about how the campaign works must be clearly and conspicuously disclosed in solicitations seeking matching donations.  All materials terms regarding the requirements that must be met to trigger a donation match should be clear to prospective donors at the point of solicitation.  Consider the following analogous guidance from the NY Attorney General’s office on placement of materials terms for cause marketing campaigns: “Consumers should be able to easily understand before purchasing a product or using a service how doing so will benefit a charity. . . . [The] key details should be displayed together in a clear and prominent format and size, and in close proximity to, the text used in marketing the promotion.”  Below are a few questions that will help you consider what are the material terms that should be disclosed as part of your matching gift campaign solicitations:

a. Is the donation from the “match donor” a pledge that is contingent upon receiving donations from the public, or has the donation already been received?

b. Is there a match donation cap (i.e., a maximum amount that the “match donor”) will donate?

i. Recommendations provided by the NY Attorney General’s office in connection with cause marketing advertisements may provide useful guidance in how to structure matching donation campaigns to provide transparency to donors: “If there is a donation cap, “do not saturate the market with products; limit the number of units distributed to a quantity that is reasonably expected to produce the maximum donation.”

ii. The analogous principle in a matching gift campaign would be to forecast in good faith when you expect the organization will receive donations sufficient to hit the match donation cap, and plan the campaign so that the length of the campaign and match amount (e.g., dollar for dollar) vis-à-vis the number of recipients of the appeal are such that the organization will not expect to hit the match donation cap too early in the campaign, thereby negating many or most donors’ ability to have their donations matched per the campaign terms.

iii. Ideally, consider past history from similar types of fundraising campaigns (e.g., direct mail, email, social media) to forecast when you expect you would receive donations sufficient to hit the match donation cap, and plan so that the length of the campaign and match amount (e.g., dollar for dollar) are such that the donation cap will not be met too early in the campaign, thereby negating other donors’ ability to have their donations matched per the campaign terms.

c. What is the donation match period? Must donations be received by the specified date, or merely pledged or postmarked by the specified date?

d. What is the match ratio? 1:1? 2:1?

e. To trigger the match, do the donations need to be made through a specific website, or be specifically in response to a special direct mail appeal?

  1. Obtain prior consent from the donor with respect to their commitment and the organization’s plans to use it in a public solicitation. Consent should be obtained for any situations that will involve communicating with the public about a donor’s potential or previous donation. This commitment should be obtained in writing prior to receiving any funds associated with the challenge.
  2. Stop promoting the matching gift incentive once the match donation cap has been reached. Consider establishing a mechanism to track in real-time the status of donations received in response to the campaign.

a. If campaign donations are made through a unique website URL, consider posting a notice on the webpage once the matching donation cap has been reached stating that the match has been fulfilled, but donations will still be gratefully accepted.

b. If the campaign is promoted on social media, consider switching posts from promoting the match opportunity to communicating that the match has been fully met.

c. If the campaign is being conducted by email or direct mail, consider including a website URL or telephone number where donors can obtain campaign status updates.

4. Properly manage restricted gift solicitations. If the matching gift campaign is being used to raise funds for a specific project or purpose, make sure that the donation goal reflects a reasonable estimate of the amount needed to fund that project or purpose. Ensure that funds received are properly booked as restricted funds, and used only for that purpose.

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