Challenge Grants Can Multiply Your Success
Challenge grants are indeed challenging to fulfill, and once secured, they are unusually rewarding opportunities for non-profit organizations to greatly energize and enhance their fund-raising campaigns. They can significantly increase the chance to raise more money than would be possible otherwise. Challenge Grants may be utilized to jump-start a campaign, or as a mid-course correction to energize a flagging campaign. The best thing to know about Challenge Grants is that they almost always are a required key element of capital and endowment campaigns, but are equally effective and productive when they are employed in annual fund, sponsorship and underwriting campaigns.
From Whom and for How Much?
To help identify a potential Challenge Grant donor, your best source is your Board of Trustees. Perhaps one of your Board members has the financial capability to lead a challenge, or knows of another individual, company, family or community foundation that has such potential. It is always best to identify several possible donors in priority order. The amount of the Challenge Grant request will depend on a variety of factors:
- The need: based on the Fund-Raising Campaign Goal.
- The rated capability of the Challenge Grant prospect.
- he rated potential of those in your donor base from whom you will seek matching funds.
Do you have reasonable certainty that you can match the challenge dollars at least on a one-for-one dollar ratio? Based on your fund-raising potential as indicated above, you can determine if you will seek the usual one-for-one (dollar for dollar) match, or increase the ratio to perhaps, one-for-two, or even one challenge dollar for every three dollars you raise so you can raise as much as possible from the challenge amount. Again, it all depends on your fund-raising potential.
Visit the Prospect
With the help of your Board, identify the appropriate individual solicitor(s) who, based on their relationship with the prospect, would have the best chance to secure the Challenge Grant. Those so identified should then visit the prospect. The case for support/need for the Challenge Grant should be cited. Relate what makes a Challenge Grant so attractive. Let the prospect know of the explicit, unique advantage of a Challenge Grant program: specifically, to provide inspiration and enthusiasm to your leadership and volunteer solicitors, and to compel the gifts of others.
- It’s a great solicitation “tool” for the volunteer solicitors to use with excitement and to bolster their confidence when making personal solicitations. They have yet another strong “talking point” to present when they ask for money. Imagine the confidence a volunteer solicitor has when, immediately after asking a prospect to give a stated amount, the solicitor is able to follow with, “… and your gift will truly generate even more money for our campaign because your dollars will be matched on a ___(ratio)___ basis.”
- It’s a compelling solicitation “ask,” which lets donors know that the gifts they give will not only help to make your organization’s campaign success a reality, but that the money they give literally multiplies as it is matched by the challenger. They have the added satisfaction of knowing they were responsible for the additional money you will receive. In every solicitation, you cite the excitement and the opportunity of the generous challenge in the first place, and how equally generous donors such as they, can have their gifts multiplied.
Then Start with Your Board of Trustees
Once you have secured a Challenge Grant, your first effort to meet its requirements begins with your Board. Make your “case” to them to pick up the challenge and meet it. Having them know and implement the specific components comprising a successful challenge program will determine your chances to meet or to exceed the challenge. Start off by telling your leadership that the entire fund-raising profession employs challenge programs all the time because they do work, and work very well. Let them know that you have the plans, the tools and the challenge grant to help meet your organization’s campaign goal.
And your Board of Trustees sets the precedent—they must be the first give to the challenge campaign before you go out to others. They must give at the top of their capability—and, most importantly, demonstrate 100% participation. Trustee leadership and involvement are the first things the philanthropic community sees and responds to when a major fund-raising campaign is operating. Your Board owes it to the “Challenger” to reward his or her generosity with their maximum support.
Publicize, Publicize, Publicize
Announce the Challenge Grant to the remainder of your donor base and others by sending out special letters. Publicly herald the Challenge Grant and the generosity of its donor in every possible mailing and publication your organization produces. (Should the Challenge Grant donor wish to remain anonymous, comply with her or his wishes. However, try to dissuade anyone from anonymity, as people more favorably respond to real people, rather than to those who remain anonymous.) You can even re-solicit donors who have already contributed, should the Challenge Grant be secured later in the campaign (…”thank you for your already generous gift, but do you know that any additional dollars you provide will be matched”…). Let all know that their contributed dollars will “multiply” for the good of your organization. And do it often.
With a Challenge Grant, everyone wins. A Challenge Grant will energize a campaign with your plan to multiply the gifts from the Board, from current annual fund donors who have major giving potential, and to seek major new gifts from individuals, corporations and foundations.
Hi, my organization will be launching a challenge grant for a restricted program from a foundation. I was asked by my president "if we surpass the goal, what do we do with the money? can it go to general operating?" Can't seem to find an answer. Help
Debbie: Any granting entity giving expressly to the budget and terms you presented to them, should be apprised if their funds were not entirely used to pay for your project. You ask them what you should do.
Any other donations given in a general way, could be used for annual fund or endowment use.
Depending if the project is to be permanent, it might be a good idea to enter any surplus funds into a special endowment for that particular program so you can keep up with possible increasing costs over the years.
It is always a good idea to be open and honest with grantors about having a surplus of money when to your understanding they gave their money in exacting terms—to the penny for your project.
Mel: I agree. It is beyond unethical. It is a lie.
It appears that the $5,000 donation was totally removed from any idea of it being matched. Using it in that way could have you take most any contribution and do the same.
You could consider working to secure a matching gift from another donor, or even from a few donors, and ask if they would give in that matching way.
On the other hand, having a matching program, while a good thing of course, should have you think of how the supermarket owner woulld feel when, instead of a total focus on promoting the program to your donors and the general public and his customers to spotlight the supermarket, you would be necessarily promoting as well the donations of those providing the matching gifts. That could water down the promotion of the supermarket, though I know it's tempting to work those funds to be double.
If you do go that way, seeking new matching donors to what the supermarket raises, be sure to broach the idea the owner in a delicate fashion.
Otherwise, from what you are saying, which is correct, plucking the $5,000 donation already made and claiming it was made on a matching basis, is not at all true. You should not do it.
I agree wholeheartedly with what Tony says. But, for sake of discussion, even if you were willing to “reapportion” the $5,000 to make it “fit into a match gift program” remember one big thing. There are no secrets in the world. Sooner or later someone would spill the beans. Most likely the person whose idea it was because he couldn’t help bragging to someone about how smart he is. This idea is wrong because you already have the gift in hand and because you are getting the full amount no matter what. Claiming the $5,000 is a match gift has the potential to badly damage the organization’s reputation with donors and potential donors.
I am the Executive Director of a small not-for-profit serving individuals with disabilities. Recently a Board member made a $5,000 donation. In November we are partnering with a regional supermarket for a point of sale contribution campaign aimed at shoppers. My Development Director is suggesting we encourage greater contributions by marketing this donation as a challenge grant- i.e. we have a donor who will contribute $1 for every $2 contributed during the POS campaign. I am reluctant because- we already have the $5,000 contribution- so this is not really a challenge grant. Is such a practice illegal- I have concerns about its ethicalness
Congratulations regarding the truly outstanding matching challenge you earned, and which you are working hard to meet. Continue to follow the advice in our article above. Plus, a search on Google for non-profit fund-raising letters, will turn up a great deal of example and suggestions for construction of fund-raising appeals. You need only work into the letter the good news of the challenge.
Only you know the core values of your organization, and the benefits it brings to those in need. Knowing those things can then be entered into an appeal letter following several suggested components as follows. Think of what you are saying to the prospect.
1. The “ho-hum crasher.” — Here is the problem/opportunity to do our good work.
2. Read on. — Here is a specific example of the need.
3. We did our homework. — We have studied and planned.
4. We can make it work. — We have the organization to do it.
5. What’s in it for you? — You can do something heroic.
6. You can double your donation — Thanks to a challenge grant from __________, you have the opportunity to double your donation with each dollar being matched with two dollars.
7. Do it now, please! — Here is what we want you to do & why.
We respectfully ask that you consider your donation of (example) $10,000, which will be doubled by our generous matching fund grantor. Thus, you can, in effect, account for a total raised of $30,000, of which you can be justifiably proud,and for which we will be sincerely grateful for your generous and enlightened support.
Excellent points. Wonder if you have a good resource for an effective matching donation letter. We have $125000.00 grant and if matching funds are effectively raised another$250,000 grant is promised .
Lesa: You say you are “planning to seek a challenge grant for $2,500.”
(A) A conventional, true, challenge/matching gifts program (as described in our article above), always begins with a donor (or donors) who has stepped up and pledged to give up to a set amount of money when an organization obtains other donations expressly solicited to the meet the challenge.
(B) The way I read your note is that you are thinking about directly “challenging” 100 prospects to collectively give the $2,500.
There are a few ways to think this through if the need is indeed, $2,500. For discussion sake, I will simply lay out my thoughts for you to determine any possible application of the variations.
(1) In my opinion, a 90-day Campaign is about 60 days too long. I am talking about the actual prospect assignment/contact/asking-to-conclusion time being 30 days or less. OK to have the extra time for preparation, but to have the actual solicitation time go out to 90 days would surely result in lagging enthusiasm and even dropped solicitations when other personal and business activities disrupt the Campaign flow.
(2) If you can find a donor or donors who could pledge a real challenge of $1,250, then you go “public” to get the other $1,250 in a way which works well as described in the article. Telling a prospect that her or his say, $100 donation would attract another $100 can make anyone feel good that they, in effect, were responsible for $200 being raised. Folks respond to such challenges for that reason.
(3) If you are not able to execute (2), then you appear to be thinking about setting out to “challenge” 100 prospects to give $25 each which would then bring in the $2,500 you seem to expressly need.
Do you think this is realistic?, you asked. I think the formula to be more impractical, than it being unrealistic. Those are too many prospects to solicit for too little money. And be aware that should you even be able to ask 100 people to give $25 each, it stands to reason that many will give less, or nothing. Thus, you would need to have a much larger base of prospects—maybe even up to 200—to make the plan work. This is all far too time consuming and labor intensive.
Only you can know what donation potential you have at hand to know if any way you go is realistic.
I think that you should dentify by name as many viable prospects as you can. Review them as best you can to determine their giving capability. See how many you believe can give $100. You only need 25 donors giving at that amount to meet the goal. (Remember to add about twice that many for those giving less or nothing.)
What I am trying to do here is to make the Campaign far more manageable with a greatly reduced timeframe, and working to get the $2,500 from as few donors as possible.
What determines how you go, and how successful you will be, is the one key element which you must know:
— those prospects whom you know, and who know and care about your organization, and some reasonable idea of what they can give when asked by the "right" person at the right time for the right amount.
Let us know how things worked out. Best wishes for success.
We are a newly formed 501(c)3 and planning to seek a challenge grant for $2500. Our goal is to have a 90 day campaign where 100 people donate and the total donations equal $2500. Do you think this is realistic?
Thanks so much for your response – after poking around on the web, I came to pretty much the same conclusion, but it is helpful to have it affirmed. Thanks for being such a good web resource…
Karen: Most any organization has had such challenge agreements from time to time, and they are all different. Perhaps you want something having a framework bordering on terms binding to the donor’s promise. If so, generally, nothing is really legally binding. Donors can, and at times do, withdraw and cancel their pledges for reasons best known and justified to them. Non-profits never—hardly ever—pursue relentlessly or take legal action. So, make your agreement simple.
You look to put into writing the terms and conditions which are unique to what your organization and the donor understand, and agree to. It is not necessary to produce an agreement steeped in legalistic terms. Most pledges to give money, with no matching component, are simply stated in letters and pledge cards. Except for the challenge aspect, this is not much different. It is not so much that the challenge gift be in the form of a formal contract, as it is important to simply state the terms of your organization gaining the donor’s money when matched.
— How much the donor will give in total, usually stated as, “… up to $ ______”
— Based on achieving new money from first-time donors, and/or increased donations from previous donors?
— The time frame from within the challenge funds are to be raised.
— Will pledges count, the money to be collected later, or must the challenge be met with the cash in hand?
— For individuals only? Or can the matching program apply to granting foundations and corporations too. How about net proceeds from a special fund-raising event?
— Agreement to allow not only the publication and promotion of the challenge, but work to have the donor agree to name her or him as the challenger, so as to put the “human” touch to the challenge campaign. It’s best to have Susan and John Jones’ challenge, than have it come from an “anonymous” donor.
— How is the match to be made in terms of one to one, two to one, three to one, etc.? That is, in terms of how many matching dollars (or one dollar) are required to obtain one dollar from the challenger.
Karen: So, you see, there are a number of variables with which to contend. And only your organization and the donor can set them up in writing for clear understanding and acceptance.
We have a donor who wants to make a gift that we then match ($30K) but they need to give us the gift before the end of the this calendar year. Is it okay, and the donor is okay with this, if we accept the donor’s gift prior to raising the match? (this is a set amount and the gift won’t be any larger than $30K)
Could we then place the gift in a special account where we won’t have access to the funds until we match the funds? The donor hasn’t given us a deadline for raising the match either. Once we raise the matching funds, the donor’s gift and any matching gifts, will go to our semi-endowment at a local community foundation.
The individual is very special in that they are intimately aware of everything related to our nonprofit.
Thank you for any thoughts you might have on this subject.
These are questions that you should explore with an attorney.
I am looking for a sample agreement that can be drawn up between an organization and a donor who wants to make a challenge gift. Do you have something you would be willing to share, or can you point me to another potential source?
thanks very much