A number of resources provide listings of companies having gift programs that match contributions made by their employees to non-profit organizations. According to the grantor’s guidelines, such matching funds could be general in nature for support of almost any type of accredited non-profit favored by an employee, or a company might limit its matching funds, say, to education. Often, a company has a maximum limit to funds it donates in this way to a given nonprofit organization during a single year. Through your research from libraries and on the Internet, such commercially available lists and those harvested by nonprofit associations, such as CASE (Council for Advancement and Support of Education), can be reviewed for possible value to your organization.
Look Only or at least Mainly to Companies
Operating in Your Area of Service
You will need to be selective and temper your expectations when consulting listings of companies matching the gifts of their employees. These general and geographically-wide lists of companies with matching gifts programs may be of very limited use to community organizations. What counts most is that any companies that match gifts of employees who make contributions to non-profit organizations must have some facility or operation in the geographic area served by the non-profit. Thus, it would do no good to present to your donors a list of companies that have no business interests or employees in your area. No business in the area—no employees—no matching gifts.
So, let’s narrow the search for those companies which have matching programs, and which operate in your area.
- How do you identify the companies in your area with matching programs?
- How do you determine which of your donors work for those companies?
- How do you obtain those matching gifts?
- How do you win new gifts from other, currently non-donor, employees?
The Best Ways to Attract Corporate Matching Funds
Let’s review a typical checklist of activity when it comes to working a matching gifts program. Which of these tactics have you followed? Which could you initiate?:
__ Ask each board member if she or he is a Director of a commercial business. Directors invariably are given the opportunity to have their gifts to non-profits matched. (I’m not referring to board members who are trustees of other non-profits, as that is not relevant.) Those who are Directors of commercial businesses should obtain the paperwork necessary to process the matching funds programs of the companies they serve. Hopefully, they will be contributing to your organization at a level that will ensure the maximum matching money allowed by their respective companies.
__ Ask board members who are Directors of commercial businesses with no matching gift programs to request that a program be instituted. Because Directors enjoy prominent and influential positions with the companies they serve, chances are good that their requests for matching of their contributions to your organization will be heeded.
__ Gather as many Annual Reports as possible of other non-profits operating in your area. Our Annual Report always listed the companies that matched employees’ gifts made to our organization, and I’m sure that you can find the same kind of information in other such publications.
__ Ask your board members about the types of solicitations they routinely receive from the other non-profits they support, and about other requests they receive for matching gifts. Ask them to give you any requests in which the non-profits have provided a listing of matching companies as they know them.
__ Identify the largest employers from your area’s Chamber of Commerce listing of businesses, your newspaper’s business section, public library, and from people in the know. Make telephone contact with the company’s contributions officials and PR or Community Affairs departments and ask if they have an employee matching gifts program. If possible, obtain their guidelines or other publications pertaining to the program. While you are at it, you might find that some of the people you talk to will be able to tell you of other companies having such programs, since corporate contributions officials are often in contact with their colleagues, and they do share such information.
__ Learn directly from the individuals already giving money to you. Through separate mailings, communications in solicitations, or a note on the return gift envelope you enclose with your solicitation, ask them to check with their employers to determine if a gift matching program is in effect, because your organization could be eligible to receive matching funds. If so, request that your donors let you know, obtain their companies’ gift matching forms, fill them out, and send them to your organization.
Other Essentials – Handling Pledges
Naturally, you will need to have cash gifts in hand to prove to the companies that the gifts were paid. Pledges will not count until they are paid. Then, the companies will process their matching gifts and send checks to your organization.
All gift return envelopes mailed to donors for renewed gifts and those mailed to new prospects should ask the receiver to check with his or her employer in the way described above. In time, as you learn of matching companies which have employees in your service area making gifts to you, print those corporations’ names on the back side of your gift return envelope (the underside of a long sealing flap) to urge that the receiver see if his or her company is listed.
How to Recognize the Employer’s and the
Employee’s Gifts to Your Organization
Here is what I believe to be an important practice regarding how to handle and recognize the gifts companies give to non-profits to match their employees’ gifts. If the cash match is indeed what a corporation matches to an employee’s gift to a charity as cited below, we suggest the procedure which follows.
M/M John Smith donated (and paid) $500 to our organization. With our acknowledgment of that gift in hand, they submitted the proper matching form to Mrs. Smith’s employer, who in turn, sent us another $500.
- We sincerely and enthusiastically thanked the Smiths in writing for their $500 gift, as proper and in keeping with the IRS’ regulations for the money they gave. We paid special tribute to them for their thoughtful and generous use of their company’s matching plan to favor our organization.
- We thanked the employer in writing for its generous and thoughtful $500 matching gift.
- We listed M/M Smith in our Annual Report, under the $1,000 gift heading to recognize publicly what they personally gave and what they were responsible for achieving for us by their favor of our organization. No quibbling here about the exact amount coming from the Smith’s checkbook, because, after all, we would not have gotten the additional corporate $500 if not for the thoughtfulness of the Smiths.
We simply believed that this gesture (partial “paper credit”) was appropriate and thoughtful, and you can be sure it was always appreciated by our donors during the twenty years I followed this procedure at my organization, and when I still enthusiastically recommend the practice to other non-profit organizations and consultants.
The corporation’s $500 gift was publicly recognized as well in the Annual Report. Additionally, if the company gave a separate gift to our annual fund, gave money to a sponsorship, or gave to a special fund-raising event, we simply combined all of that money with any matching funds for the total we listed for public credit. Again, the public “paper credit” was simply a good donor relations exercise. The “double booking” here as paper credit was of no consequence to our finance department’s audit. The actual transactions, of course, were handled as required by accounting standards in our in-house financial operation and with the Auditor.
James: I had some further comments, as found in some other reading and inquiries. I may be off base, but because I do care about the good work you are doing, and from the questions you asked, I wanted to go the distance, even if the risk it is in the wrong direction.
Have you checked as yet with those in the know regarding how your music school is in fact positioned to the IRS classification of the church? You are close up and personal to the school’s type of affiliation with the church, but from this literal and figurative distance, it seems unlikely to me that the music school would qualify as an integrated auxiliary of a church (see the definition of integrated auxiliary on page 27 of IRS Publication 557:
So, is the chance high that The Music School is not covered under the church’s tax exempt status, unless the church has a group exemption, and includes the music school in the annual roster of subordinates that is sent to the IRS? That needs to be clarified if it is not clear to the principals of the school and the church.
As I reported above, from my experience, corporations are unwilling to make grants to churches for the reasons mentioned (objections from employees, customers, shareholders, etc.). To remain reasonably secular in their contributions’ approach to the general community, they are following a policy which they themselves have established. It is not a matter of tax law.
In any event, if tax-deductions do accrue to those donating money to the school, be alert to a situation I have known from time to time in somewhat similar circumstances. That is, sometimes payments by parents to a music school, being payments for music lessons, are instead innocently claimed as donations. This would be a double error should corporations, if it were possible, be in turn asked to match what amounts to an employee’s personal expenses.
I just wanted to cover all of the bases as possible ot help as best I can.
James: I do have a few comments, but hasten to say that I am not a non-profit-experienced attorney. You must review your Sunnyvale Church host’s 501 (c) (3) status, and articles of incorporation, both with the IRS, and the state of California, to accurately answer your questions. But, here is how I see things—unofficially.
(1) I believe that you should first know your possible and potential base of support if those parent donors to your Music School, in fact, have employers who would provide matching funds to the School. Most corporate matching programs are specific in what they will match, i. e., higher education, etc. It would be wise to survey those parents to know if their employers do have a matching program in the first place, and then to know exactly what donations they will match. This effort is expended to know how to evaluate the potential relative to how far you pursue the idea with time and effort. You will know is due course if such corporate matching funds are excluded from religious institutions.
(2) The Music School claims to be non-profit, but in fact, from your website, TMS is an outreach program of the non-profit Sunnyvale Presbyterian Church. It would seem to me that donors would need to make out checks payable only to the Church for any possible tax-deduction. The question would be if the parent donors would do so, though likely they would, being assured that the funds go directly to your use. But, even more important, and to me, perhaps unlikely, corporations may not provide matching funds to those of your parents/their employees, for a host of reasons. From my experience, public corporations generally do not make their matching donations (donations in general) to specific religious institutions. That is my opinion, anyway.
(3) Only you can determine if it is worth it to go the Form 1023 route to have TMS itself become a non-profit organization, considering the time, effort, and cost to do so—plus, considering the advantages of what the SPC affiliation brings to the School.
A non-profit-experienced attorney is needed. And, you should conduct the survey I mentioned above, using the process described in my article.
By the way, a suggestion that you read another of my articles:
— In-Kind Gifts: How to Acknowledge and Recognize Them
Perhaps a semantics thing, but from your offer on your website to provide musical instrument donors “… with a donation receipt for your tax records…,” you may want to change that wording, if you, in fact, provide a specific, official, amount of value to the donors of instruments. IRS does not allow that. Such valuations are solely up to the donor should they be applicable to what they report to the IRS for any possible tax-deduction for what are In-Kind donaations. I explain the process you should follow in my article.
Some of our students have parents who work for companies that match donations to non-profits. Our Music School is affiliated with a Church and is covered under the Church’s tax-exempt status.
My questions are:
(1) Can The Music School accept corporate matching funds under the present affiliation, or are there other IRS conditions that must be met, for example filing Form 1023?
(2) How should the solicitation for company matching funds appear on the website?
Thank you for any help you can provide.