Matching Funds - Charitable Causes

Charitable Causes

In philanthropic giving, foundations and corporations often give money to nonprofit entities in the form of matching gifts. Corporate matches often take the form of employee matching gifts, which means that if an employee donates to a nonprofit, the employee's corporation will donate money to the same nonprofit according to a pre-determined match ratio (usually 1:1). For foundations, matching gifts are in the form of grants made directly to nonprofits, under the qualifying condition that the nonprofit raise a set quantity of money before the grant is bestowed. The benefit of foundation matching grants is that they provide greater incentive leverage when a nonprofit is fundraising from its constituency. If a foundation approves a 1:1 matching grant, donors know that their dollars will be doubled. On the other side, foundations who give matching grants receive assurance of the nonprofit's capacity to raise adequate funds.

For example, Dr. Booker T. Washington, a famous African-American educator, had a long-time friendship with millionaire industrialist Henry Huttleston Rogers who provided him with substantial amounts of money to be applied for the betterment and education of black Americans in the late 19th and early 20th centuries.

Dr. Washington later wrote that Henry Rogers had encouraged projects with at least partial matching funds, as that way, two ends were accomplished:

1. The gifts would help fund even greater work.
2. Recipients would have a stake in knowing that they were helping themselves through their own hard work and sacrifice.

Using the matching funds philosophy, after Rogers' death, Julius Rosenwald and the Rosenwald Fund continued and expanded the work, eventually funding over 5,000 Rosenwald Schools between 1912 and 1932. During that time, over US$4.6 million additional dollars were contributed by blacks in the communities responding to the challenge thus presented.