Which Matching Gift Challenge formula works best?

(A)   1:1 matching grant (“An anonymous donor will match your contribution dollar for dollar.”)

(B)   2:1 matching grant (“triples your donation”)

(C)   3:1 matching grant (“quadruples your donation”)

The anecdotal (as opposed to scientific) ‘rule’ in our trade is that higher match levels are better than lower match levels. [Remember the ‘rules’ we discussed on Monday?!]

So you might be surprised to learn that a 3:1 matching grant offer is no more effective than a 1:1 challenge. And a 2:1 challenge is about the same as the 3:1 and 1:1 challenges.

These findings are based on real campaigns conducted and measured by economists Uri Gneezy and John List of the University of Chicago.

In their fascinating bookThe Why Axis — they challenge some of the received wisdom of our trade with a series of field experiments. Thus their findings exploding the myth of challenge grant formulas that more is better.

They explain that, from an Economics 101 viewpoint, fundraisers’ reasoning that giving will increase if the matching formula increases makes perfect sense. After all, they note, “if you can get either one Snickers bar for $1 or two for $1, you’ll go for the two-for-one deal.”

However, when they went into the field, here’s what they found:

  • Indeed, just having a match in place increased the response rate by 20%.
  • BUT … the 3:1 matching grant offer proved no more effective than a 1:1 challenge. And a 2:1 challenge worked about the same as the 3:1 and 1:1 challenges.

So what about the Snickers effect? The researchers concluded: “In the end, matching grants aren’t at all analogous to offering two or even three Snickers bars for the price of one … donors do not behave like customers at a fruit counter.”

According to Gneezy and List, what motivates matching gift donors is that their gifts are an example of “doing the right thing” and they are also motivated by “feeling that warm glow”.

Their advice for fundraisers in almost any organization:

  • “stop relying on hand-me-down formulas or assuming that selling donations works like selling Snickers bars.”
  • “Above all, it’s important to appeal directly to people’s appetites for the warm glow by showing them how good they will feel after donating. When charities (and marketers) recognize that feature of human motivation, they’ll be able to come up with a hundred new and interesting ways to get Mr. and Ms. Citizen to open their wallets.”

What’s your experience with matching challenge grant formulas?

Roger

 

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