Why You Shouldn’t Let “Donation Matching” Affect Your Giving

We know that donors love donation matching.* We know that if we could offer donation matching on gifts to our top charities this giving season, our money moved would rise. And we know that we could offer donation matching if we thought it was the right thing to do: there are donors planning six-figure gifts to our top charities this year who would almost certainly be willing to structure their gifts as “matches” if we asked. (It might not be possible to “match” all of our money moved, but we could almost certainly provide “matching” for a short period, which would motivate people to give during that period and would also provide us with some data on the impact of matching on our audience.)

But we’ve decided not to do this because we would feel dishonest. We’d be advertising that you can “double your gift,” but the truth would be that we just restructured a gift from a six-figure donor that was going to happen anyway. We’ve discussed whether we might be able to provide “true” donation matching – finding a donor who would give to our top charities only on condition that others did – but not surprisingly, everyone we could think of who would be open to making a large gift to our top charities would be open to this whether or not we could match them up with smaller donors. Ultimately, the only match we can offer is illusory matching.

I don’t deny that non-illusory matching may exist in some other circumstances. A couple possibilities:

  • Coordination matching. A charity needs to raise a specific amount for a specific purpose. A large funder (the “matcher”) is happy to contribute part of the amount needed as long as the specific purpose is achieved; therefore, the matcher makes the gift conditional on other gifts.
  • Influence matching. The matcher wishes both to support a particular charity and to encourage others to give to that charity. Therefore, the matcher makes a legitimate commitment to give only if others do, in an attempt to influence their giving.

In both of these cases, it may seem at first glance that a one-to-one match really does “double” your donation, but I don’t think it’s quite that simple.

Regarding coordination matching – I would guess it’s relatively common for a funder to say privately, for example, “I’ll give $100,000 if you can raise the remaining needed $900,000.” But there are a couple of problems when it comes to advertising this situation as a “match.” First, saying “every $9 you give will be matched with $1 from a major donor” wouldn’t be very psychologically compelling – matches rarely go below the 1:1 threshold. Second, even if the funder were providing enough for a 1:1 match, it still wouldn’t be quite true that each $1 was matched with another $1: the match would occur only in the case that the total amount needed was raised. So while “coordination matching” is a possibility, we would guess that it rarely explains the “each $1 you give will be matched by $1″ campaigns commonly used in fundraising.

Influence matching is something I think impact-maximizing donors ought to be concerned about. In the short run, influence matching makes it true that your $1 donation results in $2 donated to the charity in question. But it also means that you’ve let the matching funder influence your giving – perhaps pulling you away from the most impactful charity (in your judgment) to a less impactful one – just by the way they structured their gift. By giving, you are rewarding this behavior by the matching funder, and you may be encouraging them to take future unconditional gifts and turn them into conditional gifts, because of the ability to sway other donors.

Perhaps, rather than giving your $1 to the charity the matching funder is pushing, you should fight back by structuring your own influence matching – making a conditional commitment to the highest-impact charity you can find, in order to pull other dollars in toward it.

For the average donation match, it’s unclear to what extent the match represents illusory matching vs. coordination matching vs. influence matching. My guess is that coordination matching is by far the least common (since it requires such a specific set of circumstances to hold) and that illusory matching is the norm (since this is generally the easiest to offer, and since donors don’t tend to distinguish between the different types when they decide where and how much to give).

Corporate matching programs sometimes match only gifts to specific charities; in this case I think it’s best to think of them as “influence matching.” If the company offered matching to any charity (as some companies do) and/or simply made gifts to the charities of its choice, it would no longer be pushing its employees to support specific charities. If you are employed at a company offering matching only on specific charities, I recommend pushing for a change in policy (to unconditional gifts to charities and/or unconditional matching for employees, as other companies do) rather than perpetuating a dynamic where your company’s corporate philanthropy team decides where you give.

In general, I advise donors seeking to maximize their impact to simply support the most impactful charity possible, and not to factor in the presence or absence of donation matching either way. If you support a less impactful charity due to the presence of a match, you may be having more total impact, but you also may be having substantially less (in the case of illusory matching) and/or contributing a dynamic that leads to less effective giving broadly (a risk both for influence matching and illusory matching).

GiveWell may offer donation matching sometime in the future. If so, we will be explicit about whether it is influence matching or coordination matching (we wouldn’t be comfortable offering illusory matching, except perhaps as a joke – i.e., “If you’re thinking of giving to another charity just because of a donation match, let us know and we’ll get your donation to a top-rated charity matched”). If we do implement influence matching, it will be to (a) fully neutralize the effect of other matches on impact-oriented donors, further encouraging them to support the most impactful charities possible; (b) raise money from non-impact-oriented donors who are happy to have their donation “matched” despite the logic above.

*“Donation matching” refers to when a large funder offers to give $X to a particular charity for every $Y other people give – for example, “For every $1 you give to this charity, a large funder will contribute another $1, doubling your impact!” For more, see the 2007 study on donation matching by Dean Karlan.

Comments

Why You Shouldn’t Let “Donation Matching” Affect Your Giving — 20 Comments

  1. This may be the case, but I have also seen at the non profit radio station I work at, that announcing a match on the air does increase donations during that time period. There are people who will specifically wait until a match is announced before donating. Eliminating those matches would impact fundraising and explaining our rationale would leave donors feeling as if they were duped.

  2. Here is some discussion of this question in a thread about one of the Singularity Institute’s matching fund drives: http://lesswrong.com/lw/6w3/the_125000_summer_singularity_challenge/4kqy. In it I declare that my portion of the match funds is subject to “any leftover goes to partying”.

    You write: “We’ve discussed whether we might be able to provide “true” donation matching – finding a donor who would give to our top charities only on condition that others did – but not surprisingly, everyone we could think of who would be open to making a large gift to our top charities would be open to this whether or not we could match them up with smaller donors”

    If you asked someone whether they would be open to setting aside a large amount of money to be spent on a party, or if matched, donated to your top charities, and also open to making at least a public statement that they will do their best to never “make up for” any “lost” funds this way, would that work?

    I still have a lingering feeling that turning matching donations into real and not illusory match pledges is somewhat like extortion… “hey world, donate X or this cute kitten gets it”. But I’m really not sure and haven’t fully thought it through.

  3. I’m not convinced by your argument against influence matching.

    Yes, the big donor is trying to influence you. But this influence is not coming for free, the donor is paying for the influence exactly the amount by which they are exerting the influence.

    Conversely you as a small donor benefit from the prior oversight and vetting done by the big donor.

    I don’t see how influence matching differs from, say, a supplier to the charity you are donating to offering 50% off to the charity, thus affecting the cost calculations of donating to the charity.

  4. A Kickstarter campaign provides something close to true coordination matching. There’s a goal to be reached and no money will be collected until it is, so the matching happens against everyone else who contributes. Not surprisingly, they’re pretty popular.

    Unfortunately, there’s a possibility of fake coordination matching too, where a charity announces a goal amount of money to be raised, but it’s not for a specific purpose, and they collect the money right away.

  5. Pub radio guy: I understand that illusory matching can be an effective fundraising tool and I can sympathize with a charity’s decision to use it when it’s an important source of revenue. However, it’s something we at GiveWell just wouldn’t be comfortable with personally or brand-wise.

    Guy: this does sound to me like extortion. As a donor, I prefer to commit not to be influenced by these sorts of matches; if enough others did as I do, then it seems this would remove your incentive to “threaten to spend the money on a party” and cause you to donate it unconditionally instead, which would be a gain. When considering whether to let oneself be influenced by this sort of match, a donor must consider how compelling s/he finds the “long-run effect on incentives” vs. “short-run leveraging of dollars”; this is a judgment call, and seems related to one’s views on Newcomb’s problem, timeless decision theory, etc.

    Vipul, I think the situation is quite analogous to a supplier donating supplies; I analyze this sort of situation in a more recent post. As I said in my response to Guy, there does seem to be a short-run “leverage” here, but with a negative effect on incentives (encouraging future donors to do more “influence matching” rather than giving unconditionally) that may overwhelm that short-term gain. The “prior oversight and vetting done by the big donor” seems like a completely separate issue, however.

    The question is – say that you were deciding between a GiveWell-recommended charity and another charity that you weren’t as confident in, but believed to be at least 50% as good. Should a 2:1 “influence match” sway you to support the second charity instead? Here the major issue isn’t the “prior oversight and vetting” – it’s how you weigh short-term leverage against (a) the possibility that the leverage is illusory (b) the fact that you’re encouraging the tactic of “influence matching” rather than unconditional giving.

    Brian, I agree with your comment.

  6. I agree with you about the fake matching where someone is giving $500,000 and just agrees to call it matching…

    I don’t agree on the company “influence” problem. It seems to me this is indeed a way to add to you gift total. Ok, so the company is offering to match gifts to certain charities. If I want to support those ones I can give and get the charity more than just my gift. I think this is perfectly fine. I do agree these charities are not likely to be too controversial (unless the company/employee/customer base are controversy seeking…). So some charities I might want to support might not be included – that seems fine to me.

  7. Great discussion, Holden.

    Like Google, Microsoft offers matches up to $12K per year for any US 501(c)(3). As you say, in this case your reasons for opposing matching don’t apply.

    Another version of influence matching that might be more benign is if the donor plans to split a total of $X between two or more charities but doesn’t have particular preference about the amounts given to each. She might decide to donate to art museums vs. reducing animal suffering in proportion to the size of matches that each receives. Obviously it would still be best if she chose the better of the options herself, but this example seems like less of an ultimatum and more like a way to break a tie. I have no idea if scenarios of this type occur in the real world.

  8. I thin matching could make sense in this situation:

    Suppose a donor believes that a charity is more likely to be worthwhile if the donors are not all of the same economic class.

    For example, a wealthy/large donor might think that the opera or ballet is a great charity, and not understand that most of the population will not benefit from these things. Requiring matching gifts from small donors is a way to ensure that the large gifts go only to charities that average citizens use, such as the public library.

    Conversely, the average person might not know enough about macroeconomics to tell whether subsidizing the down-payments for low-priced housing in the U.S. would help the poor to be homeowners, or would just lead to higher real estate prices, resulting in higher mortgage payments for the buyer. A large matching gift from someone with the resources to tell if this is a real risk will reassure less educated donors that the program is beneficial.

  9. Stephen – thanks for the comments. I agree that there are a number of situations when a large donor might want to give a matching gift; Holden was arguing that it rarely makes sense for smaller donors to let those gifts affect their behavior. As you point out, a matching gift might be an effective way for a trusted source to communicate their support for an organization, which might legitimately effect smaller donors’ behavior. However, it’s not clear to me that the donor would need to use a matching gift, rather than just a large public contribution, in order to communicate their support.

  10. 1) Great article! I thought the following was the best part:

    “Perhaps, rather than giving your $1 to the charity the matching funder is pushing, you should fight back by structuring your own influence matching – making a conditional commitment to the highest-impact charity you can find, in order to pull other dollars in toward it.”

    To me, this is a call to action for those in the GiveWell community like myself.

    2) Isn’t matching being practiced by Against Malaria Foundation when it partners with the distributors? “Here are free bed nets, if…” and doesn’t this influence the priorities of these governments and nonprofits towards AMF’s agenda? I think this is the right kind of influence, but this article seems to be arguing AMF shouldn’t influence because that encourages other, less impactful charities to influence other groups using offers of free resources (e.g. “provide us matching funds for an ill-conceived, unproven project!”).

  11. Ben: thanks for the comments. Yes, this is what AMF is doing when they require distribution partners to contribute the funds required to ship, distribute, and follow up on bednets, and we’re ambivalent about it. I believe that AMF’s projects are likely more cost-effective than the typical other projects run by international aid funders, so diverting their funds towards AMF projects is probably good. On the other hand, it is not standard practice in the international donor community to do so (funders who provide funds for bednets typically also pay for distribution), and it significantly increases transaction costs (since distribution organizations have to find another source of funding to pay for all of the associated costs); we think this may part of the reason AMF struggled to get nets out the door later year. I’m less worried about creating a “culture of matching” than these more tactical considerations, but I do agree with Holden’s view that such an effect would be a negative one.

  12. “Donor Matching” any way your perceive it or argue it, is a positive “push” that listeners need to want (unconditionally) to give because it tells, no, shows them how serious someone else is to giving to the cause. It gives their psyche the realization of how many other people have dedicated their time, effort, & money to the cause. Not evil, deceiving, or misleading at all. Not like the President telling you Global Warming is a hoax.

  13. Dennis, how does donor matching tell you any more information about others’ seriousness than unmatching donations? Wouldn’t it indicate more seriousness if the other donor was willing to give even if you didn’t match?

  14. So…not sure how this obvious point was missed (or if I missed it), but most donation matching is done by a corporate foundation. The money is earmarked to go to charity, but you determine where it goes by applying for the match. It’s somewhat of a stretch to tell donors they are doubling their donation, because that money would have gone to a charity anyway. Still, by funneling that money to a GiveWell reccommended charity instead of the Red Cross (or whoever else would have gotten it), they are coming pretty close to double.

  15. Chris – we agree that there’s no problem with taking advantage of corporate matching programs that do not restrict the choice of charitable recipients. Holden meant this above when he said “If the company offered matching to any charity (as some companies do) and/or simply made gifts to the charities of its choice, it would no longer be pushing its employees to support specific charities.”

  16. I disagree entirely with the premise of this article (or maybe I just misunderstand it). I regularly craft matching gift challenges to some of the non-profits I support. While it is true that they would have received some $ amount from me, I can ensure you that in all cases the success of the matches led to a larger gift from me than I had initially planned.

  17. A different paradigm you don’t mention is as follows: donor offers a fixed amount of money to *whichever* of some set of charities can match it first. I am under the impression that the UK’s Christmas “Big Give” works in this way. (http://www.thebiggive.org.uk/). That is I’m sure donors put limits on which sorts of charities they’re interested in, but I do also think (not least from frustrations I’ve heard about with charities trying to use it!) that these matches aren’t already set up 1-1.

    In this case, your $1 donation *does* result in an extra $1 to that charity…. at the expense of any others in the sector. So if a particularly effective charity is in the mix, this is still meaningful. Presumably one should count it as your $1 being matched by the difference between the cost-effectiveness of the charity you’re supporting and the average of the sector?

    Anyway, I was pretty pleased when I got a big donation through to SCI this way.

    Ah, and the UK department for international development runs something similar, too:
    https://www.gov.uk/uk-aid-match

  18. Elizabeth – I see this as structurally similar to the situation with employer matching (where the match applies to a wide variety of organizations), though because of the added complexity and uncertainty about how funds are allocated and exactly where the margin is, I would be less likely to change my donation behavior in an effort to meet the requirements of such a matching scheme.