When Is Your Next Challenge Gift Initiative?
Several months ago, my priest at church came to me and asked if I would help lead a church initiative that included a challenge gift. The anonymous challenge gift of $350,000 was to be matched by parish members. The proceeds would be applied to underwrite an iconography project at church and eliminate a second mortgage. I drafted a small team of fellow parish members, and we created a comprehensive plan for this new program.
Currently, The Salvation Army Indiana Division has become deeply involved in the frontlines of serving those affected by the COVID-19 virus. Thousands of people in the state of Indiana need food, shelter, emergency assistance for basic needs, rent, utilities and more. The Indiana Division received an anonymous $250,000 challenge gift. My assignment was to seek matching challenge gifts from individuals, corporations, associations, organizations and foundations as soon as possible.
As I was driving this week to work, I heard on Fox News that Aflac chairman Dan Amos and his wife Kathleen recently made a $1 million challenge gift directed to a vacant fifth floor of former Doctor’s Hospital (now Piedmont Regional Hospital) in Columbus, Georgia. This gift will be used to renovate a dedicated unit of 29 beds and seven ICU beds for COVID-19 patient care. As a matching gift to Piedmont, the Piedmont Columbus Regional Foundation is seeking to match the Amos gift with funds from the community.
Why are challenge gifts important, and why launch a challenge grant program? Double the Donation has created a guide to challenge grants. According to Double the Donation, challenge grants are donations that serve as an avenue that an organization can use to bring in additional funds. A variable included with a challenge grant process is a specific timeframe to complete the challenge grant process.
Challenge grants also provide a ratio for the challenge, such as a 1:1, 2:1 or 3:1 match, which means the grant maker will donate in a 1:1 match, one dollar for every dollar donated, up to a specific capped amount. This type of fundraising is an all-hands-on-deck affair, which gets boards and volunteers engaged. It can be internally or externally focused.
You can diversify fundraising strategies to obtain funds and will hopefully secure new supporters. The key donor that launches the program obtains positive public exposure, and it provides the organization with a chance to gain publicity, especially as to how the funds received will be used. This type of fundraising will certainly create new partnerships and excite donors.
To make a challenge gift campaign successful, ask for donations from organizational leadership, and let everyone internally and externally know about your campaign. Don’t just ask for money but ask for volunteerism. Johnson Grossnickle and Associates suggest that challenge gifts should be a mainstay of your fundraising program because they work. Formal research has shown that challenge gifts attract donors and increase contributions. A study titled “Matching and Challenge Gifts to Charity: Evidence From Laboratory and National Field Experiments” revealed that challenge gifts attracted 23% more donors and increased total contributions by 18%.
The Balance notes that Philanthropy Works cited numerous statistics regarding matching gifts and challenge grants. Just declaring a matching gift increases giving by 19%. A match increases the likelihood that an individual will give by 22%. A challenge gift program keeps major donors involved. For total success to occur, you need a strong case for support and anticipated results. Note guidelines for a matching gift effort. Set a tangible and time-limited goal. Create campaign urgency, use social proof by keeping everyone aware of campaign progress and strive to make your pool of possible donors larger.
According to Averill Solutions, there are benefits of challenge gifts. They are creating a sense of competition among donors, providing an incentive to give within a specific time frame and allowing donors to share giving publicly, if they so desire and promoting philanthropy.
Nine tips for building a robust challenge gift plan are:
- Listen to your donor and match their desire with organizational goals.
- Build a plan between donor and organization on paper.
- Determine the match ratio and ask yourself whether this ratio meets your financial goals.
- Decide on gift parameters from donors.
- Set a minimum matching gift amount.
- Identify your target audience and craft your message accordingly.
- Build a timeline with a proposed start and end date.
- Organize a marketing plan and utilize a multi-channel approach.
- Have the donor sign off on the plan.
My church challenge gift plan was four months in duration. It included personal presentations in the church, so the parish could see the need and included personal solicitations, brochure and marketing materials development, social media engagement, progress reports and constant communication, and important messaging that included urgency and impact. The $350,000 challenge gift program netted at least $400,000 and met priority goals, not to mention the important stewardship of the anonymous donor and communications with the parish.
The Salvation Army challenge gift program is feverishly under way and a variety of strategies are being utilized. Because it is for COVID-19, the need is obvious. We generated $30,000 last week and yesterday, I secured a $2,500 gift over the phone. What made this gift so special was the fact that the donor asked me to tell his children how the funds would be used. The donor then led us in prayer for the people that are suffering because of COVID-19. Being Good Friday, the impact of that family prayer was profound.
When is your next challenge gift initiative? I suggest you include this type of giving in your fundraising operational plan today.
Duke Haddad, Ed.D., CFRE, is currently associate director of development, director of capital campaigns and director of corporate development for The Salvation Army Indiana Division in Indianapolis. He also serves as president of Duke Haddad and Associates LLC and is a freelance instructor for Nonprofit Web Advisor.
He has been a contributing author to NonProfit PRO since 2008.
He received his doctorate degree from West Virginia University with an emphasis on education administration plus a dissertation on donor characteristics. He received a master’s degree from Marshall University with an emphasis on public administration plus a thesis on annual fund analysis. He secured a bachelor’s degree (cum laude) with an emphasis on marketing/management. He has done post graduate work at the University of Louisville.
Duke has received the Fundraising Executive of the Year Award, from the Association of Fundraising Professionals Indiana Chapter. He also was given the Outstanding West Virginian Award, Kentucky Colonel Award and Sagamore of the Wabash Award from the governors of West Virginia, Kentucky and Indiana, respectively, for his many career contributions in the field of philanthropy. He has maintained a Certified Fund Raising Executive (CFRE) designation for three decades.