Have you ever had the chance to apply for a “matching grant”? If so, you might have wondered what exactly a matching grant is—and whether it’s worth pursuing.

Over two decades of nonprofit fundraising and consulting, I’ve worked with dozens of organizations that have successfully pursued matching grants. I’ve learned that there are pros and cons to matching grants that aren’t always apparent upfront.

So, before pursuing a matching grant, it’s worth taking a step back to understand what it really entails—and how to make it work for your organization.

 

What Is a Matching Grant?

Matching grants are conditional funding awards that require an organization to raise a specified portion of the grant through solicitation of new money and/or in-kind contributions. The “match” amount required varies based on individual funding guidelines but can generally range from 20% to 100% of the grant award. Matching grants may also be called challenge grants.

The purpose of a matching grant requirement is to challenge an organization to increase its revenue and broaden its base of support. A matching grant is often used as leverage to inspire others to step forward and support an organization or specific project.

In many cases, a grantee cannot access the original grant award funds until they have secured the required match. For example, say your nonprofit is awarded a $100k grant with a 100% match requirement. You can only “unlock” the original $100k grant award once you have already secured $100k in new funding commitments. For especially large grants, you may be able to unlock funds in increments as you raise the match.

Not all matching grants are created equal, though. Some allow in-kind contributions to count toward the match requirement (more on that below), but others only allow new funds from new donors.

As grant writers often say, “If you have seen one grant application, you have seen one grant application.” Keep this in mind as you read through grant guidelines, conduct grant research, and decide which grant prospects to pursue.

 

Who Awards Matching Grants?

Many types of funders award matching grants. These includes:

• Foundations
• State and federal grant programs
• Major individual donors

Funders tend to think of matching grants as an opportunity for nonprofits to increase their funding base and long-term sustainability. Matching grants are also a way for funders to ensure they are not the only ones supporting an organization or project.

 

Pros and Cons of Matching Grants

As you can already start to see, matching grants require more work than non-matching grants. But they can also result in big payoffs.

 

Benefits of Matching Grants

When properly planned for, matching grants can help you:

• Secure new or increased funding for priority programming in your organization. When planned well, matching grants can help you secure a short-term influx of new support for your organization—and expand your donor base for long-term sustainability.
• Reassure funders they are not the only invested donor. Most donors do not want to be the only ones supporting a project or program, so matching grants can be a way for them to “hedge their bets” on a funding investment.
• Build a committed group of donors with shared goals who, ideally, remain invested in your organization for the long haul. Achieving this also requires strategic donor communication and cultivation.
• Increase donors’ confidence in your organization. If you’re able to quickly and effectively secure matching funds, donors will immediately see that you can rally your team to deliver results. You’ll also demonstrate your nonprofit’s high community support, diverse funding base, and commitment to sustainability. When donors are confident

 

Downsides of Matching Grants

Even with these benefits, matching grants can still have downsides—and not every matching grant is worth accepting!

Some warning signs to look out for when considering pursuing or accepting a matching grant include:

• How strict are the matching requirements? Every matching grant has its own unique requirements. The biggest one to look out for is how strict the grantmaker is about what type of support counts as an eligible “match.” Some matching grants allow for in-kind support (provided by donors, partners, board members, etc.). Others count increased funding from current donors or an allocation of general support dollars as part of the match. However, the strictest guidelines may exclude in-kind support and funding from active donors and require that you secure the match only from new donors or donors who have not supported your organization in the last 1-2 fiscal years. This last type of match is especially cumbersome.
• Do you have a viable path to meeting the match? Before you accept a matching grant, be sure you have a solid plan for how you will meet the match requirements. Remember that not every funder you target for the match will come through. So, if you need to raise $20k for a matching grant, consider having a pipeline of $40k-$60k in potential match funding.
• Is the funding for a priority program? If the matching grant isn’t for a priority program, you may be stuck putting a LOT of energy into something that is not mission-critical. This can happen even with a smaller matching grant for a very niche project! You may also end up diverting donor dollars from things like general support or core programming into non-priority programs or projects. If you’re not sure what your priority programs are or are not, then it’s time for a strategic planning process.

 

How to Find Matching Funds

Depending on the grant requirements, you may be able to use the following types of support to meet your match:

• In-kind contributions: In-kind contributions are donated goods and services that have a quantifiable and documented value. This can include things like staff time, office space, facilities for program activities, equipment and supplies, overhead costs, and contracted services. Not that in-kind contributions must match actual line items in the budget submitted to the grantmaker (meaning, you can’t make up expenses after the budget has been submitted and the grant awarded). Potential sources of in-kind contributions include other donors, partner agencies and organizations, board members, and businesses.
• Cash-on-hand or allocation of general support: If you have funds for general support, reserves, or other unrestricted cash-on-hand, you may be able to allocate a portion of this to project expenses to meet your match.
• Increased donations from current donors: In your annual fundraising plan, you likely built a list of donors who have significant giving capacity and potential to increase their annual contributions. You can use the opportunity of a matching grant to approach these donors and ask them to make an additional gift, above and beyond their current giving, to meet the match. Often, this new, higher giving level becomes their baseline annual giving going forward.
• Contributions from new donors: Do you have a set of foundation and individual donor prospects in your fundraising pipeline who are almost ready to commit? Sometimes, going to these donors with a matching grant opportunity can be the nudge they need to write that first check.

Being clear on what counts for the match is essential. So, if you have a question or are unsure about how to proceed with a matching grant you’re working on, don’t guess! Refer to the guidelines or reach out and talk with the program officer.

 

Matching Grant Plan Example

Matching grants can feel complicated at first, so let’s look at an example of how we helped one of our clients with a successful matching grant.

A few years ago, Funding for Good wrote a large federal grant for an after-school program. The grant required a 20% match. This came out to a matching requirement of $120,000 per year. At first, finding $120,000 in matching funds seemed like a lot! But with upfront planning, we realized it was easy to reach with in-kind contributions.

The school, which was partnering with the after-school program, was providing a gymnasium, football field, lunchroom, and media center every day after school for 2.5 hours. During the school year that was 5 days a week times 40 days = 200 days.

We then took the rental value of each of those facilities (because that rental fee is documented with the school system, we did NOT make it up) and calculated what it would cost for space if we had to rent it for the program.

• Gymnasium @ $100/hr x 2.5 hr/day x 200 days = $50,000
• Football Field @ $100/hr x 2.5 hr/day x 200 days = $50,000
• Lunchroom @ $100/hr x 2.5 hr/day x 200 days = $50,000
• Media Center @50/hr x 2.5 hr/day x 200 days = $25,000

Total for 1 Year of In-Kind Space = $175,000 

We would take a similar approach to determining the value of staff, media, technology, overhead, transportation, and so on.

 

Conclusion: Being Strategic About Matching Grants

When it comes to matching grants, the keys to success are understanding the requirements, making a viable plan, and using creative thinking. Without these three elements, a matching grant can become a frustrating time-suck rather than the fundraising opportunity it is meant to be.