What are Challenge Grants?


by Mandy Pearce

A ‘Challenge Grant,’ also known as a ‘Matching Grant’, is when a foundation commits to award a set amount of money to an organization based on the amount of new funds raised in response to the challenge.

For example, The Smith Foundation offers you a $25,000 grant, once you have raised $25,000 in new dollars for your organization. This means new donors or increased giving from current donors.

This concept might sound like extra work, but upon deeper reflection, it is actually an opportunity to show a donor our willingness to work to grow our own capacity. By increasing our donor base in response to their gift, we are in turn, increasing our ability to sustain ourselves beyond their gift.

Throughout the years I have had the opportunity to work on numerous grants that listed matching funds as a requirement in the guidelines. For those of you new to grant writing, guidelines vary from donor-to-donor and agency-to-agency.  I have seen required matches from 20% to 100% of the total amount being requested.  You will want to note is whether the match can be in-kind as well as cash, or if it has to be one or the other. Best case scenario, you can use in-kind and cash to achieve your goal.

Now, how do you create your match?  This will vary based on the type of program and/or agency you have, as well as the type of funds you are requesting.

I remember working with a colleague on their first federal grant application a few years back. Their required match was 100%, dollar-for-dollar.  The overall proposal they were submitting was for about $60K. We were challenged with where to create these matching dollars.  Luckily for them, they had a nice little sum of cash they could allocate to the match, which took care of about $10-$15K.  Nice!

Where else could they look to complete the match?

As we brainstormed the contributions from the organization that helped make the program possible, we listed space, portions of staff salaries, equipment, and in-kind services from partner agencies.

We needed to create a needs list first of every possible thing needed to make the program happen.  A lot of times people overlook things like space, projectors, portions of overhead expenses (think about things like power, utilities, rent, etc.), marketing materials and the tools to create them (like copiers, ink, toner, paper, etc.).

Once you have that needs list, compare it to the items you are requesting from the potential donor/agency.  Anything not being requested in the proposal budget, are things you will either have to acquire, will have donated (in-kind hopefully), or you already possess.  These are the items you will turn in to in-kind matches.

One of my favorite, and easiest to understand examples is this:

Funding For Good wrote a federal grant for an after-school program a few years ago. We were required to have a 20% match. This came out to about $120,000/year. That seemed like a lot at the time. Ultimately, it was not very much at all.  The school was providing a gymnasium, a football field, a lunchroom, and a media center every day after school for 2.5 hours. During the school year that is 5 days a week times 40 weeks = 200 days. We 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.

Check it out (*these numbers are guesstimates because I don’t remember the exact numbers):

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

Now, this was a year-round program, and we have not even calculated the space for the summer portion of this program. Just imagine what we COULD have matched!

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

When you get to your first challenge grant, or as you move through current grants that have matching requirements, don’t freak out.  It is doable.  It may take some creative thinking on your part, but it is doable.

As I always tell people, if you have a question or are unsure of how to proceed, talk with the program officer and refer to the grant guidelines. Don’t guess when you have resources at your disposal that can give you answers.

Best of luck with your 2018 ‘challenges’ and happy writing!

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