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In the world of direct response fundraising, matching gifts have consistently proven to be an effective tool to increase donor engagement and maximize revenue. The promise of having their donation doubled resonates strongly with donors, providing a clear and immediate incentive to give. This psychological appeal is powerful, making matching gifts a staple in successful fundraising efforts. Some organizations use challenge gifts instead, assuming they will yield similar results.
Matching gifts and challenge gifts
The ECFA defines a matching gift as one that represents a gift that is contingent on the gifts of other donors to receive it, while a challenge gift represents a noncontingent gift that becomes a "challenge" for other donors to also support the same charity.
Challenge gifts: Are they equally effective?
While challenge gifts are sometimes used in place of matching gifts with the assumption that they are similarly effective, a recent case study Masterworks executed suggests otherwise. We conducted a longitudinal test across three direct mail campaigns to assess the relative effectiveness of these two strategies. One panel received all matching gift offers, a second received all challenge gift offers, and a third received offers with no matching gift and no challenge gift. To note, the client we tested this on uses matching gifts regularly but had never presented their donors with the challenge gift option. The findings were illuminating:
- Matching gifts: Boosted response rates and GYPM (gross revenue/yield per thousand) by an impressive 20%.
- Challenge gifts: Showed no significant difference in effectiveness compared to the panel that received no matching or challenge gifts.
The effectiveness of matching gifts
Matching gifts have long been known to boost both response rates and revenue in fundraising campaigns. The promise of having their donation doubled resonates strongly with donors, providing a clear and immediate incentive to give. This psychological appeal is powerful, making matching gifts a staple in successful fundraising efforts.
Challenge gifts: Are they equally effective?
While challenge gifts are sometimes used in place of matching gifts with the assumption that they are similarly effective, a recent case study Masterworks executed suggests otherwise. longitudinal test across three direct mail campaigns to assess the relative effectiveness of these two strategies. One panel received all matching gift offers, a second received all challenge gift offers, and a third received offers with no matching gift and no challenge gift. To note, the client we tested this on uses matching gifts regularly but had never presented their donors with the challenge gift option. The findings were illuminating:
- Matching gifts: Boosted response rates and GYPM (Gift/Yield Per Thousand) by an impressive 20%.
- Challenge gifts: Showed no significant difference in effectiveness compared to the panel that received no matching or challenge gifts.
This stark contrast highlights a crucial point: donors are keyed into the language and mechanics of these strategies. The clear and immediate benefit of a matching gift is easily understood and compelling, whereas challenge gifts may not resonate as strongly with all audiences, making testing essential.
Prioritize matching gifts
Given these findings, it’s evident that matching gifts and challenge gifts are not interchangeable strategies. Donors are discerning and keenly aware of the distinctions between the two. Therefore, if you’re currently using challenge gifts, it’s essential to test their effectiveness within your own campaigns. However, the evidence strongly suggests prioritizing matching gifts, as they deliver the tangible and immediate impact that donors want, leading to greater fundraising success.
