Making the Match: How Do We Use Matching Contingencies Effectively?

By Tasha Tucker and Ben Kerman

Many philanthropic institutions require prospective or current grantees to match all or part of the value of a grant in order to secure funding. Foundations use matching contingencies to recruit funding partners, build grantee capacity to raise funds, replicate program models, and soften their exit from the field, among other purposes. Funders see matching as a useful tool to make philanthropic dollars go further—but do their grantees feel the same?

Over the past five years, the Atlantic Philanthropies has made matching foundation funding with grants from other sources a central grantmaking strategy. Because Atlantic is a limited-life foundation set to cease operations in 2020, we are using matching contingencies to minimize possible negative effects on our grantees as the foundation closes shop and exits the field. In 2011, Atlantic conducted an analysis of grantees that would be most affected by our exit. The analysis demonstrated that in order to decrease dependency on Atlantic funds, grantees needed additional tools to increase fundraising capacity. Atlantic, like many foundations, hopes that matching contingencies will help grantees connect with new funders, drawing more money into the field to sustain and amplify impact. For such a popular tool in the philanthropic space, there has been little or no empirical evidence on the effects of matching contingencies on grantees, their projects, or the impacts on different program areas or geographic locations. Until now.

In January 2014, Atlantic commissioned Mathematica Policy Research to evaluate its matching practices in the hopes of documenting the utility and outcomes of Atlantic’s use of matching requirements. We interviewed 38 grantees, and 19 program officers in several countries. What we found, as with many strategies in philanthropy, was that matching isn’t a one-size-fits-all solution. For some organizations, the challenge of meeting matching contingencies prompted more strategic planning and led to an increase in funding sources. For others, the matching requirement led to the pursuit of quicker and shorter-term funding, rather than sustainable, or resulted in competition among peer organizations in a given field.

Here are a few of the most important lessons we learned from the research:

• We saw that some grantees are better suited for matching contingencies than others. These “matching-ready” grantees possess a combination of organizational characteristics— such as less controversial program work and certain geographical locations. They usually have at least 10 employees, charismatic and competent leadership, and some existing capacity for fundraising. In addition, they tend to work in a program area and/or country where the funding community is large and robust. For these grantees, the matchmaking requirement can be a boon instead of a hindrance.
• But even if a funder identifies grantees suited to a matching incentive, it’s still essential to have an early and open dialogue in order to create a realistic matching contingency. Planning enables foundation staff and the grantee to consider how a matching contingency might fit into an organization’s goals for growth, and allows the contingency to be designed for the organization’s capacity and financial situation. The grant development process between foundation and grantee is essential to creating viable and realistic matching contingencies.
• Foundations and donors should know that many grantees need assistance to manage a matching contingency.  While a majority of the Atlantic grantees in our sample met the match, we found 13% needed to recalibrate their goals in order to be successful and 21% did not meet the match or were not on track to meet their goal at the time of the study. Examples of assistance valued by respondents included: training in fundraising and strategic planning, the development of a grantee-to-grantee mentoring program, or an ongoing grantee roundtable to discuss issues related to fundraising and sustainability. Most grantees also noted that connections and introductions to other funders by Atlantic program executives are extremely important. These relationships play a major role in leveraging matching funds. Connecting grantees with potential funders was one of the more frequently cited actions that Atlantic employed to help grantees meet their match requirement.

At Atlantic, matching appears to have been helpful in advancing the foundation’s goals with most grantees. Yet, matching contingencies are neither a universal solution to the expected changes in funding levels nor a clearly detrimental practice. The use of matching contingencies can change a foundation’s relationship with its grantees—by complicating the management of grants and grantee relations—and with peer foundations. But it can also help grantees expand access to other sources of funding, ultimately making a grantee’s work more sustainable in the long run.

For example, Atlantic’s final $3 million grant to the Just and Fair Schools Fund at NEO Philanthropy (formerly Public Interest Projects) imposed a 1:1 match to require contributions from new donors and expanded commitments from existing donors. The match encouraged NEO Philanthropy staff and the fund’s donors to set targets for growth and sustainability of the fund, and to intensify efforts to attract new revenue to eventually replace Atlantic’s resources. At the same time, Atlantic staff actively reached out to other funders explaining the initiative and identifying strong grantees like NEO Philanthropy. The match pressure paid off in a large new grant from the W.K. Kellogg Foundation, which awarded $4.9 million to support the fund’s work, helping us meet our support goal for our long-time grantee and the grantee meet its goal of sustainably scaling its work.

Foundations should consider carefully the purpose, design, and policies around their matching contingencies before moving forward, as some types of grantees benefit from matching, while others find it a difficult and perhaps a counterproductive process. Funders should be willing to hold discussions with grantees before designing the contingencies, to account for grantee goals, strengths, and challenges in the match conditions, and to offer assistance and flexibility in securing matching funds—including outreach to elicit interest from partner foundations. A matching contingency can yield great results for the donor, the grantee, and the field, if used in a smart and realistic way. We are pleased that many of Atlantic’s grantees now have new funding partners as we are exiting the field, and that matching was used as a tool for communication, sustainability, and impact.

Ben Kerman, Ph.D., is head of strategic learning and evaluation at The Atlantic Philanthropies. Dr. Kerman is involved with the design and implementation of Atlantic’s final phase learning agenda.

Tasha Tucker is an associate programme executive for children and youth at The Atlantic Philanthropies.