Do-gooders do better with matching gifts

(The writer is a Reuters contributor. The opinions expressed are his own.)

By Chris Taylor

NEW YORK (Reuters) – When Nigel Glennie saw the images coming out of Nepal after the earthquake in late April, he just had to do something.

When he heard that his company, Cisco Systems Inc, was offering a dollar-for-dollar match on donations (up to $1 million), he figured his money could do twice as much.

“It’s a multiplier effect,” says the 41-year-old Australian communications executive who lives in San Francisco. “I donated a little more on behalf of my family, because we knew we were getting that extra match.”

Matching programs for charitable donations have proliferated after the Nepal quake. A number of major companies like Cisco announced lavish matches: Facebook Inc matched $2 million of donations made through its site, while Google Inc gave $1 million and another $750,000 in matches for employee contributions.

In fact, 20 percent of U.S. firms match charitable contributions, a 2014 survey from the Society for Human Resource Management shows. Another 1 percent planned to do so in the next 12 months.

“Research has found that it does tend to motivate people,” says Holly Hall, features editor at The Chronicle of Philanthropy.

Big names can prompt more action, says Eric Friedman, author of “Reinventing Philanthropy.” If Facebook has selected a Nepal charity for a match, for instance, then donors assume that Facebook has done its due diligence, and that the charity is an effective one.

Matching programs can make plenty of sense for individual donors: If every $1 you give can be matched by $1, or even $2 or $3, then you have automatically amplified your potential impact.

However, a whopping $3-for-$1 match does not generate any more contributions than a simple dollar-for-dollar match, Hall says.

Nonprofits have discovered that matches can provide a shot of adrenalin. Microfinance site Kiva (http://kiva.com), for instance, handles a daily average of about $300,000 in loans to small-scale entrepreneurs around the world. But on days when loans are matched, “loan volume can go up to $3 million,” spokesperson Hania Abu-Eid says. “So we are talking about a match day being 9-10 times more than a standard day.”

David Nelson, a former wide receiver for the NFL’s New York Jets, has witnessed the power of matching programs first-hand at the charitable organization he runs, I’m ME, which cares for 10 orphans at a facility in Haiti (http://imme.org/).

Every time there is a matching promotion, “we’ll see people who were going to donate $50, decide to give $100, making a total of $200,” he says. “It also encourages people who weren’t going to give at all, to give a little, because that gift is being doubled.”

Other observers, however, inject a note of caution about all the charity matching offers that are filling your inbox. Just because your dollar is being doubled, does not necessarily mean that the cash is being used wisely.

“It can be like getting a two-for-one deal on a terrible car,” says Dean Karlan, a Yale University economics professor who has studied the effectiveness of matching programs. “The matching offer isn’t really what donors should be paying attention to. They should be paying attention to whether the charity is doing effective work, and getting evidence of their impact.”

One way to do that: Visiting a site like Charity Navigator (http://charitynavigator.org), which rates nonprofits based on factors like how much cash is being gobbled up by administration costs. There are sites that narrow down the choices as well, like GiveWell (http://givewell.org), which spotlights a handful of specialized charities like the Against Malaria Foundation that it deems the most effective.

The latest updates are found on the U.S. Chamber of Commerce Foundation’s site (http://uschamberfoundation.org), which compiles corporate aid roundups for everything from the Nepal quake to the Syrian refugee crisis.

As for Cisco’s program, employees have donated about a quarter of the company’s $1 million goal so far, Glennie says. “The images are so tragic. You hear about all these personal stories from family and friends in Nepal, and you have to help.”

(Editing by Beth Pinsker; Editing by Richard Chang)

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