Skip to main content
SpringerLink
Log in

The Long-Term Effects of Matching Grants on Giving and Fundraising: A Longitudinal Study of Community Foundations in Indiana, USA

  • RESEARCH PAPER
  • Published:
VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations Aims and scope Submit manuscript

Abstract

A matching grant is an important tool to leverage charitable giving. Most research on the effects of matching grants on donations has applied experimental methods to examine how and to what degree these grants affect donors’ giving behaviors. Through a 20-year mixed-method longitudinal study of community foundations in Indiana, USA, this study has found that matching grants not only have large and significant impacts on giving but also influence charities’ fundraising efforts. The results demonstrate that although matching grants could stimulate a temporal increase in fundraising expenses, they have a significant income effect and might discourage fundraising in the long term. Additionally, repeated provisions of matching grants induce an anticipating effect such that organizations delay fundraising activities for a higher future return.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4

Similar content being viewed by others

Notes

  1. Most research has applied field experiments to examine the effects of matching grants on selected donors from a single charity, and the match providers were anonymous individuals. The amounts of matching grants in field experiments were relatively small (less than $1 million). Some studies report matches provided by a private foundation (Castillo & Petrie, 2020) or multiple foundations and corporations (Meer, 2017), and on a large scale: Meer (2017) examined the effects of a $23 million matching grant through an online fundraising platform, and Hungerman and Wilhelm (2016) examined the effects of a $3 million matching grant to a university. However, no study has examined large-scale, repeated matching grant projects that support multiple charities’ development, like the Lilly Endowment’s GIFT Initiative.

  2. The NCCS is an open data platform for data on US charities. NCCS Core Files have been produced annually since 1989 and contain descriptive and financial information from Form 990, which is an informational tax form provided by the US Internal Revenue Service that most tax-exempt organizations are required to file on an annual basis.

  3. GuideStar is a database (now part of a new non-profit organization called Candid) that publishes tax-exempt organizations’ Form 990 filed to the IRS.

  4. The CICF’s affiliate fund in Hamilton County participated in all GIFT Initiative phases. The affiliate fund used to be an independent CF but later partnered with the Indianapolis Foundation to create CICF in 1997. Pre-2004 affiliate fund giving and fundraising data are missing. To avoid complications, the CICF and the Hamilton County affiliate fund were removed from the sample.

  5. For Form 990 prior to 2008, donation data were retrieved from Part I, Line 1, “Contributions, gifts, grants, and similar amounts received”; for Form 990 in and after 2008, the data were retrieved from Part I, Line 8, “Contributions and grants,” Column “Current Year”.

  6. CFs used different fiscal years for Form 990 reporting. The Lilly Endowment and most, but not all, CFs started the fiscal year in January. Therefore, 33 observations had negative checkbook donations after deducting the Lilly Endowment grants. In these cases, I moved the Lilly Endowment grant a year forward or backward to match the fiscal year of these foundations.

  7. For Form 990 prior to 2008, fundraising expense data were retrieved from Part I, Line 16b, “Total fundraising expenses”; for Form 990 in and after 2008, data were retrieved from Part IX, Line 25, “Total functional expenses” (Column D).

  8. For Form 990 prior to 2008, net assets data were retrieved from Part I, Line 21, “Net assets or fund balances at end of year”; for Form 990 in and after 2008, data were retrieved from Part I, Line 22, “Net assets or fund balances,” Column “End of Year”.

  9. Exceptionally large gifts are defined as gifts above $30 million. Excluding the three foundations, the maximum checkbook donations yearly are approximately $8–10 million.

  10. The Lilly Endowment uses the term “challenge grants” instead of matching grants. A typical challenge grant requires charities to raise funds up to a threshold to get the match. However, in the GIFT Initiative, CFs that failed to complete the challenge had their donations matched by the Lilly Endowment. Therefore, I use “matching grants” instead of “challenge grants”.

  11. The consultant’s personal communication with the author, November 14, 2019.

References

  • Adena, M., & Huck, S. (2017). Matching donations without crowding out? Some theoretical considerations, a field, and a lab experiment. Journal of Public Economics, 148, 32–42.

    Article  Google Scholar 

  • Adena, M., & Huck, S. (2022). Personalized fundraising: A field experiment on threshold matching of donations. Journal of Economic Behavior & Organization, 200, 1–20.

    Article  Google Scholar 

  • Andreoni, J. (2006). Leadership giving in charitable fund-raising. Journal of Public Economic Theory, 8(1), 1–22.

    Article  Google Scholar 

  • Andreoni, J., & Payne, A. (2003). Do government grants to private charities crowd out giving or fund-raising? American Economic Review, 93(3), 792–812.

    Article  Google Scholar 

  • Andreoni, J., & Payne, A. (2011). Is crowding out due entirely to fundraising? Evidence from a panel of charities. Journal of Public Economics, 95(5), 334–343.

    Article  Google Scholar 

  • Anheier, H., & Salamon, L. (2006). The nonprofit sector in comparative perspective. In W. W. Powell & R. Steinberg (Eds.), The non-profit sector: A research handbook (2nd ed., pp. 89–116). Yale University Press.

    Google Scholar 

  • Anik, L., Norton, M., & Ariely, D. (2014). Contingent match incentives increase donations. Journal of Marketing Research, 51(6), 790–801.

    Article  Google Scholar 

  • Bertrand, M., Duflo, E., & Mullainathan, S. (2004). How much should we trust differences-in-differences estimates? The Quarterly Journal of Economics, 119(1), 249–275.

    Article  Google Scholar 

  • Benartzi, S., & Thaler, R. (1999). Risk aversion or myopia? Choices in repeated gambles and retirement investments. Management Science, 45(3), 364–381.

    Article  Google Scholar 

  • Castillo, M., & Petrie, R. (2020). Optimal Incentives to Give [Working paper]. https://ssrn.com/abstract=3616460

  • C.S. Mott Foundation. (2013). 2012 Annual Report: Community foundations: Rooted locally. Growing globally. C.S. Mott Foundation. https://www.mott.org/news/publications/2012-annual-report-community-foundations-rooted-locally-growing-globally/

  • Davis, D. (2006). Rebate subsidies, matching subsidies and isolation effects. Judgment and Decision Making, 1(1), 13–22.

    Article  Google Scholar 

  • Eckel, C., & Grossman, P. (2003). Rebate versus matching: Does how we subsidize charitable contributions matter? Journal of Public Economics, 87(3–4), 681–701.

    Article  Google Scholar 

  • Eckel, C., & Grossman, P. (2008). Subsidizing charitable contributions: A natural field experiment comparing matching and rebate subsidies. Experimental Economics, 11(3), 234–252.

    Article  Google Scholar 

  • Gandullia, L. (2019). The price elasticity of warm-glow giving. Economics Letters, 182, 30–32.

    Article  Google Scholar 

  • GIFT Office. (2015). GIFT Snapshort Report Indianapolis, Indiana: Ruth Lilly Special Collections & Archives, IUPUI University Library.

  • Gong, N., & Grundy, B. (2014). The design of charitable fund-raising schemes: Matching grants or seed money. Journal of Economic Behavior & Organization, 108, 147–165.

    Article  Google Scholar 

  • Hager, M., Rooney, P., & Pollak, T. (2002). How fundraising is carried out in US nonprofit organisations. International Journal of Nonprofit and Voluntary Sector Marketing, 7(4), 311–324.

    Article  Google Scholar 

  • Hammack, D., & Anheier, H. (2013). A versatile American institution: The changing ideals and realities of philanthropic foundations. Brookings Institution Press.

    Google Scholar 

  • Huck, S., & Rasul, I. (2011). Matched fundraising: Evidence from a natural field experiment. Journal of Public Economics, 95(5–6), 351–362.

    Article  Google Scholar 

  • Hungerman, D., & Wilhelm, M. (2016). What is the Price Elasticity of Charitable Giving? Toward a Reconciliation of Disparate Estimates [Working paper].

  • Indiana Grantmakers Alliance. (2003). GIFT Program: Final Report to Lilly Endowment Inc. January 1, 2002–December 31, 2002. Indianapolis, Indiana: Ruth Lilly Special Collections & Archives, IUPUI University Library.

  • Indiana Grantmakers Alliance (2005). GIFT Program: Final Report to Lilly Endowment Inc. January 1, 2004–December 31, 2004 (Indianapolis, Indiana: Ruth Lilly Special Collections & Archives, IUPUI University Library).

  • Kamenica, E. (2012). Behavioral economics and psychology of incentives. Annual Review of Economics, 4(1), 427–452.

    Article  Google Scholar 

  • Karlan, D., & List, J. (2007). Does price matter in charitable giving? Evidence from a large-scale natural field experiment. The American Economic Review, 97(5), 1774–1793.

    Article  Google Scholar 

  • Karlan, D., List, J., & Shafir, E. (2011). Small matches and charitable giving: Evidence from a natural field experiment. Journal of Public Economics, 95(5), 344–350.

    Article  Google Scholar 

  • Krasteva, S., & Saboury, P. (2021). Informative fundraising: The signaling value of seed money and matching gifts. Journal of Public Economics, 203, 104501.

    Article  Google Scholar 

  • Krishnan, R., Yetman, M., & Yetman, R. (2006). Expense misreporting in nonprofit organizations. The Accounting Review, 81(2), 399–420.

    Article  Google Scholar 

  • Li, Y. (2017). Tencent confirms charity frauds in the 99 Giving Day. TouTiao. https://kknews.cc/zh-cn/news/5gppnj2.html

  • Loewenstein, G. (1987). Anticipation and the valuation of delayed consumption. The Economic Journal, 97(387), 666–684.

    Article  Google Scholar 

  • Meer, J. (2017). Does fundraising create new giving? Journal of Public Economics, 145, 82–93.

    Article  Google Scholar 

  • Meier, S. (2007). Do subsidies increase charitable giving in the long run? Matching donations in a field experiment. Journal of the European Economic Association, 5(6), 1203–1222.

    Article  Google Scholar 

  • Morris, G., Roberts, D., MacIntosh, J., & Bordone, A. (2018). The financial health of the United States nonprofit sector: Facts and observations. Berlin: Oliver Wyman.

    Google Scholar 

  • Rondeau, D., & List, J. (2008). Matching and challenge gifts to charity: Evidence from laboratory and natural field experiments. Experimental Economics, 11(3), 253–267.

    Article  Google Scholar 

  • Saboury, P., Krasteva, S., & Palma, M. (2019). The Effect of Seed Money and Matching Gifts in Fundraising: A Lab Experiment [Working paper].

  • Struckhoff, E. (1991). Ways to grow: A study of community foundations serving populations under 250,000. Council on Foundations.

  • U.S. Census. (2010). County Classification Lookup Table. https://www.census.gov/programs-surveys/geography/guidance/geo-areas/urban-rural.html

  • U.S. Census. (2020). STATSINDIANA: Indiana’s Public Data Utility. http://www.stats.indiana.edu

  • Vesterlund, L. (2006). Why do people give. In W. Powell & R. Steinberg (Eds.), The nonprofit sector: A research handbook (2nd ed., pp. 168–190). Yale University Press.

    Google Scholar 

  • Wiepking, P., & Handy, F. (Eds.). (2015). The Palgrave handbook of global philanthropy. Palgrave Macmillan.

    Google Scholar 

  • Wooldridge, J. M. (2010). Econometric analysis of cross section and panel data. MIT press.

    Google Scholar 

  • Ziliak, S., & McCloskey, D. (2004). Size matters: The standard error of regressions in the American Economic Review. The Journal of Socio-Economics, 33(5), 527–546.

    Article  Google Scholar 

Download references

Acknowledgements

I am grateful for the helpful comments received from Lehn Benjamin, Nicolas Duquette, Jonathan Meer, Jonathan Oxley, and anonymous reviewers. More than the usual thanks go to Mark Ottoni-Wilhelm for helping me develop the theoretical framework and analytic strategy of this research project and to Helen Monroe for providing feedback from an insider’s point of view.

Author information

Authors and Affiliations

  1. School of Public Administration and Policy, Renmin University of China, 59 Zhongguancun St, Haidian District, Beijing, 100872, China

    Xiaoyun Wang

Authors
  1. Xiaoyun Wang
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Xiaoyun Wang.

Ethics declarations

Conflict of interest

The author declares that she has no competing interests.

Ethical Approval

This research has been approved by Indiana University institutional review board (IRB). The IRB protocol number is 1711044024A001.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Supplementary Information

Below is the link to the electronic supplementary material.

Supplementary file1 (DOCX 101 kb)

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Wang, X. The Long-Term Effects of Matching Grants on Giving and Fundraising: A Longitudinal Study of Community Foundations in Indiana, USA. Voluntas 34, 1243–1257 (2023). https://doi.org/10.1007/s11266-022-00551-x

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11266-022-00551-x

Keywords

Search

Navigation