Leading Tactics for Rural Fund Development

Understanding and Leveraging Focus A Endowment in and for Your Community

Tactic 3 Seek challenge matches for fund

What is it?

One way to get people to give to your community fund is to offer them the incentive that you have a “match” for every dollar they give. Offering donors a match is one of the most effective tools in building endowment, whatever the source of the match or the purpose for the endowment.

A challenge match is a significant that someone pledges to give to your endowment fund if you are able to secure a certain amount from your other donors to “match” it. Often referred to as a challenge grant, these challenge matches can come from other foundations, businesses or individuals—or from your own discretionary funds. In rural communities, boards typically seek match commitments from individual donors who care about the community and who want to challenge others to help build the endowment.

Meeting a challenge can be a good way to get a rural endowment fund started and to grow it quickly to a respectable size. Challenges are a great way to attract contributions over a limited period of time for a specific purpose, because people feel like they get more for giving when there is a match. They work because both the challenge grant donor and all the prospective donors who help you meet the  Focus A Understanding and Leveraging Endowment Tac t ic 3 ic provide a challenge match grant. match challenge a provide might that sources typical the are Here community. your in difference a make will that idea good a is match a as contribution their structuring that donor(s) potential your to case a make to have you And match. a as use can you donation or grant challenge a find and out go to have you or match, a for use to funds unrestricted existing some dedicate to decide must board your Either them. for look to Youhave door.front your in walk just don’t matches generally But match. a offer and you Sources. Howdoesit is contribute to time the that donors large likely-but-slow-to-act persuade to challenges used have foundations community Other grants. challenge match individuals—to few a from gifts planned large longer-term, to opposed people—as of range wide a from funds immediate raise to events use communities small very or rural very Some to ask—and to supporters and membersmotivate boardhelp also theyurgency, so of sense conveya todeadlines with cometypically grantsChallenge community.your offers it what and is it what about peopleeducate to opportunity great a fund orfoundation your offer alsoendowment, theyyour about talk to reason a youchallengesleveraged.give Because dollars their see tolike really match c a T g n i d a e L Seek challenge matches for fund gifts n n

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Seek challenge matches for fund gifts Tactic 3 

live, work and shop there. One example: In South Generally, matches don’t just walk in Bend, Indiana, the African your front door. You have to look for American Community Fund of the Community Foundation them. Either your board must decide to of St. Joseph County secured dedicate some existing unrestricted funds Understanding and Leveraging Endowment $450,000 in leadership gifts to use for a match, or you have to go out from six local businesses to provide matching funds for and find a challenge grant or donation

gifts made from the entire you can use as a match. community.

Another example: In Montana in the 1990s, a national beer producing firm offered a match challenge grant to community funds in towns across the state where they had distribution outlets. Of course, they did not think that up without some help and encouragement—in this case, from the Montana Community Foundation.

n Family or corporate foundations. Many families and corporations that have their own charitable foundations also have ties to a rural community and can be persuaded with the same argument as local businesses. This is true even for families that have moved away, businesses that are headquartered elsewhere, or those that have relocated but once were a key business in your town or region. Families or firms that realize their wealth was or is being built in your community and with your workers, may be willing to consider offering a match challenge. Note: Sometimes families or businesses that have moved away may not have a foundation, but still may be willing to contribute a match from their personal or corporate assets.

n Private local, regional or national foundations. Occasionally, private foundations—small or large—may provide a match to build community endowments. A match offers them a way to target their funds to a particular place and perhaps a particular issue, while offering leverage and the promise that by building a permanent endowment, their investment will continue to grow and produce good things over time. The Lilly Endowment has been

providing endowment matches as part of a multi-year initiative to grow rural Focus A

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n organization (agency) endowments, designated for use only by a particular nonprofit in your area

n Your foundation’s or fund’s operating endowment, to support ongoing staffing, office and administrative costs

n Specific community or local affiliate endowment funds Understanding and Leveraging Endowment

The Match Deal. Match challenges require that you raise a certain amount to draw down the match, however the structure of each match varies. And there are several variables to consider when working with your challenge donor—as well as with the donors who help you meet the match.

n Ratio. The amount of match dollars that will be offered for every contribution is usually described as a numerical ratio: for example, in a 2:1 match, the challenge donor provides $2 for every $1 raised. Challenge ratios generally range from 0.5:1 to 3:1.

As a rule of thumb, you want to stretch your match to attract as many local dollars as possible. So when someone offers you a challenge match grant for a set amount with a “rich” match, say 3:1 ($3 from the match donor for every $1 you raise from other donors for your endowment), you might want to convince them to lower it to 1:1—as long as you think that ratio will still attract local givers and you can meet the challenge. Why lower the ratio? Because it’s a win all around: It will raise more endowed dollars and new givers for you, and it will offer the challenge donor even higher leverage.

Does this math seem confusing—or counterintuitive? If so, follow this example through: Generally, you rarely get an unlimited match challenge; rather, you get a set figure—for illustration, let’s say your challenge donor promises $10,000—and the donor has a match ratio in mind. If you have a limit of $10,000 coming in for the match, the relevant question becomes: How far can we stretch that $10,000 as an incentive? If the donor gives you $10,000 and you use a 3:1 ratio, you end up with $13,333. If you use a 2:1 ratio, you get $15,000; if you use 1:1, you get $20,000; at 0.5:1, you get $30,000. Thus, when your challenge is for a set amount, the lower the match ratio you offer donors who help you meet the match, the more endowment you grow. Focus A

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community endowment. Have you had trouble getting new You can get very creative about using donors, or business donors, match dollars to build certain kinds or people to give more than $1,000? If you are trying to of endowment or to recruit certain build new donor markets, or categories of givers that are most Understanding and Leveraging Endowment break some kind of logjam in important to your foundation or fund at the kinds of gifts people are willing to give, how can you the time of the challenge. So when you target your challenge to turn structure The Match Deal, think about the the tide? For example, meeting other objectives you have in mind to build a challenge with only two donors in one week may get your community endowment. it done quickly, but at the end of the day, how much oomph does only two new donors give to your efforts over the long term?

n other match requirements. Usually, challenge grants simply provide direct matches: a match amount for a contribution. In some cases, however, challenge donors (especially if they are foundations) may also provide you additional funding to conduct some new grantmaking or program activity while you are raising the endowment match. The idea behind this arrangement is that it provides an incentive for your foundation to fund or operate a new program (like youth engagement, helping local craftspeople learn business skills, or housing rehabilitation for working families) while simultaneously raising an endowment that will ensure the program continues after the match is met. This can be a wonderful opportunity to strengthen community efforts. Just be sure you are ready and willing to take on the extra work, and that the program area is one that is important to your central mission—else it may divert too much time and energy away from everything else your foundation or fund is doing!

Building helpful capacities

There are two sides of a match challenge effort. First you have to find the match donor. Then you have to run a campaign to meet the match. Focus A

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Seek challenge matches for fund gifts Tactic 3 

If you want to actively seek and meet a match, your board is a natural to lead in the campaign. Here are the primary components and capacities that will move your match forward.

Get a task force going. First, create a foundation task force or ad hoc committee of board members, and staff if you have any, to plan and run the effort. Invite Understanding and Leveraging Endowment others from the community to join the task force or help in some way—for example, individuals who know about community needs or specific issues, people who have some professional fundraising experience, or local leaders who are well connected. Think hard and long about including on the task force people whom you need to diversify your community participation and donor base—for example, youth and young adults, or people from a wider variety of racial and ethnic cultures—so that your task force reflects your entire community. Indeed, a match campaign is a good way to “hook” new people into your work for a limited time-commitment; if they say “yes” and it succeeds, they may become longer-term supporters—or even board members—in the future.

Imagine the kind of match you want. Before you go out there and look, it makes sense to strategize together about exactly what kind of challenge match you would most like to get. How much, at what ratio, over what period of time, for which kind of gifts, for what purpose—and why? You may not ever get it, but thinking through your Ideal Match Deal in advance will help you articulate your ideas better to potential match providers, avoid confusion on your task force, and pull together towards your goal.

Find the match challenge donor. The next task is to seek and secure your challenge grant. With the potential Sources (listed earlier) in mind, brainstorm with your task force about who might be persuaded to offer a match. As you consider potential individuals, families, businesses, foundations or government that might become match donors, remember to:

n Look locally. Think about who you have right where you live and work. Sometimes people with wealth are hidden, so you may want to let the community know you are looking, to see if a volunteer surfaces. Keep in mind that some donors who do this (even businesses or foundations, sometimes) may want to remain anonymous. People need to know that you will keep their confidences if they want to keep things quiet. Focus A

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event can we sponsor to encourage contributions? In the above example, you might determine that board members who already have made bequests might do one-on-one meetings with other potential bequest donors in town to find the five bequests, while you might hold some community fundraisers or send some direct mail letters to get the smaller cash donations from the 200 new donors. Understanding and Leveraging Endowment

n Craft your campaign pitch or messages—and the materials to go with them. Develop a campaign pitch or set of messages that will get to your targeted donors. Tailor them to suit the donor visits or fundraising activities you are planning. Don’t forget to appeal to the self-interest and heart of your potential donor—and use the match as a hook. For example: We have a match available! So give now to give more to your hometown!

n Let everyone know what you are

doing—and how you are doing. Don’t keep your match challenge Don’t keep your match challenge a secret! Let everyone know what a secret! Let everyone know what you are doing and the progress you you are doing and the progress

are making as it happens. Create you are making as it happens. excitement by announcing the campaign on bulletin boards, in free “shoppers” fliers, in local newspapers and organization newsletters, on local radio and TV shows, at civic clubs and other community meetings. Provide news releases. Write letters to the editor. Every so often, report your success to date, and hold a come-one-come-all celebration whenever you achieve significant milestones. It will only help build the community spirit and momentum!

n Set goals, responsibilities and timelines—and track and adjust them. Create a timeline from now until the match period expires, complete with midpoint goals, and scheduled meetings to review your progress and adjust your plan. List the tasks to be accomplished in just the next few weeks, and who is responsible. Then, when you next meet, report what has worked, what hasn’t, figure out what to do next—and list the tasks to be accomplished in just the next few weeks. Repeat as needed! Focus Focus A

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“Never “Never doubt that a small Check Check out the Internet, your local library t’s t’s okay to say “No.” I Eliminating Eliminating Keep Keep on asking. Get crafty. Keep the fire lit. Take stretch! the fear factor fear the t V o p m e n l heck heck it out first. e v e materials. Get help from local marketing directors or advertising departments. Find the folks who have run a church’s capital cam paign. If they can do this, you can! Don’t give up. turns coming up with the “Match Idea of the Month.” And always remember Margaret Mead’s advice: group of thoughtful, committed citizens can change the world. Indeed, it’s the only thing that ever has.” value value for community funds and foundations. In other cases, the relationship requires complex reporting and rigid timelines—which can be difficult if you are not Enter ready. into such partnerships very seriously. People have said “No” to match challenges they thought they could not handle—sometimes it is the best decision. But if you can... Learn from others. and other community organizations that have run successful chal lenge-grant campaigns. Ask for their plan outlines and marketing to to give you an unfettered contribution to make it a match. Have the school children create a small fund with their pennies, and then go out to ask for it to be matched. From such small acorns, large endowments can grow! C large challenge from a foundation, review the donor foundation’s mission, requirements, goals and history. Ask other organizations about their experience with the donor foundation. Some partner ships with national or regional foundations provide tremendous Launch your own challenge program. say it again: Create your own match. If you have exhausted your efforts to find a donor from inside or outside the community, then look inside your foundation or fund. Ask for some multi-year pledges from your board and your existing donors and pool them into a community match challenge. Ask someone who was going D u n d F

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n corporate, private or family foundation gifts (for the challenge grants)

n Organization endowments (when the match is targeted to nonprofit organizations that start or build endowments with your community foundation)

The payoffs for this tactic are many, and are usually immediate or short-term, Understanding and Leveraging Endowment depending on the length of the challenge period. In a small community, a challenge can raise a lot of small gifts from new donors, resulting in a lot of new friends and visible progress in your efforts to build the community endowment. Each new friend now is a partial “owner” of your fund, which means they may care enough to give again. In short, challenge matches may spark the beginning of many beautiful longer-term relationships! Focus Focus A

Leading Tac t i c s f o r R u r a l F u n d D e v e l o p m e n t V v ersion 3-06

16 Tactic 3 Seek challenge matches for fund gifts

RFD Tool Box All the resources that follow relate to seeking and meeting challenge matches to grow endowment. The websites listed are active links to the materials that are available online. Where materials are not available online, use the email links provided.

Resources for the field. Key organizations and resources that provide critical tools and information to the entire field.

1. The Kresge Foundation Partnership to Raise Community Capital

Details: This generous five-year grant program has helped develop permanent endowment assets for community foundations and nonprofit organizations. The Partnership is a one-time grant program, not likely to be repeated, so there is no current opportunity to apply. But Kresge meant to provide its program as a model for other funders and community stakeholders to consider as they develop programs to strengthen their own regions. You can visit this website to find a good explanation about why endowment is important to build—it might be persuasive to someone you are trying to recruit as your challenge match donor.

Online: www.kresge.org/content/displaycontent.aspx?CID=31

Contact: The Kresge Foundation, 248-643-9630, www.kresge.org

2. : Giving Indiana Funds for Tomorrow

Details: For more than a decade, the Lilly Endowment has sponsored an intensive program—including an endowment match challenge component—that has helped local leaders build a community foundation or affiliate fund in every one of the state’s 92 counties. These websites will provide both rationale and data that you might share with your potential challenge donors about what a difference their match could make. Note: There are portions of these websites that only members or GIFT participants can access.

Online: Lilly Endowment Inc./Community Development/GIFT, www.lillyendowment.org/cd_gift.html; Indiana Grantmakers Alliance, www.indianagrantmakers.org/Members/community.cfm Understanding and Leveraging Endowment Leveraging and Understanding Focus A

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Seek challenge matches for fund gifts Tactic 3 17

3. Endow Iowa

Details: This Iowa Department of Development (IDED) website details the design of the state’s challenge match to build rural community endowments. It links you to materials and resources, including the actual legislation.

Online: www.iowalifechanging.com/endowiowa/index.html

Contact: Iowa Department of Economic Development. See website above to be routed to Understanding and Leveraging Endowment various components—and contacts—for this effort.

4. The Foundation Center

Details: If you are looking for local, regional or national foundations that might offer match challenges, The Foundation Center is a good first stop. You must subscribe to use their most powerful online search services, but you can also access all the information for free at Foundation Center Cooperating Collections located in libraries, community foundations, and other nonprofit resource centers across the country. Cooperating Collections provide a core collection of Foundation Center publications and a variety of supplementary materials and services in areas useful to grantseekers.

Online: The Foundation Center, www.fdncenter.org Cooperating Collections by state: www.fdncenter.org/collections

Contact: The Foundation Center, 212-620-4230 or 800-424-9836

Helpful examples from your peers. Leading or representative examples of good practice by colleague community foundations.

1. Creighton Community Foundation Endowment Challenge Packet

Details: Here are a variety of materials used by Creighton Community Foundation—a rural community affiliate fund of the Nebraska Community Foundation—to meet a $50,000 challenge that was provided by the second generation of a family that owns a rural telecommunications firm in their region. The materials include a description of the challenge, a case statement, a projection showing how meeting the challenge will grow into significant endowment and grantmaking over time, a script for donor visitations, a pledge card, and a “pyramid” of donations the foundation is targeting and tracking.

Contact: Nebraska Community Foundation, 402-323-7330, www.nebcommfound.org. A Focus www.aspencsg.org/rdp/_documents/tactics/creighton.pdf

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18 Tactic 3 Seek challenge matches for fund gifts

Helpful samples and templates. Generic templates or additional explanations that may help you.

1. How to Design a Simple Brochure www.aspencsg.org/rdp/_documents/tactics/simple_brochure.pdf

2. How to Write a News Release www.aspencsg.org/rdp/_documents/tactics/news_release.pdf Understanding and Leveraging Endowment Leveraging and Understanding A Focus

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Seek challenge matches for fund gifts Tactic 3 19

About the publication Leading Tactics for Rural Fund Development

Raising endowed assets in a rural setting can be very different from asset development in urban or metropolitan areas. Leading Tactics for Rural Fund

Development was written specifically for rural leaders who want to raise Understanding and Leveraging Endowment endowments in and for their community.

This Tactic is one in a series developed specifi- cally to make the job of the rural fund developer easier. The Leading Tactics were compiled from www.aspencsg.org/rdp on-the-ground experience with rural endowment builders by the Aspen Institute Community Strategies Group with significant assis- tance from the Southern Rural Development Initiative. Most Tactics were then vetted and improved by a dozen rural community www.givingforum.org fund developers at a Knowledge Lab in early 2005. The Lab was sponsored by New Ventures in Philanthropy, a national initia-

tive of the Forum of Regional Associations of www.philanthropyindex.org Grantmakers, which also provided follow-up support to help complete the Tactics.

Please go to any of our websites to find more than a dozen other Tactics in this series in the following four focus categories:

n Focus A: Understanding and Leveraging Endowment In and For Your Community

n Focus B: Working with Individual Donors

n Focus C: Engaging the Entire Community in Building Community Assets

n Focus D: Targeting Community Endowment for Community Outcomes Focus Focus A

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