Posted on Wednesday, May 15, 2019 Share
Matching grants are a type of conditional grant where a donor promises to make a donation to a nonprofit once the nonprofit raises a certain amount of funds by a set date. The details of a matching grant may vary but the end result is the same, the nonprofit must raise funds before it can receive the match and record the grant in revenue.
Eligibility of Match: The donor may require the nonprofit to raise funds from specific sources or exclude certain sources, such as government entities or private foundations. Or the donor may require the matching funds to come from new donors that have never given to the nonprofit before.
Match Ratio: The most common match is 1:1 where the donor gives $1 for every $1 raised by the nonprofit. Other match ratios may be 1:2 (donor gives $1 for every $2 raised) or 2:1 (donor gives $2 for every $1 raised). There is normally a limit on the amount given by the donor to be matched (ex. Donor will match up to $10,000 raised by the nonprofit).
Timing of Payment: The donor may make payments to the nonprofit as the funds are raised or they may wait until the end of the period. For a $10,000 matching grant, the donor may make a payment of $2,500 after the nonprofit raises $2,500, then another $2,500 after $5,000 is raise and so forth. Or the donor may make a $10,000 payment after the full $10,000 is raised by the nonprofit.
Regardless of the details, matching grants are a great opportunity for nonprofits. Not only do matching grants, provide increased funding for an organization, they provide the opportunity for the nonprofit to engage new donors, increase their donor base and diversify funding sources.
Posted by: Carrie Minnich, CPA
Posted in Mission Minded Nonprofits
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