What is donation matching?

Donation matching is a program where you match the donations your employees make to charities. You can limit the gift matching to a list of certain charities or offer it for any donation. It’s common for employers to match the donation dollar amount exactly, but you can make a larger donation. You might also have a maximum amount you’ll match.

Benefits of offering charity matching

By highlighting your donation matching program, you may motivate employees to donate to a cause or, in cases where it’s financially possible for them, encourage them to donate more than they normally would. It’s a good way to give back to the community while inspiring your employees to do the same. Some specific benefits include:

• Employee satisfaction: If your staff members value making a difference, they’ll appreciate the added donation you make on their behalf. It helps them feel good about making a contribution.
• Nonprofit support: Local organizations get a boost in donations and receive more than they would normally. Your charity matching program makes a big impact on those organizations.
• Positive reputation: Publicizing the donation matching benefit gives a positive impression of your business. It shows that you care about your community.
• Improved culture: Being charitable as a group can improve your corporate culture. It could inspire your team to help in other ways, too.

Drawbacks of offering gift matching

Although donation matching offers several advantages to your company and community, there may be situations where it isn’t an appropriate option. Consider some of the following potential issues when considering whether to offer donation matching.

• Financial strain: There may be times when your organization’s financials aren’t quite up to expectations, which can make donation matching less feasible. In this case, consider limiting the match amount to help you stick to a budget.
• Paperwork: You’ll need an employee to keep track of donations and to oversee the process. Depending on the size of your company and the amount of donations made by employees, this can become a time-consuming task.
• Lack of interest or ability: Not everyone is interested in donating to charities and not everyone can donate money. Consider introducing and discussing the topic with your employees before officially launching a donation matching program. Doing so will allow you to get a clearer picture on the interest level of employees. In turn, you can avoid putting in the time and effort to launch an initiative that may end up being underutilized.

Setting up your donation matching program

Before you start matching donations, make sure you have clear policies and guidelines for the program. Here are things to consider when developing a company policy for gift matching.

1. Decide who’s eligible

Will you match the donations from all employees or only qualifying staff members? You might limit the donation matching to full-time employees and not part-time employees, contractors or freelance workers. Define who can participate when you write your policy.

2. Set your donation amount

Make it clear how much you’ll match. Many organizations donate the same amount as the employee. A $50 donation becomes a $100 donation when you contribute your $50. You can decide to double or triple the donation if you want to make a larger impact on local charities.

3. Define maximums

In addition to the matching ratio, decide if you’ll cap the donations to a certain amount. This can keep you from going over budget if an employee makes a larger donation than you expect. You can also set a minimum amount, so you’re not inundated with a lot of small dollar amounts.

4. Choose nonprofits that qualify

You can allow employees to choose any nonprofit organization or limit it to a specific list. Limiting the donations to 501(c)(3) organizations can be done for tax deduction purposes. Beyond that, you can choose the eligible organizations however you want.

One option is to choose organizations that align with your goals or relate to your business in some way. If you’re an educational supply company, you might match donations to educational nonprofit organizations. Or you might offer matches for all types of organizations by matching at a higher rate for educational organizations.

Keep in mind that you might see lower participation rates if you have a very limited list of qualifying organizations. People want to support causes that are important to them. An employee might have a family member with a chronic illness, so they want to support an organization that researches cures and treatments for the disease.

5. Establish a process for submitting match requests

Decide how you’ll manage the matching process. Using a software program designed for gift matching makes the process much easier. You might require a receipt as proof of the donation, along with a request form the employee has to complete.

Some companies also call the organization to verify the donation was made, but this adds an extra step that can be time-consuming if you have a high participation rate. Make sure employees know what information they need to get the match and how to complete the process.

6.Determine a deadline

Setting a deadline for submitting the donation matching request helps you manage the donations. You might have a yearly deadline that employees have to use to get a match for their donations for the year.

Or you might set the deadline to a certain period after the employee makes the donation. You might require them to submit the request within three months of donating, for example. Make this deadline clear in your policy to ensure everyone completes their paperwork in time.

7. Let employees know about the program

When you’re ready to offer the donation matching program, announce it to your employees, so they know about this new job perk. Include it in your new employee training, so incoming staff members are aware of it. Having a point of contact makes it easier for employees to ask questions and get more information about the donations.

8. Track the program

Tracking metrics for your charity matching program helps you determine how successful it is. The data can also help you make changes to the program. If you have low participation numbers, create a survey for your employees to find out if there’s anything you can do to increase participation. Perhaps the eligible organizations you chose don’t align with the causes your employees want to support.

FAQs about donation matching

Are matching donations tax deductible?

The matching donations that a company gives are generally tax deductible. They need to be made to an eligible 501(c)(3) organization. Consult with your accountant or tax advisor before starting your matching program. They can explain how the donations work for tax deduction purposes and give you customized advice on setting up the program to maximize your benefits.

How do you encourage employees to make donations?

You can encourage your employees to take advantage of your charity matching program by promoting it regularly. Make sure everyone knows you offer the program and understands how it works. You might highlight local charities or share success stories from nonprofit organizations based on donations they’ve received.

What does a 2-1 match mean?

Donation matching is often described as two-to-one or another variation, such as one-to-one or three-to-one. This describes the employer’s contribution compared to the employee’s donation. For a two-to-one match, the company would pay two times the employee’s donation. If the employee donates $100, the company donates $200.