Challenge gifts can revitalize and punctuate a long fundraising campaign. Learn how they work and how to structure one with this quick guide from the pros.
Does your campaign need a boost? Do you feel as though it’s a long slog with no end in sight?
That can happen in capital campaigns. They start out with some big, exciting gifts, but as time goes on momentum can slow. There’s a proven way to relight the fire: a challenge gift.
What’s a Challenge Gift?
A challenge gift is just what it sounds like: A donor offers to make a gift to your organization if you raise a certain amount by a specified time. For example, the challenging donor might offer to give $100,000 if you can raise $100,000 by December 31.
The terms of a challenge might be used strategically to motivate gifts from specific groups of donors. A challenge might be defined to encompass only new gifts or increased gifts. Or, a challenge might be made to motivate gifts from board members.
A challenge gift can motivate, inspire, even amuse both the donor who makes the challenge and those who give in response. It can liven up a campaign that has been going for a while by providing interim deadlines and giving opportunities. It deepens trust in your nonprofit through the social proof of your generous partner’s support.
Challenge gifts aren’t the same as matching gifts. In a matching gift, the donor promises to match other gifts received during a specified time period up to a certain amount. The size of the matching gift is contingent on how much others give. Corporate matching gift programs work similarly. In a challenge gift, the donor won’t make the gift until the terms of the challenge have been met.
How to Structure a Challenge Gift
There’s no set formula for a challenge gift, but here are five basic steps for setting up a successful challenge:
- Set the amount of the challenge gift.
- Determine the amount that must be raised to meet the challenge.
- Define other terms of the challenge, like which types of gifts count towards its goal.
- Establish a deadline for completion of the challenge.
- Promote the challenge and publicize progress toward the goal.
Alexandra O’Connor, Director of Philanthropic Engagement at The Gordon School in Rhode Island, thinks that challenge giving is a great way to get new donors involved. Alexandra knows that setting up a meaningful and fun challenge gives the challenging donor a chance to inspire others to give—and gives those who may never have given before a fresh reason to want to be part of the campaign.
“People want to be a part of something bigger than themselves,” she says. “A challenge gift brings a strong community feel to the conversation. They’re all part of it together. And people feel like their impact is being doubled.”
She cites a campaign The Gordon School ran that challenged alumni to give. Every gift from an alumna would be matched by a donor up to a specific amount, $25,000. The school went one step further by promising to plant a tulip in a new Alumni Garden for every alumna gift received. Of course, they reached their alumni campaign goal.
How about trying a “last-dollar” matching gift? A major donor offers to match gifts dollar-for-dollar right up to the goal. Donors want to be on the winning team, and doing that right up to the finish line can generate a lot of excitement and support.
Why Do Challenge Gifts Work?
Some donors enjoy knowing that their money will catalyze other people’s giving. But the idea usually doesn’t come from the donor.
Usually, the development staff will suggest the challenge strategy to a donor they know might like it. Once a donor is interested, the development staff can work with the donor to shape a challenge that will be most helpful to the campaign. A challenge that works must be sound from a fundraising point of view. It’s got to work for your campaign and be framed in a way that will appeal to other donors and fits into your overarching case for support. Bring an element of fun, and, if possible, recruit your challenging donor to act as a spokesperson, speaking from the heart about why they gave.
Capital campaigns have a way of running on and on, but a challenge gift strategy serves to help punctuate your campaign. Consider one for your next campaign!