The Maryland Guide to Creating Matching Gift Programs

Transcription

1 Informing Grantmakers, Improving our Community The Maryland Guide to Creating Matching Gift Programs 2 East Read Street, 2nd Floor, Baltimore, MD (410)

2 The Maryland Guide to Creating Matching Gift Programs The matching gift concept has generated a growing stream of dollars to colleges, hospitals, museums, and other nonprofit organizations. Matching gift programs provide more than money; they motivate individuals to give or give more generously because they know their gifts will be doubled or tripled by their company s charitable contributions. We see first hand the great impact that philanthropy can have on a community and know what a difference individuals and corporations can make through their generosity. Matching gifts are a vital source of funds for educational institutions and nonprofit charitable organizations. They are also an increasingly important way for companies to allow their employees to direct a portion of the monies earmarked for charitable contributions. We produced The Maryland Guide to Creating Matching Gift Programs to provide a roadmap for companies interested in starting a program. We also hope this will help companies that already have a matching gifts program strengthen their programs. The Guide answers common questions about matching gifts programs and provides sample forms and other resources. We are indebted to the Council of Michigan Foundations for allowing us to adapt its excellent booklet, A Guide for a Successful Matching Gift Program. We are also grateful to the 17 Maryland corporations that provided detailed information about their matching gift programs in response to an ABAG survey conducted in The recommendations offered in this guide are a general blueprint for consideration. We recognize that implementation and success of any matching gift program will vary depending upon the structure, goals, and needs of an individual corporation. The Association of Baltimore Area Grantmakers (ABAG) is the Greater Baltimore region s premier resource on philanthropy, dedicated to informing grantmakers and improving our community. Our members include representatives of more than 130 private foundations and corporations with strategic, ongoing grantmaking programs. Page 1

3 Quick Overview Simply stated, matching gift programs encourage employees to give individually, motivated by the employer s offer to match each donation at a specified level. Employees find such programs appealing because they leverage individual gifts of time and money to organizations and causes important to them. Matching Gift programs vary from company to company, yet there are some commonalities. The majority of matching gift programs: Match annual gifts of full-time employees with a minimum of one year of service; a growing number of programs include corporate directors; Match employee donations on a 1:1 basis; Provide a minimum match of $25 with a maximum of $1,000 in donations per employee per year; Match employee gifts of cash or stock; Fund educational institutions, although the number of programs matching gifts to all nonprofit organizations in a company s service area is growing; Operate the program with a simple one-page matching gift program form with both employee and recipient verification sections; Provide the form to employees on a continual basis through their payroll system, newsletter, or other communication tool; and Have a designated contact person for both employees and recipient organizations. This Guide will walk you through the steps needed to create an effective matching gift program, providing detailed information about each of the aspects above. Page 2

4 The Case for Matching Employee Gifts Why match gifts? Companies that have created matching gift programs explain that such programs help the company: Foster better public relations to improve their corporate images. Corporations find that having the corporation or corporate foundation name on the Matching Gift Donor Form spreads word of its role as a corporate citizen to hundreds or potentially thousands of nonprofit organizations and their employees, board members, volunteers, and clients. Engage and connect employees. A matching gift program helps make the company s community involvement goals apparent to employees, as well as to prospective employees. Matching gift programs, like other community involvement initiatives such as employee volunteer programs, may help attract and retain dedicated employees. Complete the overall giving program by expanding the number of organizations eligible to receive grants. Matching gifts provide corporations with another means by which to respond to the many funding requests they receive from the community. Initiate a virtuous cycle that provides donations to organizations that help educate their employees. Many programs focus solely on supporting educational institutions and matching gifts can help to advance connections between the workplace and these institutions. Increase community impact over time by promoting the employee donations leveraged by the matching gift opportunity. Once employees begin participating in the matching gift program, they tend to make ongoing annual donations. Be a better corporate citizen. According to the Council for Financial Aid to Education (CFAE) report Matching Gifts Patterns and Practices in Corporate Matching Gift Programs, matching gift programs communicate to the general public the picture of an enterprise where management and employees are working together for the common good. Give shape to the corporate giving program. Funding causes important to employees can help give a focus to charitable giving. Page 3

5 T. Rowe Price has long been committed to improving the quality of life in our communities. In an effort to strongly encourage and support associates' community involvement on a personal level, T. Rowe Price, through our corporate Foundation, established a matching gift program. Allowing associates to direct a portion of the Foundation s charitable donations through our matching gift program is an important way for us to support their charitable interests. In addition to matching our associates' financial donations to qualifying charities, we also recognize the value of their volunteerism through our Dollars-for-Doers program, which awards cash grants to charities where associates volunteer their time. - George A. Roche, Chairman and President, T. Rowe Price While there are known matching gift programs in 28 industry classifications, the greatest number are in the manufacturing sector, according to the 2005 Blackbaud Matching Gift Survey Data Summary. Insurance, financial services, and utilities are the other three large classes of industries supporting such programs. Matching gifts are very appealing to nonprofit organizations that receive them. In addition to receiving increased donations, matching gift programs inform corporations about nonprofits with which they may not be familiar. When a nonprofit organization receives an individual donation that is matched by the donor's employer, this does more than merely double the donation. It also provides the nonprofit exposure to the company that provided the matching gift, and lets that company know that at least one of its employees finds the nonprofit worthy of donation. This kind of exposure, over the long term, can lead in many interesting directions. The company may become interested in having employees volunteer at the nonprofit, or share professional expertise or other in-kind resources. Who knows? It may also lead to a direct funding relationship between the company and the nonprofit. - Peter Berns, Executive Director, Maryland Association of Nonprofit Organizations Page 4

6 Designing a Matching Gift Program What kind of organizations do we match? Companies need to make a clear statement of eligible and not eligible nonprofit charitable organizations. For example, groups often cited as ineligible are religious and political. The following four options are examples of the types of organizations matched depending on the kind of company and nature of its work force. Option 1 is to match employee gifts to colleges, universities and secondary institutions. The 2004 survey of 958 companies by the Council for Advancement and Support of Education (CASE) found that 43% of companies surveyed limit their match program to educational institutions. The 2005 Blackbaud survey of 1,078 companies using their matching gift database software found that 56% of respondents match gifts to four-year colleges and universities. For example, Constellation Energy matches dollar-for-dollar active employees' and retirees' donations to accredited institutions of higher education up to a maximum aggregate of $2,000 in any calendar year. Option 2 is to match gifts to targeted nonprofit organizations addressing issues chosen by the company, such as the arts, environment, and social services. Hospitals, museums, social service organizations, and public broadcasting groups are all examples of recipients listed in the Blackbaud survey. Option 3 is to match employees gifts to local United Ways or other federations. 10% of the respondents to the Blackbaud survey report they use this option. Some companies will match all new contributions to the United Way, or if their employees increase their United Way giving, will match the amount of the increase. Option 4 Option 4 is to match gifts to all nonprofit organizations with 501c3 status in the geographic area the company serves. Black & Decker uses this option, matching gifts to public charities qualifying under Sections 170 or 501(c)(3) of the U.S. Internal Revenue Code. These include trusts, combined giving organizations, funds, or foundations whose programs operate primarily within the U.S. and Puerto Rico, and U.S. charitable corporations whose programs operate anywhere in the world. While the CASE survey reports that only 23% of the companies surveyed used this option, its use is growing. Page 5

7 Which employees are eligible? The majority of corporations allow any full-time employee with a minimum of one year of service to participate in a matching gift program. Most of the companies surveyed by ABAG allowed employees to participate as soon as they became employed. Determining the eligibility of employees rests with the company because most nonprofit organizations do not have the capacity to verify employment status. The CASE survey reports that 49% of respondents allow corporate directors to participate in the matching gift program. The majority of the respondents to the ABAG survey allow this. And 34% of CASE survey respondents report that retirees take advantage of the program. Because retirees are a growing class, the future financial implications for the corporation must be considered when including retirees. What should the level of match be? An employee could use the whole match for one gift to a nonprofit, so it is important to have both a minimum and a maximum level for individual matches and for each employee. The common minimum for a matching payment is $25; nearly 50% of respondents to the Blackbaud survey confirm this. Minimum gifts in the ABAG survey ranged from $15 to $100. The maximum match payment per gift varies greatly depending on the status of the employee. Many companies set a limit of $1000 as the maximum budgeted per employee per year. The ABAG survey companies had limits from $250 to $23,750 or 10% of base pay. In addition, some companies set an annual limit on gifts to a single organization; some have an annual gift limit (i.e., five gifts) per participant, and some limit the total gifts matched per year. What should the ratio of match be? It is recommended that every employee be treated equitably by having one matching rate. Most companies match on a 1:1 ratio, though a few companies match certain gifts at a 2:1 ratio. Several companies in the ABAG survey indicated that their matching gifts policies vary per participant (limits are set according to employee level). Page 6

8 How often should the match be paid out? Because the volume of matching checks can be large, many programs pay matches continuously if they have the staffing resources and software. While this is the optimum practice, it is not unusual to pay matching gifts semi-annually or even annually. Nonprofit recipients and employees indicate that knowing the payment is scheduled is more important than the timing of the payment. What type of gifts should be matched? Studies confirm that matching employees gifts of cash or checks are the norm, and there are three major categories in the response to this question by participants in the Blackbaud Survey: Gifts made by check or cash are matched by 88 % of programs. Gifts made by credit card are matched by 68 % of programs. Gifts of stock/securities are matched by 54 % of programs. IRS officials say that corporate foundations and giving programs should be careful not to match a portion of an employee s donation that may benefit that person directly. An example of this would be a donation to attend a benefit event where a certain percentage of the donation covers the cost of a meal. In response, many companies state clearly on their matching gift forms that no match will be provided for donations that provide a material benefit such as a dinner, golf outing, tickets or auctions to the employee, their relatives, or designees. Page 7

9 In the ABAG survey, companies listed the types of gifts that they do NOT match. Type of gift NOT matched Percentage of companies Pledges not yet paid in full 100 Gifts of real or personal property 100 Bequests 94 Donations to political organizations 88 Spousal Gifts 82 Donations to religious organizations 76 Donations to hospitals 41 Donations to primary or secondary education institutions 24 Donations to higher education institutions 6 Other: Gifts to individuals, gifts to fraternal and social organizations and gifts to religious organizations to be used for religious purposes 41 Dollars for Doers Another Way to Match Many employees donate their time and talent instead of money, and corporations want to recognize and reward this, as well. The Rouse Company, which was merged into General Growth Properties in November 2004, created a dollars for doers program, through which the company contributed up to $1000 per employee, each calendar year, to one or more organizations where the employee volunteered. Margaret Mauro, Vice President of The Rouse Company Foundation, noted that the company believed that the work of volunteers was a powerful component in the effort to deal with the needs of the community. We knew that many company people volunteered time, talent and energy to a variety of groups. Over the years their efforts had a tremendous impact on the lives of many people. The financial contributions made to nonprofits on behalf of Rouse employees who volunteered at those organizations served both as recognition of employee volunteer efforts as well as incentive for further volunteering. This program relies on a simple grant application form that is filled out by the employee. It asks for contact information, their role at the organization, length of service and amount of donation requested. The nonprofit organization is asked to verify the information. Once the form is returned, the contribution is processed. Page 8

10 What should the process be in paying the match? Creating guidelines for employees that cover everything from eligible organizations and dollar amount of donations to steps and deadlines for submitting match requests helps to provide the structure and organizational processes for a smooth program. Appoint a designated contact person. This person can answer employee and recipient organizations questions about the program, and can clarify concerns with a Matching Gift Program Form. Examples of program forms are included in this guide. Matching gifts can be relatively small. In order to reduce the administrative costs of handling the information necessary to process the gifts, procedures should be kept to a prudent minimum. Each form has a section for the employee to complete and then send along with their gift to the eligible nonprofit organization. The listing of eligibility criteria on the form is a helpful reminder to the employee using the form. Employee Role An employee should obtain a matching gift form from the employer, usually from the human resources department. After completing the form, employee sends the matching gift form to the nonprofit (usually with their gift). For example: The Verizon Matching Incentive Program has an online application which allows employees to click on an organization, if it is already on the employee s personal giving list, or search for an organization from Verizon Foundation's database. The employee fills in the amount of the gift, and the system then prepares a coupon to print and send to the organization, along with the employee s contribution. Recipient Role The nonprofit organization should complete its section of the form and return it to the company for verification and payment. The form should require that the authorized representative of the recipient organization sign to certify that they are in compliance with the company s program criteria. Company Role The company verifies the eligibility of both the employee and the nonprofit recipient and sends the check to the nonprofit. Page 9

11 Receipts For each gift in excess of $250, the IRS requires that a corporation receive a receipt from the nonprofit organization that receives the matching gift by the date on which it files its tax returns, or the actual due date for the corporation s income tax returns, whichever is earlier. This same legal requirement regarding receipts does not apply to foundations (corporate or independent); however, many foundations still require a receipt from a recipient institution for internal financial and accounting purposes. Additionally, the receipt should state that no goods or services were provided to the foundation or corporation in exchange for the donation. Technology There are a number of software products available to help with the management of matching gifts. Contact information for several products is included in the Appendices. Outside Assistance According to the CASE survey, 65% of programs are administered in-house. Some companies do turn to outside help for managing their matching gifts programs. Contact information for several vendors is included in the Appendices. How many employees should we expect to participate? The level of participation is in many ways directly affected by the amount of visibility and promotion the program is given by the company. It is not uncommon for participation rates to range between 30 and 50 percent of eligible employees. However, there are examples where that range has increased when the company, with employee input, decides to challenge employees to respond to an issue or community emergency. According to CFAE, management should make sure that matching gift programs are perceived by employees not as a permanent benefit or entitlement, but rather as a flexible mechanism able to be altered, increased or decreased, to suit the corporate and community interest and, to be sure, available funds. Page 10

12 Communicating the Program Program administrators identify the single most important factor in the success of their programs as COMMUNICATION. Once you implement the program, how do you inform your employees and eligible recipients? Use internal communication tools Administrators recommend using newsletters, brochures, intranets, and meetings to remind employees about the matching gift program and to update them on program changes and successes. Whatever the communication tool, the matching gift form needs to be highly visible and accessible to employees. Encourage and inform Encourage employees to participate in your matching gift program and provide them with the information needed to make decisions about their charitable giving. Many employees want and need to be educated about the benefits, rules and results of donating their money to worthwhile causes. Reasons for giving should be a focal point of any informational dialogue with employees when outlining charitable programs. Those reasons include: Giving back to a supportive community; A desire to perpetuate a certain viewpoint or philosophy; A memorial to a friend or loved one; A wish to leave a lasting imprint on society by making a difference; A feeling of value and satisfaction through helping people; and Tax benefits. Most companies do not publicize the matching gift program to eligible nonprofits but seem to rely on their employees to get the word out. However, many nonprofits include a list of corporate matching programs in their annual solicitation letters as a reminder to any of those company s employees that may be on their mailing lists. Many companies do not issue press releases on matching gifts, and instead allow the recipient organization to handle any media contacts. They do, however, have a designated corporate spokesperson available for interviews. Some companies are concerned that increased media coverage would result in escalating matching gift requests that would deplete existing budgeted funds. In addition, they may be concerned that too many charitable organizations would inundate them with requests for assistance and that there would be a perceived negative reaction if those requests were denied. Page 11

13 Appendices Sample Matching Gift Forms Black & Decker Constellation Energy Firaxis A1, A2 B1, B2 C T. Rowe Price D Software Resources and Vendors E F Page 12

14 A1

15 A2

16 B1

17 B2

18 C

19 D

20 Software Contact Information Matchfinder Plus Blackbaud, Inc Daniel Island Drive Charleston, SC / Fax: 843/ Corporate Pearl Bromelkamp Company 106 East 24th Street Minneapolis, MN / Fax: 612/ CyberGrants CyberGrants, Inc. Two Dundee Park Andover, MA / Fax: 978/ Grant Administrator Dyna-Quest Technologies, Inc. 365 Boston Post Road, 144 Sudbury, MA / Fax: 978/ GIFTS MicroEdge, Inc. 619 West 54th Street, 10th Floor New York, NY / , ext FIMS NPO Solutions 89 North State St. Concord, NH / Fax: 603/ E

21 Resources and Vendors The Council for Advancement and Support of Education (CASE) Matching Gifts Clearinghouse serves matching gift companies, educational institutions, cultural and charitable organizations, and: Keeps up-to-date profiles for more than 8,600 different matching gift companies; Compiles and maintains a comprehensive matching gift program database, available as an annual printed directory, Matching Gift Details, and via their website; Provides statistical data on matching gift programs and contributions; Encourages companies to establish and expand matching gift programs; Offers products and services online; and Organizes and annual symposium on matching gifts. The CASE Matching Gifts Clearinghouse 1307 New York Avenue, NW Suite 1000 Washington, DC / Others HEP Development Services 105 Loudon Street, SW Suite One Leesburg, VA / Matching Grants Administration JK Group, Inc. PO Box 7174 Princeton, NJ / , ext F