Employee Gift Matching Programs: Benefits and How-Tos

Employee gift matching is a powerful philanthropic strategy that involves companies pledging to match the charitable contributions their employees make to non-profit organizations.  General Electric created the first known gift matching program in 1954 and now matches more than $35 million in charitable donations each year. Microsoft has donated more than $1 billion since rolling out their matching gift program, and heavy promotion of these programs internally has led to more than 65 percent employee participation.

The exciting thing about gift-matching programs is that companies of any size can participate, not just large companies like General Electric and Microsoft. Even small companies can benefit by creating a gift matching program and can easily tailor their programs to fit company and employee goals.

Benefits

There are many benefits to implementing gift-matching programs, the most obvious being that companies can enjoy positive public relations by demonstrating that they take social responsibility in their communities. Further, employees can increase the impact of their donations to charities they value, and community charities enjoy increased donations. There are tax benefits too! Charitable gifts can be used as charitable tax deductions for the company or its owners.

Other benefits include increased employee satisfaction, as employees have a say in how their company spends its giving budget. These programs can be used as recruitment and retention tools since they tend to be attractive to high quality talent. Gift matching can be considered a compensation benefit to employees, although the matching program requires employees to give to a charity to trigger the matching donation from their company.

Increase employee engagement and productivity

The most important benefit of gift matching programs by far is that they increase employee engagement and productivity. In their intriguing study, “Charitable Contribution Matching and Effort-Elicitation,” Douthit, Martin, and McAllister found that charitable contribution matching (“CCM”) is a powerful tool in increasing employee productivity. Using a series of laboratory experiments, the researchers found that participant productivity was higher, regardless of the type of pay arrangement, when a CCM program was available. They found that CCM is a relatively cost-effective method of improving employee productivity and concluded that a CCM program motivates greater employee productivity than direct corporate giving.

The authors wrote, “the key to CCM’s potential in increasing employee productivity lies in its ability to create, sustain, and support beneficial social norms within an organization.” They continued, “conversely, because direct corporate giving doesn’t require employee input, this form of contribution doesn’t uphold the social norm of helping others in the same way that CCM does.”

Establishing a gift matching program

Since everyone wins with gift matching programs, let’s talk about how to establish one. First, determine the goals and parameters of your gift matching program. Guidelines for your program should be clear and well defined at the outset. Consider the following:

• Which charities or types of charities would qualify for your matching program? Some firms will create a list of acceptable charities they will match toward, or stipulate that any 501(c)(3) will qualify. Creating a list of acceptable charities with employee input would be simplest and likely most compelling to employees.
• What employees would qualify for the program?
• What will your match ratio be?
• What limits on dollar amounts do you want to establish? What will be the yearly maximum donation matches per employee? Consider minimum and maximum amounts for matches. Also consider a yearly company maximum.
• How will employees submit requests for matches? How will the gift be verified?
• What will the submission deadlines be?
• How will company matches be made?

 

Next, choose a program administrator (can be a person or a team) and decide how to track gifts made. Gift matching software and databases such as Double the Donation are available to large companies, but small companies can use much simpler manual methods. For example, if an employee knows the dollar limits and the qualified charities, they can provide receipts for each qualified donation they want matched. The company can use a spreadsheet or other method to keep a tally of the amount of donations each employee has requested a match for so the company and the employee can know when the limit has been reached.

Once your program is defined and record keeping is in place, you can promote the program to your employees and begin processing matching gifts. Be sure to evaluate the program periodically and make adjustments as needed.

Special thanks to Jeremy Douthit, PhD, associate professor in the Dhaliwal-Reidy School of Accountancy at University of Arizona, and principal author of the study cited above, for his invaluable input on the benefits of charitable contribution matching programs and how to implement them. We at R&A hope to begin our own CCM program soon, inspired by a presentation made by Dr. Douthit.

Do you have questions about starting your own CCM program or a success story to share? Let us know!