How to Embrace a Challenge Gift

I think we can all agree that a challenge gift is both a blessing and a curse.  The blessing is that the gift will most likely leverage new money from new donors.  Challenge gifts can also be a much needed jolt for a board of directors that needs to step up their efforts.  The curse is that the process will be an awful lot of work.  When the challenge comes from a foundation, you can expect a lengthy set of guidelines that give a clear understanding of what is expected.  However, when the challenge comes from an individual donor, the details can get a little murky.  I have worked with several donors on pledges ranging from 2k to 20K and many lessons have been learned.

(This is what raising 20K from new funders in one night feels like.)

The first thing I want to emphasize is that a challenge gift is always a good thing.  While it means some work on your end, it demonstrates that the donor is ready to engage on a pretty high level.  She is thinking strategically about your organization, and feeling so good about your work that she wants to inspire others to give as well.  If you are planning to solicit an increased gift from a donor, it can be a great strategy to present the ask as a challenge if you think that added boost is needed to seal the deal.  Regardless of who puts in on the table, when managing  a challenge gift, keep in mind the following:

1.  Create a challenge that is meaningful to the challenger.  A former board member may be motivated by inspiring giving from other former board members.  Someone who is heavily involved in your community may want to leverage their gift to solicit other neighborhood donors.  The possibilities are endless and it allows you to have a meaningful conversation with your donor about why they choose to give and what sort of impact they would like to achieve.

2.  Have a clear understanding about your relationship with the donor.  I have worked on challenges from board members, former board members, heavily involved donors, and distant donors.  Every donor deserves complete honesty about the progress and fulfillment of the challenge, but the degree to which you keep them in the loop as to struggles and progress will differ.  Some donors will be open to talking through the hurdles, others may wonder if you are subtly asking for a way out.

3.  Be very clear about the parameters of the challenge, clarify them once more, and then write them down.  It may feel like you are shooting yourself in the foot by attaching too much fine print to a challenge, but remember: 1. a challenge is supposed to be challenging, and in fact it has to be if you want the staff and board working at full capacity to fulfill it and you genuinely need the new money; and 2. you, not the donor, will suffer from ambiguities.  To ensure that all parties involved are left feeling positive about this experience, make sure you have an explicit understanding of the following:

  • Does the gift need to come from a new donor?
  • If so, are increased gifts eligible?
  • If so, will the entire gift be matched or just the increase?
  • What is the first day and last day for eligible gifts?
  • If the match is tied to an event, does the donor have to be present?
  • Will gifts of any size be matched?
  • If this challenge is geared towards individuals, can they give from their personal account, their business, or their family foundation?

4.  Every time you present the final report to the donor it should follow the plot of a VH1 behind the Music – from humble beginnings we were off to a great start thanks to your help, we faced an uphill battle about 3/4 of the way through, and with a lot of hard work we achieved our goal and are moving forward better than ever.