Maximizing Impact with Challenge Gifts: A Nonprofit's Guide to the Benefits and Challenges of Offering a Challenge Gift

Maximizing Impact with Challenge Gifts: A Nonprofit's Guide to the Benefits and Challenges of Offering a Challenge Gift

Would you like your fundraisers to secure more donations and  expand your network of donors? Promoting a challenge gift is one of the smarter fundraising strategies that helps provide incentive for more donors to contribute to your nonprofit while also securing new lines of revenue.

These fundraising challenges offer a nonprofit the opportunity to secure challenge grants, or gifts contingent on reaching a certain goal (such as raising a certain amount of money for your nonprofit). This can provide your staff, volunteers, and donor network a strong incentive to raise more money and can make your fundraisers more lucrative and exciting.

However, there are certain challenges (pun intended) that come with making sure your challenge gift campaign is a successful one. To help, PayBee has created this article to show you exactly how challenge gifts work and how to make this fundraising challenge work for you.  

Improving Fundraisers Through Donation Challenges 

So, how do challenge gifts work exactly? Basically, a challenge gift is a donation with a contingency. In order for your nonprofit or charity to receive this gift, your supporters need to successfully complete a certain donor challenge. This philanthropic challenge could be made by an individual donor, a corporation, a trust, a government agency, or an employer.

What sort of donation challenges might your nonprofit have to accomplish? Common types of challenge gifts might require a nonprofit to raise a certain amount of money by a set date/time. If the fundraising goals are met, then the donor offers an additional donation to your cause.  

Other challenge gifts have a matching challenge. For instance, you could have an employer who agrees to match the donations made by their employees to a nonprofit (up to a certain point). Still other challenge incentives might simply require your nonprofit to recruit a certain number of donors by a set time in order to receive the gift.   

Whatever type of nonprofit challenge you have, you'll need to follow certain key steps to set up your challenge:

  • Establish a set amount of cash donations (or donors) your nonprofit must raise in order to earn the gift
  • Establish the time span your organization will have in which to meet the challenge
  • Outline what is considered a donation in your challenge. For instance, will you only count donations made directly to your fundraising pages? Or will donations made to your raffles and auctions count too?  

Crafting a Successful Challenge Grant Campaign

In order to secure a challenge grant for your nonprofit, you'll need to entice both challenge donors and your current pool of donors. Keep the following in mind:

Secure Donors Interested in a Donation Challenge

Why might a donor be interested in offering a challenge to help raise money and resources for your nonprofit? One big incentive is the goodwill and positive publicity a good donation challenge will provide businesses and philanthropists. Fundraisers always provide a chance to promote sponsors and supporters during their events, and a good donation challenge will attract a lot of attention. Communicate these benefits to potential donors when you approach them to see if they'd like to participate.

Start looking for donors within your organization's own network. Perhaps a sponsor would be interested in issuing a challenge at your next fundraiser -- or maybe one of your current financial supporters would like to offer a large cash gift if you can meet their challenge. Whoever you decide to approach, craft a clear proposal of what you're asking for in a challenge so everyone's on the same page.  

Start a Smart Marketing Campaign for Your Challenge Gift

To get everyone excited about your upcoming challenge (and to attract more attention to your challenge donor), be sure to start a marketing campaign as soon as possible to inform people about this new fundraiser challenge. 

Use the usual marketing tactics -- promote the challenge gift on social media channels that your guests frequent. Mention it in your email newsletter and provide details on your fundraising goals and how people can contribute. If you really want to go all out (and if your marketing budget allows for it), promote the challenge in radio spots and TV ads.

Provide Donors with Giving Incentive

Your marketing campaign will also need to encourage donors to give generously to your campaign. Fortunately, donation gifts that come with a challenge encourage donor engagement and stimulate charitable incentives.

Donors like knowing that their giving efforts are having a greater impact on your nonprofit and their community. By letting donors know that giving to your fundraiser helps you reach your challenge goal and secure a large donation for your cause, your supporters will be more willing to give. Even donors who wouldn't normally give to a fundraising campaign might decide to offer cash gifts since they know their contributions (even small) will be matched or help you reach a larger goal. 

Communicate all this to your donors. Let them know how much of an impact their giving efforts are making. Including a donation thermometer on your fundraising pages that shows how much money you've raised and how much you still need to make your goal is an excellent strategy that will keep your donors energized and willing to give. 

Increasing the Likelihood of Receiving Gifts from Your Challenge

One of the biggest challenges of a challenge gift campaign is that you might not meet the requirements of the charitable challenges. In this case, your donor is under no obligation to provide your nonprofit with a cash gift and you won't make the revenue you hoped. This can be rather disheartening, not just to your staff but also your volunteers and donors.

To keep this from happening, keep the following strategies in mind:

Maintain Momentum and Donor Interest

While donors might be extremely hyped to participate in your campaign at the beginning, this enthusiasm might dwindle as the challenge goes on, reducing the chance that you'll get your gift. 

To counteract this, keep your challenge in the forefront of your  supporters' minds and encourage them to keep giving. Before your challenge even starts, send out notices to your support network through emails, social media posts, texts, and direct mail. Offer links to your fundraising pages so they can contribute easily to your campaign. 

Be clear on what you want and make participation easy. For instance, if you need to attract 100 new donors to meet the requirements of your challenge, reach out to your current network and ask them to reach out to their friends and family. Offer email templates they can use to explain what the challenge is and how their friends can help.

Emphasize the time crunch! People can stay more hyped when they realize there's a deadline for their participation. If you can get a group of people to contribute, their enthusiasm can spread to others to encourage more donations.

Finally, after the challenge is over, be sure to send thank you messages to everyone who contributed. This should be done even if you didn't succeed in meeting the requirements of your challenge. Thank your participants for their support and communicate how the money they raised will still make a charitable impact on your community.

Conversely, if you did reach your challenge goal, be sure to communicate that to your support network! Throw a celebration party to recognize their good work and inform them of upcoming gift challenges. This will provide additional donor incentives. 

Ensure Transparency and Accountability

When approaching donors who will provide the challenge gifts, be very transparent in your intentions. Take the time to construct a well-though out proposal that introduces your nonprofit and outlines your goals. Be clear on how much money you want to raise and how much the donor is expected to give if your nonprofit meets the challenge. Offer all the challenge details as well so everyone -- your staff members, volunteers, and the gift donor -- knows what is expected of them. Above all, emphasize the benefits to the donor, your nonprofit, and the overall community in your proposal. By being upfront and clear, you'll have a better chance to securing a donor and receiving their support.

Case Studies of Effective Challenge Campaigns

In 2020, nonprofit First Descents and Dunkin' Joy in Childhood Foundation teamed up with the VF Foundation to raise money for its HERO RECHARGE program that gave healthcare workers a chance to decompress in outdoor programs during the COVID-19 pandemic. Their landing pages immediately told prospective supporters that the VF Foundation would provide matching dollar for dollar gifts up to $50,000 for the initiative. The Campaign Activity section of the page showed the matches for each donation made in real time.

This provided visitors with incentive to donate to this fundraiser since they instantly saw that what they gave would be doubled. Moreover, the fundraising page was set up in a way where they could see the immediate impact of their financial contributions.

Similarly, marketing emails that promoted nonprofit To Write Love on Her Arms (TWLOHA)'s partnership with Newport Academy highlighted not only the dollar-for-dollar matching campaign to raise money for helping people struggling with depression, addiction, and self-injury, but also offered quotes from people who benefited from TWLOHA's efforts. This, along with a "Double Your Donation Now" button, provided both incentive and ease for email recipients who could immediately contribute to the campaign.

Emphasize the enhanced impact donations made through challenge gift campaigns can make. Offer quick links and buttons to your donation pages. All this will direct more revenue toward your nonprofit.

The Future of Matching Challenge Gifts in Philanthropy

While challenge gifts like matching donations have been around for a long time, not all nonprofits have used them to their maximum advantage. This is because many contributors don't know that their employers offer gift matching programs and don't take advantage of them when donating.

This is changing thanks to fundraising software. The right software can offer your donors access to a company database right on your website. Using this, visitors can just enter their employer's name and see if their donation is eligible for a matching gift. Some databases even show volunteer grant opportunities from companies that offer matching gifts based on how many hours their employees volunteer at a nonprofit. 

All this shows that the role of challenge gifts can rise in modern fundraising. By simply choosing a good fundraising software program, you can expand the revenue opportunities for your nonprofit and literally double your donations.


What is a challenge gift and how does it work?

A challenge gift is a donation given to a nonprofit provided the nonprofit fulfill a given challenge. This challenge might be raising a certain amount of money or getting a certain number of new volunteers to contribute to an organization. Participants must fulfill the challenge within a designated amount of time to receive the gift.

How can nonprofits effectively market a challenge gift campaign?

Your organization can promote a challenge campaign by advertising it on social media, email newsletters, print media, radio, and TV so the maximum number of supporters will hear about it and participate in the challenge. Emphasize the time limit on the challenge, show your progress, and communicate the charitable impact the gift would have on a community. 

What are the typical requirements for a challenge gift?

Charities need to establish the parameters of the challenge. This includes how much money needs to be raised (or how many donors need to contribute) in order for the gift to be given to a charity. This also means establishing how much time participants have to fulfill the challenge. Finally, a charity needs to establish what constitutes an acceptable donation for the challenge.

What are the benefits and challenges of challenge gifts?

Supporters who participate in a challenge are more likely to contribute since they know their monetary gifts will have a greater impact if the challenge is met. Charities can raise more money with challenge gifts and expand their support base. However, if the requirements of the philanthropic challenge are not met, a donor is not required to offer a gift. 

Raising More Money Through Fun Challenges and Matching Gift Programs

Challenge gifts are a useful fundraising amplification strategy. Not only does the prospect of earning a large donation improve revenue building opportunities for a nonprofit, more members of your support network will want to make their own contributions to your cause since they know they're helping you reach a worthy goal.

Because of this nonprofits need to embrace the challenge of hosting such a campaign. Find businesses and individual donors willing and able to offer large cash gifts to your organization in exchange for promotional opportunities. Market the challenge to a wide network of supporters in order to get them to participate. By using this donation challenge as a way to attract attention, you will not only raise more money for your programs, you'll also increase awareness of the causes your group supports.

To do all of this, you'll need an effective fundraising platform to build a campaign, contact supporters, and promote your challenge. PayBee offers user-friendly software specifically designed to create and market effective fundraising campaigns. Sign up for a free demo of our platform and see how we can help you connect with a vast online audience who can donate easily and frequently via customized fundraising pages and links. See how we can help you build a donor database that helps you identify generous supporters. And see how our software allows you to market virtually any fundraising campaign across multiple social media platforms with just a few clicks. Our team of experts is ready to answer any of your questions, so contact us today!  

META DESCRIPTION: Challenge gift campaigns provide you with a way to double your supporters' donations to your nonprofit and expand your support base. Here's how to take advantage of this fundraising strategy.

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Charity Fundraising
Michael Jung


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