Matching Funds

Several development projects agree on matching funds as a strategy to increase their self-sustainability.

Many development initiatives complement their financing strategies with matching funds, which are agreements with donors in which, each time the initiative manages to prove a certain material, financial or labor contribution to its own project, donors match it with economic resources. For every hour of work a community contributes to care for the forest, for instance, a certain environmental foundation donates $100. Or for every space the community provides for the state’s teacher training program, the government contributes $10,000. 

In some cases, it’s the other way round: the initiative “matches” the contributions of another project to solve a development problem of common interest (this is what some fundraisers do, for instance).  Or, in some cases, an initiative makes an agreement with a company or business so that each time clients buy a specific product, this translates into a contribution to the development project (for each coffee purchased, the store donates half of the value of the coffee to a health clinic in the coffee-growing community, for example). This benefits businesses because it gives them publicity, consumers because it gives them the chance to support a cause with their purchase, and initiatives because it helps them promote their project and gain resources.

Many initiatives, foundations or governments support development projects with matching funds to encourage them to find ways to leverage or create their own resources and become more self-sufficient over time.

Matching funds can support project self-sustainability in several ways. 

1. They are a way to better leverage and encourage the creation of in-house resources, because in order to get this type of support, an initiative needs to prove, in a clear and transparent way, their own or the local community’s engagement in the project (whether with money, space, food, paint, working hours, etc.). All this in itself has a value for the project –a value that is multiplied with matching funds.
2. Encouraging local communities to partake in and contribute to a project also works in favor of the local stewardship and appropriation of an initiative, which increases the beneficiaries’ influence on decision-making. Since project beneficiaries are the ones who know their own situation best, their input helps initiatives build projects that are more relevant to their needs. 
3. As an additional funding resource, matching funds help many initiatives increase and diversify their sources of support, which reduces their dependence on merely one or a few backers (with the limitations that this can bring about: fewer resources, money that is allocated to a very specific purpose, etc.). Moreover, matching funds help initiatives learn how to demonstrate both their concrete results and the contributions they themselves are achieving, which fosters reliability and can encourage new support.

To agree on matching funds with an institution, many initiatives first make resource inventories and collaborator rosters, or organize participatory diagnoses with the communities in order to be clear about what beneficiaries and collaborators contribute to the project (engagement in a particular activity, workspaces for events, materials, etc.). Other initiatives organize fundraising events (marathons, concerts, etc.) and agree on matching funds to increase the value of the contributions they receive. And some others agree with companies that a certain percentage of the profits from the sale of a product (a cup of coffee, a kilo of rice or a pair of tennis shoes, perhaps) will go to the initiative.