Challenge gifts are an underused capital campaign tactic that can drive amazing results:
- Influxes of gifts and at higher amounts
- Increased energy and enthusiasm
- Boosts in board engagement
- Deepened relationships with key sponsors and funders
If you’re planning a capital campaign, or perhaps in the midst of the long quiet phase slog, challenge gifts are the perfect way to reenergize your community of stakeholders and donors.
What are challenge gifts? How do they work, and what are some of the different ways that nonprofits use them to supercharge their capital campaigns?
What Are Challenge Gifts?
With a challenge gift, a major donor or corporate sponsor pledges a gift of a specified amount if certain fundraising conditions are met by a deadline. For example, a basic challenge gift might involve a donor giving $250,000 to the campaign if other donors contribute $500,000 or more by an agreed-upon deadline.
But the model is highly flexible and can be adapted to suit different goals and needs. A challenge gift just needs these three components:
- The amount of the pledged challenge gift
- The amount that must be raised to satisfy the challenge
- The date by which the challenge must be completed
You’ll need to offer the idea of a challenge gift to a particularly engaged donor or sponsor that might be looking for a unique (and highly visible) way to give. Once you establish the challenge, promote it to your target audience, explain what an incredible opportunity it represents for your campaign and mission, and you’re off to the races.
6 Ways to Use Fundraising Challenges
There are also all kinds of ways to customize your challenge gifts to support your organization’s unique goals during the campaign. Here are six examples.
1. Use a Challenge as a Targeted Relationship-Building Tool
If you have a major donor who’s emotionally invested in your mission and looking to drive a serious philanthropic return on their investment, proactively suggest they create a challenge gift. This allows them to drastically magnify the impact of a gift they were likely to make anyway.
2. Set up a One-to-One Matching Challenge
For your most generous donors and sponsors, this variation on the challenge model can be another excellent way to drive gifts and boost their impact. Set a shorter timeframe in which the donor pledges to fully match other gifts made to your campaign at a one-to-one (or other) ratio.
3. Tailor Your Challenge to Support Acquisition or Retention Goals
Work with your generous challenger to set more specific guidelines. For instance, specify that only gifts made from new or previous donors will go toward your challenge initiative.
4. Use Challenges to Drive Board Giving and Engagement
Board giving is a common hurdle for nonprofits during capital campaigns. You can use the engagement power of challenges to create a specific goal — either a dollar amount or participation rate — that gives your board an exciting and structured way to give. You might even ask a disengaged board member to make the challenge pledge as a fairly low-effort way to drive a lot of impact for the campaign.
5. Secure Both Short- and Long-Term Support
Capital campaigns often have multiple fundraising goals built into their topline objective, like increased planned giving. Tailor your challenge to hit both targets — for example, a large gift received for the campaign if new bequests reach a certain amount by a particular date.
6. Tweak the Model by Seeking Matches From Many Sources
Matching gifts are common in corporate philanthropy through which employers match gifts made by their employees. These programs are chronically underutilized, with $4 to $7 billion going unclaimed each year. Consider broadly promoting these opportunities to your donors (at all giving levels) over the course of your campaign.
If you know in advance that you want to incorporate challenge gifts into your next capital campaign, plan ahead to layer them into your calendar strategically. You might target major donors, board members and planned giving prospects with different challenges over the course of the entire campaign. With forethought and early planning to secure the challenge pledges, you can significantly boost revenue and engagement.
The preceding blog was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.
