Matchfunding: a model of financing that leverages resources and expands impact
#tag: crowdfunding, donation, matchfunding,
In a world that increasingly values collaboration and collective building as a value, models of financing that follow this logic are gaining more space and starting to produce significant effects for society.
Due to the strength of the digital environment, which is now so much a part of our lives, it has become quite common to receive invitations to participate in online fundraising campaigns. These are the famous “crowdfunding” campaigns. In them, individuals and legal entities present their projects and request financial support to make them viable.
Potential donors can support with different ranges of values and receive, at the end of the process, various types of rewards (which can be the final product, in the case of an independent production, or even a report on accountability, with the results obtained from the resources applied). This is, therefore, a model that involves multiple donors, united by common objectives and values.
Matchfunding is a type of crowdfunding. The expression comes from the combination of the English words ‘match’ = combination and ‘funding’ = financing. It is a crowdfunding model, but it is known as turbocharged, because it is capable of leveraging both resource mobilization and the impact capacity of the projects covered, due to its strategy of multiplying the donations collected.
In this text, we will explain how the matchfunding strategy works and what the advantages are of choosing it, in addition to citing examples that prove the success of this fundraising model, based on the initial contextualization of the culture of donation in the country.
The culture of donation in Brazil and the advantages of Matchfunding
The culture of donation in Brazil is constantly maturing, and gained strength, mainly, in the post-pandemic period, when it became evident the need (and the urgency) to unite efforts for the common good.
According to data from the Brazil Giving Research, coordinated by IDIS and CAF, and conducted by Ipsos, in 2020, 63% of Brazilians made some kind of donation. In 2022, that number jumped to 84%, with a large part of people donating to projects related to the theme of childhood. The total of donations made by individuals reached, last year, a total of 12.8 billion reais.
If among individuals in civil society, social responsibility is growing, among companies, it is already a premise. A company that does not have a culture of donation as a pillar of its business, in the worst case, is already poorly placed in the consumer evaluation ranking. According to data collected by the Union + Webster Agency (2019), when making a purchase, 87% of people choose companies/brands that assume a model of socially responsible management.
However, when drawing up an action plan aligned with ESG practices and their philanthropy policy, organizations need to evaluate a variety of factors, including:
- The alignment of their institutional strategies with the causes supported;
- The selection of actions and/or projects that are relevant;
- The definition of how they will track and measure the positive impact they want to achieve.
In addition, they must also assess the potential risks to brand reputation that may arise as a result of the partnerships established. To avoid image wear and tear, it is essential that the partners chosen by the organizations are aligned in values and principles.
Depending on the nature of the objectives set for the initiatives, the matchfunding model can be an interesting option, by bringing together different organizations around common goals and, thus, not only expanding the impact capacity, but also reducing the possible risks related to lack of resources, because, by involving multiple supporters, both the investment of financial resources and time and workforce will always be complementary, maximizing the chances of achieving the expected results.
It is also worth noting that, according to studies by the Goteo Foundation, projects that use the matchfunding strategy are able to attract, on average, 180% more resources from donors than projects without the participation of an institutional investor. Therefore, it is possible to associate this format with the greater engagement of people when choosing to donate.
There are examples that prove the benefits that matchfunding strategies bring to all involved. Let’s see some below.
Types of matchfunding and successful cases
There are different ways to structure a matchfunding strategy. The main guiding logic is that the institution that idealizes the initiative, turbocharges the value invested by supporters/partners. Generally, for every 1 real donated by a partner, the company leading the initiative puts another 1 real, in a format in which, at the end, each party finances 50% of the total cost of the project. However, there may be other models, with the company leading the initiative guaranteeing the largest percentage of the total cost and the partners/supporters.
The Brazilian Development Bank (BNDES) has already embraced this financing model, boosting fundraising for projects through the combination of public and private resources. In 2022, BNDES launched the Together for Health Program, aimed at strengthening the Brazilian Unified Health System (SUS) services in the North and Northeast regions of Brazil, supporting projects primarily focused on primary care. In the established matchfunding logic, the bank committed to donate 1 real for every other real donated by supporters, leveraging the investment allocated to the healthcare projects. The program’s goal is to raise a total of R$200 million over four years.
The initiative is already in operation, with three projects currently underway. All of them receive doubled resources, and donors benefit from advantages ranging from broader geographical reach and longer project durations to the opportunity to exchange knowledge, pool expertise, share risks, and, of course, expand the impact capacity of the supported projects, generating more significant and lasting results in the served territories.
Another example is the initiative led by the Raia Drogasil Group (RD). In partnership with Editora MOL, the company sells the “Sorriso” collection (consisting of magazines, books, calendars, gift bags, and cards) in its retail stores (pharmacies), and all proceeds from the product sales go to healthcare NGOs.
On the ‘Giving Tuesday’ – which at RD extends throughout the month – the company commits to matching the donations of customers, following a matchfunding logic, meaning the Group invests the same amount donated by consumers, doubling the resources allocated to the supported institutions. According to Maria Izabel Toro, the company’s Social Investment Manager, sales of social products significantly increase during the “giving month” because people know that the impact of the action will be substantial and therefore feel more engaged.
In addition to the mentioned healthcare examples, successful matchfunding initiatives exist in other fields such as culture, social entrepreneurship, gender equality, and more. This illustrates how this form of crowdfunding is potent and can attract more resources to expand impact in various causes.
Although this format is still relatively recent in Brazil, the emergence of new online crowdfunding platforms and the strengthening of the culture of giving in the country show that there is great potential for expanding this strategic model that brings multiple benefits to all involved parties.
To learn more
Have you ever participated, whether as an individual or a legal entity, in any crowdfunding strategy? Do you know of other successful matchfunding examples you’d like to share? If so, please leave your comment. We’d love to hear more about your experiences.
And if you’re interested in deepening your knowledge of matchfunding, access the links below: