Employer charitable matching programs can maximize the power of every dollar you donate – but these programs often go overlooked.
At Charis Legacy Partners, our charitable legacy planning involves creating a comprehensive financial plan that includes thoughtful strategies for taxes, estate planning, investment management, and cash flow, but we also try not to overlook the obvious. While there are a plethora of potential strategies to help you increase your charitable giving impact, there are also a few simple and efficient opportunities, perhaps none more so than employer charitable matching programs.
Does Your Company Offer an Employer Charitable Matching Program?
Not all companies offer charitable matching programs, but many, especially larger employers, have begun to. Over 18 million individuals in the United States now work for companies with charitable matching programs, and almost two-thirds (65%) of Fortune 500 companies offer these programs, but not everyone who has the opportunity always takes advantage. In fact, it’s estimated that between $4 billion and $7 billion in matching gift funds go unclaimed every year.
Why does so much money that could be supporting charitable organizations go unclaimed each year?
Well, there are some people who may not be interested in making donations and there may be others who simply aren’t in a position to make financial donations right now, but there’s also plenty of funds going unclaimed simply because people aren’t aware that their company has a charitable matching program.
When employees are aware of the program, most are interested, and some are inspired to donate more – according to a study by The Big Give Research Initiative, 85% of participants said they would be more likely to make donations if a match were offered, and one-third of donors said if a match were offered, they would donate more.
What You Need to Know About Your Employer Charitable Matching Program
If your employer does offer a charitable matching program, since every program is unique, it’s helpful to familiarize yourself with the elements of your company’s program to ensure you’re making the most of your charitable giving. Here are a few elements to consider:
The Match Ratio
The match ratio is the amount your company will donate in relation to your donation. A 1:1 ratio is most common, but some companies may go as high as 3:1. Even if your company’s ratio is only 0.5:1 you’re still dramatically increasing your giving potential.
Maximums and Minimums
Almost every charitable matching program includes minimums and maximums for donation matching. While the program’s minimums and maximums shouldn’t be the only factor in deciding how and when to donate, they may play into your decision. For example, if you’re currently just below the minimum threshold, you may decide to increase your donation just enough to meet the requirement, which would then mean every dollar has a bigger impact.
Your employment status with the organization may impact the charitable matching ratio you’re eligible for. For example, part-time, full-time, and retired employees may all be eligible for charitable matching, but at different matching ratios.
Most employers include a vast number of eligible organizations, but some do include limits, for example, some companies may not include organizations with religious goals, even if they are a 501(c)(3). If your company’s charitable matching program doesn’t include a specific organization you want to donate to, that doesn’t mean you can’t participate in the program at all. You could always make your eligible donations through your company (increasing your ROI) and then make any additional donations separately.
Yes, this is an obvious one, but it’s worth including because charitable giving often becomes a priority at the end of the year, but not all charitable matching programs have calendar year deadlines. For example, some programs may have a deadline of Tax Day, which may not be when charitable giving is as front of mind.
Leveraging Charitable Giving ROI
We often talk about return on investment (ROI) in terms of portfolios or specific assets, but at Charis Legacy Partners, our goal is also to help you use leverage to increase the giving impact of each dollar of wealth, improving your giving ROI. Few giving strategies allow you to do this as simply and as efficiently as a charitable matching program. If your company offers a 1:1 match, you’ve just doubled the power of every dollar!
As simple as this option may be, it’s often overlooked, which I can attest to from my own personal experience.
Starting in college, I felt called to devote my life to building wealth for the purpose of funneling as much of it as possible into the charities I felt passionately about, but since I came from a family of limited means and had to take out student loans to pay for college, this dream required strategic financial planning, which I worked hard on. I focused on leveraging tax-free compound growth to increase the charitable giving ROI of my retirement savings dollars, which might increase the ROI to 15% annually, and that’s being generous.
Then the light bulb went on – it occurred to me that by leveraging the charitable matching program of my employer at the time, which matched 50% of all charitable giving by its employees, I would be getting an immediate 50% charitable giving ROI – a no-brainer!
If you genuinely want to maximize your charitable giving impact, see if your employer offers a program like this, and if so, utilize it! If you have questions about how your employer’s charitable matching program may impact other charitable giving strategies, you are welcome to schedule a free consultation with us using the button in the navigation menu.