UK Matched Funding Initiative

Miles StevensonDirector of DevelopmentThe University of Sheffield, United Kingdom

9th March 2011

19/04/23 © The University of Sheffield / Department of Marketing and Communications

I aim to cover …

• Incentivising donors

• Tax efficient giving

• Gift Aid

• The UK Matched Funding Pilot Scheme 2006-2009

• The UK Matched Funding Scheme 2008-2011

Why do people donate?

© Miles Stevenson – all rights reserved

Why do people donate?

• Because they believe and share your vision• To make a difference• To get a result• A sense of “family” and belonging• Excellence/Pride• A noble cause – transformation• Putting something back• “Immortality”• Tradition and History• A debt of honour

© Miles Stevenson – all rights reserved

Why do people donate?

• Feeling very strongly about the cause

• A memorial to them (a little vanity)

• A memorial to loved ones

• A family tragedy

• No children

• Spite – Guilt

• Tax reasons

• Value for money – multiplier effect

• Because they are prompted to act

© Miles Stevenson – all rights reserved

19/04/23 © The University of Sheffield / Department of Marketing and Communications 6

Tax Reasons

Tax rates in the UK – at 20% and at 40% (salary above £43,000)

If you make a charitable donation – and are a UK tax payer – and sign a declaration - the charity can claim Gift Aid.

19/04/23 © The University of Sheffield / Department of Marketing and Communications 7

Tax Reasons – Gift Aid

Gift Aid increases donations by 25%

If you earn £125, the tax man takes 20% - basic rate tax - and leaves you with £100

If you donate £100 to a charity, the taxman gives the £25 back to the charity as a “thank you”

19/04/23 © The University of Sheffield / Department of Marketing and Communications 8

Tax Reasons – Gift Aid

For a higher rate tax payer the same rule applies but ….

…the difference between the 40% tax and the 20% tax (i.e. 20%) goes back to the donor

This is much more like the US system

Inheritance Tax

Payable on estate of £325,000 or more, for the tax year 2009/2010 and rising in stages to over £350,000 or over in 2010/2011.

It is at 40%

It can be described as a “voluntary tax” – because you can leave it to charity.

In the UK legacies to charities are free of Inheritance Tax

© Miles Stevenson – all rights reserved

19/04/23 © The University of Sheffield / Department of Marketing and Communications

The University of SheffieldFounded in 1905

The University of Sheffield has charitable status Exempt Charity X 1089

Value for money

The project costs £60,000

But we can get a great discount

So we need £25,000

If the donor gives £19,500 we can get £5,500 in Gift Aid

And as he is a higher rate Tax payer it will only cost him £15,000!

© Miles Stevenson – all rights reserved

19/04/23 © The University of Sheffield / Department of Marketing and Communications19/04/23 © The University of Sheffield / Department of Marketing and Communications

A Steinway Grand Piano

19/04/23 © The University of Sheffield / Department of Marketing and Communications19/04/23 © The University of Sheffield / Department of Marketing and Communications

Tony Blair - 2006

Tuition fees brought inExpansion in numbers – aim for 50%Matched Funding Scheme …

19/04/23 © The University of Sheffield / Department of Marketing and Communications 14

Matched Funding Pilot

The first scheme began in March 2006

Its aim was to “test the water” and to help build capacity amongst smaller operations – or to create offices in universities that had never had one

It could be used for staff salaries , for training or for database and donor research

19/04/23 © The University of Sheffield / Department of Marketing and Communications 15

Matched Funding Pilot

The sum involved was modest - £7.5 million

The scheme ran - March 2006 to March 2009

It was administered by Universities UK (UUK)

27 English Higher Education institutions were involved – there was a competition

The grants ranged from £87,000 to £375,000

Sheffield received £100,500 over 3 years

19/04/23 © The University of Sheffield / Department of Marketing and Communications 16

Matched Funding Pilot

As a condition of the grant, the institutions involved had to match the grant with an investment of their own new money.

They also had to commit to funding the whole sum in the future (i.e. this was only 50% pump-priming for an initial three year period).

Sheffield used its funds to expand its telephone campaign. We were raising c. £80,000 p.a. and now we are raising £250,000 + p.a.

19/04/23 © The University of Sheffield / Department of Marketing and Communications 17

Matched Funding Pilot

Notable successes included

Bath $550,000 from an American alumnus

Birkbeck £200,000 from a UK TrustGreenwich $13 million from the Bill and

Melinda Gates FoundationLancaster £755,000 for a Chair in Nuclear

EngineeringLeicester £800,000 from a major donor

for a new LibrarySurrey £250,000 from a faith

organisation

19/04/23 © The University of Sheffield / Department of Marketing and Communications19/04/23 © The University of Sheffield / Department of Marketing and Communications

Expand the scheme

19/04/23 © The University of Sheffield / Department of Marketing and Communications 19

Matched Funding Scheme

The new scheme was offered £200 million in government funds to match sums raised.

It commenced on 1 August 2008 and is to last for a three year period

It was the first scheme of its kind in the UK

All directly funded English institutions could choose to participate – with conditions

19/04/23 © The University of Sheffield / Department of Marketing and Communications 20

Matched Funding Scheme

Participation in the Ross-CASE Survey was a requirement - i.e. an annual completion of a detailed survey setting out fundraising costs and sums raised

There was a concern that a few leading universities would seize all the funds.

So there were to be three tiers with “caps” and different levels of match

There were a variety a rules about what could be included and what was excluded

19/04/23 © The University of Sheffield / Department of Marketing and Communications 21

Matched Funding Scheme

Only actual cash gifts would count

Gifts had to be from individuals or from small/medium size charitable trusts and foundations – which donated up to £60 million p.a.

Corporate giving would count

Overseas giving would count

Interestingly, Gift Aid would count

Legacies, pledges and gifts in kind would not count

19/04/23 © The University of Sheffield / Department of Marketing and Communications 22

Matched Funding Scheme

Tier 1 – a 1:1 match for HE institutions with the least experience of fundraising. With a cap of £200,000i.e. if you raise £200,000 you will receive £200,000

Tier 2 – a 2:1 match for HE institutions trying to achieve a “step-change” in their fundraising activities. With a cap of £1,350,000 – so if you raise £2.7 million you will receive £1.35 million

Tier 3 – a 3:1 match for HE institutions with a lot of experience in fundraising. With a cap of £2.75 million – so if you raise £8.25 million you will receive £2.75 million

Payment would be made in arrears.

19/04/23 © The University of Sheffield / Department of Marketing and Communications

New government

19/04/23 © The University of Sheffield / Department of Marketing and Communications 24

Matched Funding Scheme

Participation in the Ross-CASE Survey was a requirement - i.e. an annual completion of a detailed survey setting out fundraising costs and sums raised.

There was a concern that a few leading universities would seize all the funds.

So there were to be three tiers with “caps” and different levels of match.

There were a variety a rules about what could be included and what was excluded.

19/04/23 © The University of Sheffield / Department of Marketing and Communications19/04/23 © The University of Sheffield / Department of Marketing and Communications

CASE-Ross Survey of UK University Philanthropy

19/04/23 © The University of Sheffield / Department of Marketing and Communications

Thoughts

It has incentivised some donors (e.g. big ones) It doesn’t provide the initial spark to give The universities can decide where the match goes – but

donors do have an interest in this! Each university is using the match very differently Some universities have found it easy to meet their targets

– others are finding it harder … but there is still a year to go

Economics mean that it is unlikely for the scheme to be repeated in the short-term – but a new initiative of a £50 million sum is being proposed for the Arts

19/04/23 © The University of Sheffield / Department of Marketing and Communications

Training

Discussion and Questions