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Maximizing the Impact of a Challenge Grant



My First Foray into the World of Challenge Grants

My first experience with a challenge grant was in the early days of my development career. The campaign underway was the largest campaign in Pittsburgh's history–$17 million for Children's Hospital of Pittsburgh to build a new patient bed tower. We were so proud that the hospital had secured a chance at this challenge grant from the Kresge Foundation in Troy, Michigan.


At the time, I couldn't anticipate the impact this would make. I soon learned that the Kresge Foundation meant business and that meant I had to quickly take the steps to maximize this challenge grant opportunity.


Along with a potential grant of $750,000, the Foundation provided a list of milestones that the hospital had to meet on a specific timetable to ensure that we would secure their funding. Prior to finalizing even the opportunity for the grant, the campaign chair and I scheduled a trip to Troy to meet the program officer and establish a relationship. We provided a report of where the campaign stood, how the construction was progressing, statistics about Children's Hospital's clinical and research activities, and many other details. When we received an approval letter to begin to respond to the challenge, the clock actively began to tick.


Across a closely prescribed timetable with multiple intervals, we were required to illustrate that we met certain percentages and levels of campaign participation for the medical staff, board members, employees, volunteer organizations, foundations, corporations and individual donors. Reporting requirements included activity on the construction project and bond progress, as well as dates anticipated for many aspects of the project on the way to construction completion. Not only were there written reports required, but phone calls were scheduled at unanticipated intervals so that the hospital could provide further details.


All of this was spelled out in their directions and if we missed any of the objectives, we risked losing the grant. Fortunately, the grant was secured, as the result of work from many people. At the time, the $750,000 from the Kresge Foundation–a foundation from outside the city–was newsworthy in Pittsburgh and resulted in further media coverage of the construction project, helping to move the campaign forward.


The Kresge Foundation grant had a remarkable approach. It ensured that the Foundation indeed could help to inspire timetables for the campaign and construction completion. It provided excitement about the campaign itself. It inspired national coverage about the hospital and local interest in the impact of the project and a means to an end of the campaign and construction. It had an amazing impact and, of course, provided a significant grant for the campaign.


The Kresge Foundation grant:

  1. Put a spotlight on the construction project and provided a national endorsement that inspired local donors.

  2. Helped donors feel that their funds went much further.

  3. Highlighted the donor and the wonderful goodwill for which they had become known.

Lessons Learned: Many Years Later

Because the experience of the Kresge Foundation made such an impact in those early years, I always have valued challenge grants. Used properly, they can benefit the organization in so many ways.


Planned in conjunction with a donor, such grants or gifts can surely increase the board and staff participation in any campaign. Challenge grants provide a natural segue to ensuring that the entire organization can participate–by giving gifts and also by helping to identify who else might participate. It is the very moment in time when a board and staff can rise to the occasion.


When a donor gives such a challenge gift, it offers a genuine story to tell: Why did the donor do this? What impact does the donor hope to make? What is the pressing issue that needs to be solved? Given this, it offers the opportunity to go back to donors who may not have given for a while. It's an opportunity to speak to new donors and tell them about the organization and this special opportunity.


Overall, it expands the capacity of your development program.


A Real-Life Example

A non-profit can gain so much if a challenge grant is well planned; however, I don't want to mince words. Such a grant can be a challenging process for the staff because of the requirements, but it is a huge benefit to the organization–and to the staff–as they look back on it.


About ten years ago I was approached by a local well-known and well-respected CEO who was interested in contributing to the resolution of a particular cancer problem. He and his family wanted to support research and community education.


He had $1,000,000 that he wanted to give and he wanted it to make more of an impact. He asked if we would accept this as a challenge. At the time, Ronald B. Herberman, M.D. was the Director of the Hillman Cancer Center and accepted the challenge. We immediately could see how this could open new vistas in an important research priority, as well as within the development program. After careful consideration (and wanting to be bold and expand our relationship with the donor), Dr. Herberman and I told the donor that we could raise $1,500,000 towards his challenge. Before I knew it, he asked UPMC to match his gift and, if our development team was successful, to match that amount.


Because this gentleman now had a chance to really make an impact, he also agreed to sign letters and call others who might be interested. His own name associated with the challenge opened many doors and because of who he was, we were able to make greater progress than we could have made on our own.


Time passed. We met the challenge and the donor was very pleased with the fundraising. Blood, sweat and tears went into this campaign from the remarkable development office staff. At times it felt that we had bitten off more than we could handle, but we eventually made it through discussions with people in the city and elsewhere. It required a great deal of persistence and determination.


Both new and established donors fueled the research and progress that has been made. In fact, the cancer research program has made a national impact in several ways through the work and attracted other funding in the last decade relative to the challenge grant. Part of the funds raised at the time were segregated into an endowment fund to ensure that support for this area of work is always available. Many people who participated in this campaign continue to be part of the body of donors. In total, $5,000,000 resulted from this initiative.


The Challenge Eventually Had an even Greater Impact

This initiative educated many people involved about the framework for success for challenge grants. Challenge grants and their outcomes became woven into the fabric of the greater organization.


A very well-known local foundation added the challenge grant to their own strategies and, as a result, challenged the medical center with $1,000,000 grants to be matched by a donor or organizational funds, providing sufficient funding for multiple endowed chairs.


This wonderfully inspired strategy generated as many as ten additional endowed chairs to the medical center and I know that the foundation is not done yet. In creating the chairs, the foundation added strength and promise of productivity for the medical staff, inviting and keeping medical leadership in the community, bringing economic benefit and boosting our city's national position. They strengthened the organization and the development efforts at the same time.


In the process, the foundation has forged new frontiers in research for our region.


Now that's the power of this type of philanthropy.

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