Don’t Overmatch: You Need to Look Like You Need the Money

As you no doubt know, many grant programs require matching funds, and we’ve exposed the secrets of matching funds. But in that post we didn’t mention one other key aspect of matching funds: don’t overmatch.

If there’s a 10% match, get a 10% match—and no more. There’s a signaling hazard: If you come up with a 90% match when only 10% is required, you’re demonstrating that you don’t need the money because you already (theoretically) have the money necessary to run the program. This in turn implies the dreaded supplantation problem, which is about as welcome in grant proposals as Sauron is in Gondor.

Beyond that top level reason, there are others. Let’s say you have a $250,000 project cost and in your proposal you say that a huge match will bring the project cost to $450,000. Somehow get funded anyway: now you’ll have to spend $450,000 on the project as part of the contract with the funder. Whatever you say the project cost is, that must be the project cost in the eyes of the Federal government. If you happen to get a project audit, you’re going to have to account for every dollar of $450,000. In the real world, people who happen to have an extra $200,000 sitting around can just add it to the program anyway, without promising to the Federal government that they’ll spend the extra $200,000.

There’s also the fact that funders calculate matches in two different ways: as a percentage of the grant or as a percentage of the total project cost. The first is easy to calculate: 10% of a $1,000,000 grant = $100,000. In the second method, however, its not quite as simple: Assume a $1,000,000 grant and a required match of 10% of the total project cost.

If you propose a $100,000 match in this scenario, you’re actually proposing a 9% match ($100,000/$1,100,000 = 9%). To get to a 10% match, the match must be $110,000 ($1,000,000 grant + $110,000 match = $1,110,000 total project cost and .10% of $1,110,000 =$110,000). Always make sure you know which method is being used by the funder before you start gathering match letters. In scenario two, if you document a $100,000 match, the proposal will likely be rejected as technically deficient and not scored. In Monopoly terms, you do not pass go and do not collect $200.

The only exception to the rule that says you should avoid overmatching happens when a program offers extra points for extra leveraging. YouthBuild is a prime example. In this case, if the required match is 10% but there are bonus points for a 25% match, applicants should find a larger match—but only to the point that gets the extra points.

In general, though we counsel clients not to overmatch. But, as we’ve said before, we’re like lawyers: we offer our clients advice, based on our 20 plus years of business experience, and they’re free to accept or reject it. Our advice is good and if we say that a thing should without doubt be done one way and not another its prudent to follow of advice (there are many other occasions in which there is no right answer, only sets of tradeoffs, and when that’s true we describe the tradeoffs). We were once working for a rural school district on a Department of Education proposal. The superintendent wanted to claim the value of all of their school buildings as a match, and therefore wanted to offer something like a $20 million match. We counseled him not to, and he didn’t.

The grant was funded.

In addition, take care about where the match is coming from. In most cases, federal dollars cannot be directly matched with other federal dollars, usually with the exception of CDBG funds. If you do, and anyone notices, your application will again likely be thrown out.

Anyway, there’s a pernicious line of thinking that goes like this: if some is good, more must be better, right? Wrong: if you take more Tylenol than you’re supposed to you could end up dead or on the waiting list for a liver transplant. Working out or running is great, until you lift so heavy or run so far that you hurt yourself.*

Maybe the overmatching rule seems unreasonable. Much of the grant world is a set of imagined behaviors and situations that don’t correspond well to reality. The matching fund process is one of those fictions that applicants have to go through, like a marriage of convenience to get a visa, to get to the end goal of the money—or, in the case of the marriage of convenience, to get to America.**


* Having done this recently, it’s a salient example that’s on my mind.

** I’m reading a wonderful book called A Bintel Brief: Sixty Years of Letters from the Lower East Side to the Jewish Daily Forward, which is a collection of pithy advice columns for Jewish immigrants from Russia and Poland in the early 20th Century, so the idea of making it to the promised land of America is on my mind.

But many of the immigrants discovered that, although America was a much better place than Czarist Russia (it’s also a better place than contemporary Russia for that matter), the streets were not and are not paved with gold, and all of God’s children have problems. In my own family, lore has it that one set of my grandparents used a marriage of convenience to escape Nazi Germany.

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