If you’ve ever looked into funding opportunities for a project, then you will likely have come across ‘match funding’, or marching funds. Match funding has traditionally been found in charity on non-profit settings, and still remains prevalent in those settings today. They have also become more prevalent in a wider range of industries that stand to benefit from this particular funding type.
In this article, we’re going to look at what exactly match funding is, why it is often used, where you might find opportunities for match funding, before providing some top tips for how to maximise your success of winning matched fund project grants.
Match funding is defined as when funding is paid in proportion to funding being paid from other sources. What this usually means for businesses, is that a grant will be paid on the condition that a certain amount of funding is also contributed, usually privately. For businesses who are pursuing projects that qualify for match funding, they will usually provide the ‘match’ themselves, where a public sector organisation or foundation provides the other funds. They are particularly useful where a project's success is aligned with the interests of the business conducting it as well as the funding organisation.
Match funding may be chosen for several reasons. Importantly, it has key benefits over traditional funding mechanisms, which makes it attractive to both providers and recipients of grant funding.
The first, most clear advantage, is that the cost burden is reduced, compared to if the bill was footed by one party. Where two parties (the recipient and provider) stand to gain from a project, it makes sense that the cost is split between them. It also allows the risk of the project to be spread, which brings us on to our next point
The second advantage is that by having multiple parties invested in a project, the motivation to collaborate increases. It is a well known fact that collaboration increases a project's chances of success, so having this model in place provides a safety that collaboration is likely to take place.
Thirdly, and likely as a result of the success of match funded projects, matched funding has proven to be more effective in raising money than traditional methods. It may even be the case that by contributing a relatively small amount of money, a recipient may be able to receive a larger amount than they would have normally received through traditional funding.
These 3 factors are some of the reasons that match funding can be so attractive. So now we understand what match funding is, and why it may be chosen, let’s look at some of the ways matched funding can be raised.
In the UK, there are several options available for organisations looking to pursue matched funding.
The first, and most well known, is through Innovate UK. Innovate UK is the UK government's agency for distributing funds for projects that are considered to be in the public interest. Innovate UK is part of UK Research and Innovation, a public body funded by grant-aid from the UK government. They have a budget of around £2bn per year, and their projects are typically business focused, aiming on de-risking, enabling and supporting innovation.
Almost all of Innovate UK’s funds involve some kind of match funding. Innovate UK have a maximum fund up to 70% of a project, but it can often be less. This is partly due to Innovate UK’s focus on business viability. Applicants are assessed both on their technology and their business potential because Innovate UK wants to fund projects with a solid route to market. This is therefore a key example of where match funding can be used to fund projects that are both beneficial to society and to the recipients business. It’s no surprise that Innovate UK chose this funding mechanism.
Outside of Innovate UK, we’re starting to see more examples of match funding being used for projects. The Knowledge Transfer Partnership is one these examples. It works by supporting projects by encouraging businesses to collaborate with academia or research organisations. They also match funding, providing two thirds of the project cost to small companies, and half of the project cost to large companies. We’ve already discussed how match funding can stimulate collaboration, so this is a great real-life use case of it in action. If you’d like to find out more about the Knowledge Transfer Partnership and their grant process, head to the government website.
We’re also starting to see match funding applied to more industry specific scenarios, where previously grants may have been distributed in a less targeted way, or even not at all. Ofwat has recently launched their innovation fund for the water sector, in partnership with Nesta. This is a particularly generous offering, with only 10% of the total project costs being requested by the recipient. This was an industry that prior to Ofwats increased involvement, had much more limited, often ad-hoc funding available. It just goes to show how matching funds can remove some of the barriers to innovation funding that previously existed, bringing grants to new industries. For more information, head over to Ofwat’s website.
It’s not just the UK that’s benefiting from match funding. Across Europe we’re seeing all kinds of match funding project grants becoming available.
European Regional Development Funds (ERDF) are an example of this. They will typically provide up to 50% of the project cost. What makes it different however to the UK grants discussed is the origin of the ‘other sources’. Whereas with UK project funds, the match would usually be funded privately, the ERDF funds allow for local or regional government to provide the rest of the funding. This means that theoretically, companies can apply for match funds, with the ability to have separate organisations matching the funds. This reduced the cost burden that would otherwise be incurred by the recipient company. Their official guidance states:
‘The funding for the remaining balance of eligible costs (known as match funding) must be available from the outset. It may come from the applicants themselves (and any delivery partners’ resources), or from other organisations in the public or private sector’
This opens a lot more flexibility in the options for matching the funds, and should be an attractive option for organisations who want to reduce their own cost exposure in a project.
Other European funding mechanisms will have more specific areas of focus. A few examples of these are: the European Social Fund, the European Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund. Again, the matches for these tend to be 50%, but may differ, as a variety of rules are in place. Since the rules can get complicated, we suggest going and researching your own sector specific rules, through your local government or through the EU website.
Globally, there are organisations that provide grants with the expectation of matching to occur. These organisations tend to have less of a business development focus, and more of a particular strategic objective. Bodies such as: ‘The global fund’, which has a strategic objective of reducing disease and illness in poverty stricken countries, UNESCO, which has an educational, scientific and cultural focus and the WHO, which has a health focus are all examples of bodies that provide match funding. They are all funded in some way by the United Nations, hence their global approach.
Though these organisations will typically be supporting large multinational corporations with a specific focus, the global fund can be applied for by anyone. It’s therefore worth considering as an option if your organisation is conducting activity in one of these specific areas.
Throughout this article, we’ve illustrated that the world is definitely waking up to the benefits of matched funding. With it comes opportunities for organisations across the world to apply for grant funding, as long as they’re willing to match it in some way.
If you or your organisation are interested in learning more about how you can access funding for your projects, check out our recent whitepaper below, and learn how to never miss a funding opportunity.