Match funding for grants explained – what is it?

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    Rachel Wait

    Page written by Rachel Wait. Last reviewed on April 27, 2024. Next review due April 6, 2025.

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      Business grants can be a crucial source of funding for small businesses. They can help businesses expand, research and develop new products or invest in training and equipment. Business grants are usually awarded by the government or other companies but, unlike a loan, they do not need to be repaid. 

      When researching business grants you might come across the term ‘match funding’. It’s important to understand exactly what match funding means and how it could potentially impact your business. Here, we explain all you need to know about how match funding works.

      What is match funding for grants?

      Match funding for grants means that in order to receive a particular business grant, you will need to put up some of your own funds. Grant organisations might request match funding to give them the reassurance that you are serious about the project being invested in and that you are able to raise adequate funds to support it.

      How does match funding work?

      With match funding, you as the business agree to put up a certain percentage of the total funding required, and the partner organisation will provide the rest. Often, businesses will provide match funding in the form of a loan, but there are other options, as we explain below.

      As with all grants, match funding criteria can vary widely, so it’s important to research your options carefully to be sure you are applying for the right option for your business.

      What is charity match funding?

      Charity match funding works slightly differently to grant match funding. Here, a foundation or organisation agrees to match fund the money raised by employees for registered charities. 

      Organisations that carry out match funding can include supermarkets, banks and building societies, insurance companies and car manufacturers. Morrisons, for example, will match fund the money raised by employees up to twice a year per person, while the Aviva Community Fund offers quarterly funding rounds. 

      Employees will need to apply for match funding and be actively involved in fundraising events to qualify. Money raised must be for a charity or a not-for-profit organisation, and it is likely that an upper limit on match funding will apply.  The UK government also regularly uses match funding. Through the UK Match Aid programme, the UK government and the British public come together to help raise funds for a range of charities. For every £1 donated to a UK Aid Match charity appeal by someone living in the UK, the UK government will also contribute £1 of UK aid up to £2 million. Over the past six years, 64 organisations from across the UK have run UK Aid Match projects in 38 countries, helping around 25 million people. 

      What are the different types?

      There are a number of different types of match funding. Some typically provide up to 50% of the project cost and you must provide the remaining 50%. However, other schemes will provide up to 70% of the project cost, meaning you only need to stump up 30%.

      With cash or ‘actual’ match funding, you will need to provide the cash to meet the match funding requirements yourself. This might come from money built up in reserves or made through trading. Or it might be via a loan.

      Alternatively, in-kind match funding means that you could match staff time or volunteer time. In other words, you use the time that someone works on the project as match funding. To do this you will usually need to show dated timesheets and a full description of the work carried out.

      If you are claiming the value of volunteer hours, you will need to outline how you will keep accurate records and provide evidence of the costs, as well as show that the work they are doing is solely for your project. 

      If you are claiming for staff time, and a member of staff worked 35 hours a week on the project, for example, you would only be able to claim for 17.5 hours of the time, and the remaining half of the salary would be paid by the organisation. 

      Finally, public funding can also be used for match funding – for example, if you receive funding from a public body such as a council or trust. 

      Advantages of match funding

      One of the biggest advantages of match funding is that it reduces risk for both the provider of the grant and the business that receives it. By having two parties invest funds, the cost burden is reduced and the project risk is shared. What’s more, when multiple parties invest in a project, there are more people to collaborate and support the project, boosting its chances of success. 

      Another advantage is that match funding is often a more effective way of raising funds compared to other, more conventional methods. Even if a business invests only a small amount of its own money, this can result in the business being offered a larger grant than it would have received through more traditional funding options.

      Match funding grants in the UK

      There are a number of options for match funding in the UK. For example, Knowledge Transfer Partnerships (KTP) is a UK-wide programme that has been helping businesses innovate for growth. Each KTP is a three-way partnership between a UK-based business, a knowledge base such as a university or research and technology organisation, and a suitably qualified graduate to lead the project. 

      A KTP is part funded by a grant and it typically provides 67% of the project cost to small and medium-sized businesses and 50% of the project cost of large businesses. Companies will need to fund the remaining cost of the project.   

      However, one of the most well-known match funding options is Innovate UK.

      Innovate UK match funding explained

      Innovate UK is the government’s agency for business funding through specific grant programmes. It can help businesses find research and development partners in industry and academia and offers an annual programme of grant funding competitions across a number of areas. 

      Almost all Innovate UK grants require an element of match funding. Innovate UK has a maximum fund of up to 70% of a project, but it can be less, depending on the size of your business and the type of project. 

      Keep in mind that Innovate UK will not fund any work you have already done, so you should make your application for a project you plan to start at least three months after the closing date. Your application will be assessed on having the right technology and a solid business plan which must show how you will commercialise your innovation. 

      Example of match funding

      • Let’s say you apply for a grant of £20,000 that requires at least 50% of match funding from either another funder, in-kind or cash. 
      • This means you must have at least 50% of match funding of the £20,000 grant requested and the organisation will provide the remaining 50%.
      • You might provide this £10,000 through taking out a loan or volunteer hours.

      How do I find match funding?

      If you’re looking for match funding, or you want to take out a loan to help you with match funding, the team of experts at Swoop will be happy help find a solution unique to your business. Register with Swoop to get started.

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      Written by

      Rachel Wait

      Rachel has been writing about finance and consumer affairs for over a decade, helping people to get to grips with their finances and cut through the jargon. She's written for a range of websites and national newspapers including MoneySuperMarket, Money to the Masses, Forbes UK, and Mail on Sunday. Rachel has covered almost every financial topic, from car insurance and credit cards, to business bank accounts and mortgages.

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