What is a matching grant?

A matching grant is indeed characterized as a donation that is effectively doubled by a sponsor to encourage fundraising and participation. In essence, a matching grant means that for every dollar contributed by donors to a specific cause or project, the sponsor will contribute an equal amount, thereby maximizing the total funding available for that initiative. This type of grant serves as an incentive for additional donations, as contributors recognize that their efforts will be amplified through the matching funds.

Understanding this concept is crucial because it highlights the strategic approach organizations take to leverage donations and support community projects. It incentivizes donors by demonstrating that their contributions can have a more significant impact, thus encouraging further participation and engagement. The other choices do not accurately represent the concept of a matching grant, as they refer to different types of funding arrangements, such as outright donations or grants with specific conditions attached.