Understanding the Lifetime Value of a Donor

If you’re like most fundraising professionals, when you embark on a new fundraising campaign, you measure your impact in ROI.

Let’s say you run a CauseMatch campaign. The campaign costs your organization $X, but you raise 10X that investment.

To measure the campaign’s success, in monetary terms, you calculate 10X minus X. The answer is your ROI, return on investment.

But by focusing on the ROI, you are looking at a very narrow view. You are thinking of the campaign as a one-and-done relationship. And that mentality leaves money on the table for your organization.

The real questions you should be asking are:

• What are you going to do AFTER the donor gives? 
• How are you going to make sure she gives again next campaign? 
• What are you going to do to avoid donor attrition? 
• How can you focus on donor retention?

Please don’t ignore the lifetime value of a donor. Donor retention should be a key aspect of your fundraising strategy. 

If you run a campaign and receive a boatload of new donors and donations, then you should feel ecstatic. But your work is far from over. If those donors fall by the wayside, you’re going to have to do all that work again for your next campaign.

If you, however, have a communications plan in place to thank your donors… If you update them throughout the year about the importance of their support… Then they are much more likely to give to your next CauseMatch campaign. 

And THAT is thinking about the lifetime value of a donor.

It is much, much, much cheaper and easier to RETAIN a current donor than to ACQUIRE a new one. Your aim should be on donor retention.

Think about it. If a 40-year-old donor gives you $1,000. And if you are able to maintain a relationship with her for the next 40 years, her lifetime value is $40,000. 

If you nurture that relationship and she decides to increase her gift by 10% every other year, her lifetime value jumps to $114,000!

KEEP your donors around and your actual ROI will be significantly higher than the money you netted from your CauseMatch campaign. 

But if you don’t have a plan in place, you can’t be confident that donors will stick around for your next fundraiser.

Play the long game. And plant the seeds now for the bright future that lies ahead.