Donor Lifetime Value Study Part Two

Donor Lifetime Value: Part Two

The Power to Forecast Future Revenue

Refresher – In part one of this study we learned that a valuable measure of an organization’s donor file’s health is derived from each donor’s lifetime giving history:  Average Lifetime Value. Average Lifetime Value (LTV) is calculated using an aggregate of all donors giving history, divided by total dollars raised.

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As can be observed in the above there are substantial variances in LTV based upon donor type and organization. In addition, multi-channel donors have a much greater lifetime value than single channel donors. These variances are the result of donors giving patterns over years of study.

When LTV is measured over a multiple year period an organization can gather reliable metrics on what they can expect in future revenue from donor’s coming in the door for the first time.

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As Figure 2 demonstrates, $395,000 gross revenue is projected over the new donors’ life time of giving.  This method can be applied to all direct response programs to forecast for fundraising and budgeting targets as well as offset donor attrition.

The value of a new donor is largely in the control of the fundraising steward of each organization.  Rate of thoughtful appeals across multiple channels can result in significant improvement in LTV and return on investment for a fundraising program.

This concludes our Donor LTV study. As always, if you have interest in our Fundraising programs or anything else FLS, contact our offices at 844-FLS-2016.

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