What's a New Donor Worth?

Long-Term Value (LTV) is an essential performance metric. Every organization should know how much their new donors are worth. With LTV you gain an understanding of what you can afford to invest in new donor acquisition -- a key to growing your organization.

While there is no crystal ball to tell you what today's new donors are worth, you can look at past classes of new donors to understand what they were worth over the long-term. You can then assume that today's donor, acquired through similar means and circumstances, is of similar value.

Here's an example. The graph here shows the 5-year value of the class of 2005 for one organization.

I've seen many sophisticated ways of estimating LTV. Some methods involve statistical models and present-value calculations. All this is fine and good. However, just taking a specific acquisition class and dividing their giving into the original number of donors in that class is a simple and solid approach. I have found that simpler approaches allow you to do more slicing and dicing. And this is valuable.

The graph above slices the LTV trends into three first gift ranges. It illustrates the importance of first gift amount in acquiring donors of value.

Recommendation: Start calculating the LTV of your donors -- by first gift amount, by channel, by offer.