Does your nonprofit know the cost for every fundraising dollar donated? While it can be an arduous and sometimes complicated task, calculating this is beneficial to your organization. You should look at this number over the span of at least the last 3-5 years. Are you getting more efficient with each dollar your organization spends to get a new donor?

One important aspect to consider when you’re examining this data is what value does each acquired donor give to your organization? What benefits do your donors bring your nonprofit, specifically during the course of their lifetimes?

Calculating Your Donors’ Lifetime Values

When nonprofits can look beyond the first year to the lifetime value of a donor, the cost of acquisition becomes almost irrelevant.  

We found this helpful article on Bloomerang that gives great tips for calculating your donors’ lifetime values.

According to the article, you need to know:

1. Average gift amount over the last 12 months for first year donors
2. Average increase in gift amount by donors retained
3. Average lifetime in months a donor is retained
4. What % of lapsed donors return annually
5. What is the average gift amount from lapsed donors
6. Total average number of donors in the database over the last five years

Using these numbers, you’ll follow this method:

Divide the average annual gift by 12 to find the equivalent monthly amount. Multiply that number by average increase in giving and then add it to the equivalent monthly amount to get the monthly amount in year two.

Average lifetime value is then 12 (months) times equivalent monthly amount plus x months (to equal the total months of average giving) times monthly amount in year two, before considering any lapsed donors coming back.

To consider returning lapsed donors, simply add the percentage of lapsed donors returning to average annual gift by returning donors to get the grand total — the average lifetime value per donor.

Refer to the blog post at Bloomerang for more help in calculating lifetime value of donors for your organization. 

Our Software Makes These Tasks Easier

Retaining donors through nurtured relationships is everything. Our donor development software helps your organization do this well by personalizing communication with donors. Established, generous donors mean that your organization is maximizing every acquisition dollar and point to the possibility of lifelong partnerships. 

Our software also helps you reduce donor acquisition costs by making your work easier and more efficient, while keeping data organized so that you can quickly calculate the lifetime value of your donors. 

To sign up for a free trial, click here.