Fundraisers ought to pay more attention to the Long-Term Value (LTV) of donors
Most nonprofit organizations express commitment to the notion of "long-term value of a donor", but there are major differences in how that commitment is dealt with operationally. Some organizations require that donor acquisition programs perform at breakeven or better, and measure the value of new donors only by this standard. Some organizations don't invest in creating a sizable donor base at all, simply because they don't want to have the donor acquisition associated costs. Others set an "investment standard", such as being willing to acquire new donors if the audience that receives an offer produces $0.80 or more for every dollar spent on the donor acquisition effort, or being willing to pay up to $20 to acquire a new donor. Most organizations are not able to break even on new donor acquisition, so they acquire donors at some cost in anticipation of second and subsequent gifts that more than recover the initial investment. But, few organizations really measure the LTV of new donors.
Most fundraising professionals favor some level of initial investment and argue that the original effort should receive credit for all or most subsequent gifts. Others thwart LTV analysis by moving the best donors to other programs that receive credit for subsequent gifts. Certainly ongoing donor campaigns, Monthly Giving Programs,Large Donor Programs, and Planned Giving Programs should be tracked, but gifts to such programs should also be tracked back to the original source, so that each source can be evaluated not only based on initial giving but also LTV.
Do you agree that fundraisers ought to pay more attention to the Long-Term Value of donors? Please write an opinion about measuring the success of new donor acquisition programs, both initially and over the longer term.