Recently, new data emerged regarding the overall giving habits of the average donor in the United States, including just how many different causes the average donor supports on an annual basis.
Among the myriad data points from the Panel Philanthropy Study (PPS), the chart below illustrates the average and median giving amounts for different household income groups:
But what do these figures mean for the Lifetime Value of donors?
Defining Lifetime Value
Simply stated, Donor Lifetime Value is the total net contribution that a donor generates during their lifetime within your database.
In order to calculate average Lifetime Value from the chart above, we must first calculate the average gift amount made to each supported cause. To do so, we will take the median giving amount and divide by the (assumed) number of causes supported per income group (the average amounts in the chart above are a bit misleading, due to some very large gifts, so we will divide with the median amounts).
The median giving amount per income group annually in the chart above is:
$540 in the under $50k income group
$1,000 in the $50-100k income group
$1,850 in the $100k+ income group.
Let’s assume the three levels split their giving between three causes, then four, then five respectively. The average annual gift in each income group would be:
$180 in the under $50k income group (three causes supported)
$250 in the $50-100k income group (four causes supported)
$370 in the $100k+ income group (five causes supported)
This certainly shows how special even a $1,000 annual gift can be for most charities.
Using those assumptions, we can create Average Lifetime Value amounts for each of the three household income groups:
The entire purpose of the chart above is to raise awareness regarding the real impact of individual donors within each group.
Charities need to stop treating their donors as only $180 or $250 or $370 givers, and instead take into account their lifetime values of $1,800 or $2,500 or $3,700.
Such lifetime values warrant much more personal attention than the typical annual donor at the levels below $400. Detailed donor stewardship and communications plans are critical to maintaining these donors over the long-term.
Do these illustrations create any new attitudes on the part of you or your team? Would considering Lifetime Value lead to more encompassing communication and follow-up plans? If so, please share them in the comment area below.
A 30+ veteran of the nonprofit software industry, Jay Love co-founded Bloomerang in 2012. Prior to Bloomerang, he was the CEO and Co-Founder of eTapestry for 11 years, which at the time was the leading SaaS technology company serving the charity sector. Jay and his team grew the company to more than 10,000 nonprofit clients, charting a decade of record growth. Prior to starting eTapestry, Jay served 14 years as President and CEO of Master Software Corporation. MSC provided a widely used family of database products for the non-profit sector called Fund-Master. He currently serves on the board of the Center on Philanthropy at Indiana University and is the past AFP Ethics Committee Chairman. Jay is also the author of Stay Together: How to Encourage a Lifetime of Donor Loyalty.