How One Nonprofit Increased Donor Lifetime Value by 50%!

One of my favorite non-fiction books of all time (which is saying something since I read several each month) is Winning With Data by Tomasz Tunguz and Frank Bien. Both are quite experienced at utilizing and analyzing both small and massive amounts of data to reach game changing insights.

Chapter 6, entitled “From Hacks to Harmony: The Typical Progression of Data Driven Companies” features an outstanding example of an organization using data to influence its day-to-day actions and their ensuing results.

The best part?

That organization happens to be a nonprofit.

DonorsChoose.org Analyzes Donor Lifetime Value

Fundraising success is critical for just about every nonprofit, and that is certainly the case at DonorsChoose.org. The donor appreciation managers employed are often analyzing the data for insights.

To go one step further, DonorsChoose.org employs a data scientist by the name of Vladimir Dubovsky. He and his team have built a large data warehouse where analysis can be run on just about every aspect of the nonprofit’s operation.

One area of focus was to truly measure the impact of handwritten notes upon the lifetime value of those donors receiving them. As I read the pages, after speaking for decades about the importance of donor lifetime value, the following words jumped off the page and literally gave me a huge hug:

The Lifetime Value of Donors Who Received Handwritten Thank You Notes Increased 50%!

All of us in fundraising sensed the impact, but nobody had fully quantified it with real data over an extended period of time. But here, buried on page 90 of a commercial business-related book, was the data an entire profession needs to know and utilize!

The Impact

So, just how big is this impact?

To fully understand we need to fully explore donor lifetime value. If you aren’t familiar with lifetime value, it can be described in the nonprofit sector as the total net contribution that a donor generates during their “lifetime” within your donor database.

For example, an initial $50 donor who increase their gift 10% a year and stay on for 10 years ending with a planned gift of $10,000 would have the following lifetime value:

$50 + $55 + $60.5 + $66.55 + $73.20 + $80.52 + $88.58 + $97.44 + $107.18 + $117.90 = $796.87

Add in the $10,000 planned gift and the grand total is $10,796.87 in lifetime value!

A 50% increase results in $5,398.43 additional dollars for the mission of the nonprofit!

Even if the planned gift is left off and the donor only donates for five years, the 50% increase in donor lifetime value results in $268.65 of additional dollars for the nonprofit.

Obviously, the above example easily justifies making sure there is a handwritten note for every new donor who gives at least $50.

Perhaps every new donor should be thanked with a handwritten note!

I personally believe this should justify a $10 to $15 dollar per hour part-time employee or intern – who could write several thank you notes per hour – being used to make this huge increase in donor lifetime value come to life.

What do all of you professional fundraisers and leaders think? Should this truly change how we feel about the donor appreciation/thank you process? Are you sending handwritten thank you notes to your new donors? Let me know in the comments below!

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Jay Love

Jay Love

Co-Founder & Chief Relationship Officer at Bloomerang
A 30+ veteran of the nonprofit software industry, Jay Love co-founded Bloomerang in 2012. He currently serves on the board of the Center on Philanthropy at Indiana University and is the past AFP Ethics Committee Chairman.
Jay Love
By |2017-06-10T18:05:39-04:00January 26th, 2017|Donor Retention|

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