I was asked during a recent roundtable discussion with numerous fundraisers how I became involved as either a board member or major donor with several charities my wife and I support annually.
The answer should not have been a surprise, but I felt that it might have been for several of the fundraisers sitting around the large table.
In every single case, my involvement began with a person who was highly involved the charity – who I already knew – reaching out to either my wife or myself.
Some may ask is that the only manner that has attracted our support for charities? In other words, are we supporters of other charities too where a human connector was not involved directly?
Yes, however the support is much more casual; more than just a small annual gift or attendance at a single special event we might enjoy.
What does this difference mean to the charity and how does it happen?
That can best be answered by introducing the concept of “Lifetime Value.”
Lifetime Value of a Donor
If you are not familiar with the concept of lifetime value and it’s vast importance to your fundraising, then the following information might be game-changing for you and your organization.
Lifetime Value is defined as the total net contribution that a donor generates during his/her lifetime your database.
To calculate lifetime value, use the following equation:
LTV = ∑Ci
- ∑ (sigma) = the sum of
- C = net contribution from each year’s fundraising activity
- i = expected duration of each relationship in years.
Another way of putting it is C = the average gift amount and i = the expected duration of time being a donor.
Let’s view an example of the equation in action below:
If your average gift from a donor acquired via direct mail or electronically is $50 and their average lifespan is 1.9 years, then we have a lifetime value of $95.
Although, there is no specific research we can point to, my decades of experience tells me that the lifetime value of donors acquired and nurtured through human connectors is easily ten to twenty times or larger in size!
For example, if your average gift from a donor acquired through a human connector is $275 and their average lifespan is 6.5 years, then we have a lifetime value of $1,787.50. This lifetime value is 18.82x larger than the example above!
It would be an interesting to examine your database and calculate the lifetime value for each donor acquisition channel to see if there truly is a difference. I’m betting there is!
Human-Connector-Acquired Donors Are Worth Extra Effort
The examples above underscores how any effort spent to encourage donor referrals in the acquisition of new donors will pay high dividends in funding your mission. Perhaps just as important is any extra effort used to thank and nurture human-connector-acquired donors. Such efforts can work wonders in increasing both the average gift and the expected lifespan of giving.
Here are a few ideas to assist in this nurturing process:
- Involve the donor who referred the new donor in the thank you
- Call or visit in person any such new donor
- Continue to call and visit such donors every year they give
- Send handwritten notes to these special donors
- Have private special events with such donors AND their referring donor
- Have special communications for just these donors
- Make sure your CEO knows as many of these donors as possible
- Never take them granted or send just general appeals
I hope the ideas above make sense will you apply the lifetime giving financial analysis. Keep in mind the added bonus that a certain percentage of human-connected-acquired donors will make planned gifts from their estates in some form.
If you have done the math or tried various methods for nurturing these types of donors please leave a comment below and let us know what results you are seeing.
Perhaps this focus can lead to ever increasing lifetime value for donors funding your mission!