There was a pretty incredible piece of news this week in the Chronicle of Philanthropy.
Apparently, for every $100 charities raised last year, $100 was lost as donors stopped giving or donated less. Analysis by the Association of Fundraising Professionals and the Urban Institute also shows that for every 100 donors that nonprofits recruited in 2011, they lost 107.
Clearly, we have problem. But do we know we have a problem? How many nonprofits are paying attention to their donors in this way? Do you know who donated – but also who stopped?
The folks at Agitator encourage you to examine the lifetime value of a donor. It’s relatively easy to compute:
[Gross income from donor over whatever period of years you choose MINUS the cost of Acquisition + the per donor costs of file maintenance, overhead, cultivation, appeals and renewal = Lifetime Value]
They note you can use Harvard University’s free calculator or the free spreadsheet from the Database Marketing Institute to do this for yourself.
Agitator rightly urges us to work smarter. Know who is a steady donor and who has deserted you. Focus on testing strategies to improve the lifetime value of a donor by tracking the benefits and costs of various strategies and see what it does to the formula.
For more, check out The Agitator and its in-depth analysis. Because we can’t afford to keep gaining 100 only to lose 107!
Cartoon by The Dunvegan Group