A Dramatic Case of Lifetime Donor Value

Most calculations of lifetime donor value make no sense. We wrote about this in a paper – Making Sense of Lifetime Donor Value – a short while ago, noting that when the term first entered the language of fundraising it was meant to define both aggregated annual support over an extended period of years and the probability of extraordinary giving when a capital campaign came along or when a donor made her estate plans.

One could count on the fingers of one’s hands the number of organizations keeping records long and accurate enough to support such measures and have enough free fingers for a reasonably lively riff on an eight-string guitar.

But most organizations aren’t the New York Public Library, where keeping track of things is science and passion.

Last year the Library recorded bequests from 94 donors who at one time, and for some time, had been members of the Friends of the New York Public Library. Those 94 donors gave $184,844 in annual support during the various lives of their support and their bequests amounted to $16.9 million. While they were surely acquired as donors in times of lesser fundraising expense, even if we apply today’s average acquisition cost of $30, the lifetime values and returns-on-investment are metaphorically Himalayan.

Is the New York Public Library’s donor base typical? Definitely not. There are more and less valuable donor bases, albeit undoubtedly many fewer more valuable than less valuable.

But this awesome case from the New York Public Library reminds us to ask at least two questions:

Am I measuring lifetime donor value properly? If you’re in doubt, do check out the paper.

Am I investing enough in acquiring new donors?

To request a copy of Making Sense of Lifetime Donor Value, leave a message in the comments section below.

Reflections on the Revolution

The shallow substance of much legislator debate these days about the nonprofit sector carries strong echoes of Edmund Burke.  In Reflections on the Revolution in France, he warned of dire consequences if it brought down the country’s intelligentsia and the church, which it effectively did.

In America today, there are socio-economic forces at work strong enough to damage nonprofits, especially those in figuratively low-lying areas and those not well anchored to their foundations.

Let’s look at the two roles of nonprofit organizations in society. The first is that organizations are granted tax-exemption because they can do more efficiently what government would otherwise be obliged to do. The second is that nonprofits provide services or supplement the costs of services that consumers of those services can’t or can’t fully afford.  In either case, for legislators to classify all government funding of nonprofits as inappropriate use of taxpayer money is stupid and irresponsible.

Fortunately, only a few legislators are being that extreme. Less fortunately, all legislators will have to make distinctions between nonprofit sectors as they carve away the discretionary government spending. Their decisions will be based on conventional perspectives, but they will surely add varying interpretations of what government is obliged to do and what services are worthy of having their costs supplemented.

It seems the worst thing that could happen to sensible deliberations has happened, and that is that a political prism has been introduced by wiki attack on Planned Parenthood and now the NPR imbroglio. Such a political prism fractures the light of reason and tempts people to substitute an attractively colored element for the whole.


Buzzword du Jour: Integration

What can we learn from all this talk about integrating media in fundraising? Perhaps that most fundraising is driven by tactics, not strategy. Or that sellers of media are more influential than the experienced fundraisers who buy it.

Successful fundraising is built on clear strategic goals: keep as many donors as possible, encourage them to give more, and attract new donors above the rate of attrition.

When planning starts with strategy, integrated use of media follows as seamlessly as the batteries and gasoline engines inside a hybrid. If Toyota were a typical nonprofit organization, the Prius would come off the assembly line with its power sources not only unconnected but technologically incompatible.

What’s going wrong here is not so much lack of integration as lack of strategic direction. Witness this myopia in the board member’s declaration that all fundraising should be online. Hear it in territorial disputes over what fundraising program gets credit for what contributions. And see it in the moated castles – silo is too soft a term – where online specialists spend their workdays.