Useful Truths: Apply With Care

If you’re of a certain age, you might remember a film they showed us in school called “Our Friend the Atom.” A piece of pure propaganda — we were suckers for that stuff back then. Its message (as I remember it) was: Sure, nuclear holocaust is a scary possibility, but Our Friend the Atom can do lots of good, too!

Apparently, everything has an upside and a downside. Including useful fundraising truths. Here, I’m going to show you how even a great idea can knock you for a loop when you don’t apply it right.

The useful truth
Here it is: The higher a donor’s first gift to an organization, the higher her lifetime value. You might be saying, “Duh,” but what makes this truth so useful is the strength of the correlation. The lifetime value of a donor who gives a first gift of $10 will be a fraction of the value of a donor who gives $50 the first time around. The difference between the two typically plays out like this:

* Total lifetime value of the $10 donor will be about one-fifth as high.
* The lower donor will lapse sooner.
* Chance of upgrading (to a significantly higher level of giving) will be about half as high for the lower donor.

And here’s where it gets cool: It’s easy to calculate. A donor’s lifetime value to an organization is about 10 times the amount of her first gift. (Your actual figure might vary, but not by much.) Once you get that first gift, you have a very accurate picture of what you have coming to you in the long term.

This truth pretty much demolishes the long-revered “donor pyramid” — the belief that it’s normal for a donor to come on board with a small gift and then keep upgrading until she’s a major donor. Turns out that’s more a statistical anomaly than a behavioral road map. Of course, it does happen — but only in a tiny number of donors.