Donor Lifetime Value Calculator

How it works

LTV = Σₜ (gift × (1 + g)^(t−1) − cost to serve) × r^(t−1) ÷ (1 + d)^(t−1); infinite horizon = (gift − cost) ÷ [1 − r(1 + g)/(1 + d)]; average lifetime = 1 ÷ (1 − r)

A donor's first gift rarely covers the cost of finding them; what justifies acquisition is the stream of future gifts, discounted for the probability they lapse each year and for the time value of money. Retention enters the formula as a compounding survival probability, so it dominates: at 45% retention the average donor lasts under two years and half the lifetime value arrives in the first gift, while at 65% the relationship lasts nearly three years and the value doubles. Gift growth from upgrades adds to it, stewardship costs subtract, and the resulting number — compared with the cost of acquisition by channel — tells a development office how much it can afford to spend to find a donor of each kind and where stewardship money earns the most.

Worked example

A donor giving $150 in year one, retained at 45% with 8% annual upgrades, $15 of stewardship a year and a 5% discount rate is worth about $253 over ten years ($264 undiscounted). Against a $95 acquisition cost that is 2.7× — payback in year 1 — and lifting retention to 50% raises the value to about $280, as much as a 10% larger gift would, with the retained donors still giving beyond the horizon.

Frequently asked questions