Guides · Nonprofit marketing
Donor Lifetime Value: What a New Donor Is Worth, and What to Spend to Find One
By Josh Croom · October 27, 2026 · 11 min read
Donor lifetime value is what a donor gives you over all the years they keep giving. Work it out from two years of your own gift records, then spend less than that number to find each new donor.
The mailing that looked like a loss
Tuesday, 7:40 PM. The board treasurer reads the line out loud: the spring mailing cost $3,000 and raised $2,500. Heads nod around the table, and someone suggests dropping the mailing from next year's budget entirely.
Nobody mentions the 25 people who gave for the first time because of that mailing. Some of them will give again next year, and a few may keep giving for many years after that. The board can't weigh those people, because nobody has worked out what a new donor is worth to the organization. So the mailing gets judged on one month's checks, and next year's budget turns into a guess.
Most new donors give once
The Fundraising Effectiveness Project tracks gifts to U.S. charities every year, and its 2025 report shows where donors drop away. The biggest drop comes right after the first gift.
- 18.9%of first-time donors gave againfirst gift in 2024, gave again in 2025
- 59.3%of repeat donors gave againpeople who had also given in an earlier year
- 43.3%of all donors gave againevery kind of donor together, 2025
The same report found that the dollars given rose an estimated 5% in 2025, while the number of donors fell 3.6%. Fewer people gave more money in all, so the average donor gave more than the year before, and each new donor who stays matters more when fewer people give.
What donor lifetime value means
Donor lifetime value is the total a donor gives you, from their first gift to their last. For a new donor you can't know that total yet, so you estimate it on the day they first give, using the patterns your existing donors have already set.
Count three years of giving and stop there. Three years covers the first gift, the second and the third, which is where most of the movement happens. Beyond that point your rates become harder to trust, and the board needs a dependable number it can use in this year's budget.
Worth equals the first gift, plus the return rate times the yearly gift, plus the return rate times the keep rate times the yearly gift. The first part is money already in hand. The second part is what returning donors give in year two, and the third is what the ones who stay give in year three.
You need four numbers to work it out, and every one of them comes from your own gift records.
| Number | What it means |
|---|---|
| Average first gift | Every first gift from one year, added up and divided by the number of new donors that year |
| Return rate | The share of that year's new donors who gave again the next year |
| Keep rate | The share of donors with two or more years of gifts who gave again the next year |
| Yearly gift | What a donor who stays gives in a year, on average |
How to work out donor lifetime value
Set aside an hour with your giving tool or donor list open in front of you. A simple spreadsheet makes the counting faster, and once it's built you can reuse it every year.
Step 1
Pull two full years of gifts
Export every gift from two full years, like 2024 and 2025, with each donor's name and the date. Every rate compares who gave in the first year with who gave again in the second, so you need both years complete before you start counting.
Step 2
Find your average first gift
Add up every first gift from the first year, then divide by the number of new donors that year. Count only first gifts here, because any later gifts belong to the yearly gift and would throw this number off.
Step 3
Find your return rate
Count the first year's new donors who gave again in the second year, then divide by all of the first year's new donors. For example, if 40 of 200 first-time donors came back, your return rate is 20%.
Step 4
Find your keep rate
Find the donors who had already given in two or more separate years by the end of the first year. Count how many of them gave again in the second year, then divide that count by all of them.
Step 5
Find the yearly gift
Add up what your returning donors gave in the second year, then divide by how many of them there were. The result is the average yearly gift from a donor who stays with your organization.
Step 6
Add up three years
Put your four numbers into the formula above. The answer is what a new donor is worth to your organization over three years, and it's the most you should spend to find one.
A worked example with round numbers
These numbers are made up to show how the math works, so swap in your own. Say your average first gift is $100, a donor who stays gives $150 a year, and your rates match the national ones from the report above.
| Part | The math | Amount |
|---|---|---|
| First gift | Your average first gift | $100.00 |
| Year two | 18.9% times $150 | $28.35 |
| Year three | 18.9% times 59.3% times $150 | $16.81 |
| Worth over three years | All three added up | $145.16 |
What the example tells the board
On these numbers, a new donor is worth about $145 over three years. Now go back to the board meeting, where the $3,000 mailing brought in 25 first-time donors, which works out to $120 spent to find each one.
That's less than $145, so the mailing earns back its cost over three years, even though it raised less than it cost that spring. Together those 25 donors are worth about $3,629, which is more than the $3,000 the mailing cost. The room was ready to drop a mailing that pays for itself within three years.
Use the same math on anything you do to find donors. Divide what it cost by the number of new donors it brought, and set that cost per donor beside your three-year worth.
Out of 100 new donors
The drop between the first bar and the second is where most of a new donor's worth disappears. Anything that turns a few more first gifts into second gifts makes every new donor worth more, and it raises what you can afford to spend to find the next one.
Two ways to judge a mailing or an event
It comes down to whether you count only the money that came in that month, or also the donors who may still be giving three years from now.
Judged by that month's total
- It raised less than it cost, so it looks like a loss.
- Nobody counts the first-time donors it brought in.
- New donors get the same letter as everyone else.
- Next year's budget is a guess.
Judged by what a new donor is worth
- Divide what it cost by the new donors it brought.
- Set that cost per donor beside your three-year worth.
- Thank each new donor within two days and show what the gift did.
- Next year's budget starts from a number the board can check.
When it costs more than a donor is worth
Sometimes an event or a mailing costs more per new donor than a new donor is worth, and you may still want to keep it. It just didn't pay for itself as a way to find donors, so count it as outreach and judge it on something else, like volunteer sign-ups or families who heard about your work for the first time.
Keep the two kinds of spending on separate lines of the budget. Then the board sees the dollars that find donors apart from the dollars that tell your story, and it decides how much of each it wants.
How to earn the second gift
The second gift is where a new donor's worth grows, so most of your effort belongs in the weeks after a first gift.
- Thank every new donor within two days, from a real person, so the thank-you arrives while the gift is still on their mind.
- Show them what their gift did with one specific thing it paid for, because a receipt alone tells them nothing about the work.
- Send first-time givers a different letter than your long-time donors, since someone who just met you needs a welcome rather than a renewal notice.
- Ask for a second gift well before year-end, so a first-time giver hears from you more than once a year.
- Do the math again each year after your books close, because your rates move and so does what you can spend.
Check your donor math
Answer five quick questions about your own records, and your answers stay on this device.
Do you know your average first gift from last year?
Do you know what share of last year's new donors gave again this year?
Do new donors hear a thank-you within two days?
Do first-time givers get a different letter than your long-time donors?
Do you judge events and mailings by the new donors they bring, not just the money that came in that month?
You already have the numbers a donor budget needs. Redo the math once a year after your books close, and reset the most you'll spend to find a new donor.
You're close, so start with the first question you answered No, since each number you find makes the next one easier to work out.
Start with Step 1 this week, because two years of gift records and an hour with a spreadsheet will give your board a real number to work from.
Before your next budget meeting
Tick each one off as you finish it. Your ticks stay saved on this device, so you can return to the list after the board meeting.
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Where Google Ads fits
Search ads reach people who are typing questions about a cause like yours, so they're one more way to find first-time donors. If you pay for ads, your three-year worth tells you the most you can pay to find one new donor, the same way it does for a mailing. To use it, your donation page has to report each gift back to Google Ads, so you can count new donors per dollar instead of clicks.
A Google Ad Grant changes the math, because the ads themselves don't come out of your budget. Google pays for the Grant’s ads, up to $10,000 a month. You only pay us half of what we put to work, never more than $750 a bill. Our Google Ad Grants guide explains how the Grant works and who qualifies, and our pricing page shows the Grant fee beside every other plan.
If you'd like help putting this math next to your ads, book a call with Miguel. He'll ask how new donors find you today and what a first gift usually looks like for you.
Questions people ask
What is donor lifetime value?
Donor lifetime value is the total a donor gives your organization over all the years they keep giving. You estimate it for a new donor from four numbers in your own records: the average first gift, the return rate, the keep rate and the yearly gift from a donor who stays.
How do you calculate donor lifetime value?
Add the average first gift, plus the return rate times the yearly gift, plus the return rate times the keep rate times the yearly gift. That gives you three years of worth. Three years covers the first, second and third gifts, where most of the change happens, and your rates still hold that far out.
What is a good donor retention rate?
Compare yours with the national rates from the Fundraising Effectiveness Project. Of the donors who first gave in 2024, 18.9% gave again in 2025, while 59.3% of repeat donors and 43.3% of all donors did. Your own rate from last year matters more, because that's the number your follow-up can move.
How much should a nonprofit spend to find a new donor?
Spend less than a new donor is worth to you over three years. Divide what an event, a mailing or an ad campaign cost by the new donors it brought, and compare that with your worth. When the cost runs higher, count it as outreach and judge it on something else.
How often should we work out donor lifetime value again?
Work it out once a year, after your books close. Your return rate, keep rate and average gift all move from year to year, and so does what you can afford to spend to find a donor.
See how we manage Google Ad Grants for nonprofits
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