Vetting for Value

Armed with solid NPV information, fundraising executives can begin to make fact-based decisions driven by precision of purpose.

Applying NPV to strategic decisions
With limited resources, where would you spend $100,000 for new-donor acquisition? Take a look at the table (Figure 1), which shows the NPV of donors based on their acquisition source. Clearly, all things being equal, the smart fundraiser will invest in acquisition source D because it will deliver the highest NPV to the organization. But without this vital information, many fundraisers would choose source B because it has the lowest cost of acquisition, or source A because it has the second lowest cost. Others might base their decision on percent response or average gift. While important, these latter statistics must always be placed in context with NPV.