This is lesson thirty-one. This is towards one of our missions. Education. You’ll learn everything about marketing - from the basics to the most advanced strategies - for free, thanks to VellumWorks.
Two of the most important metrics in marketing and fundraising are Lifetime Value (LTV) and Return on Investment (ROI). But they answer very different questions.
Understanding the difference helps charities stop chasing short-term wins and start building sustainable, long-term impact.
What Is Lifetime Value (LTV)?
Lifetime Value (LTV) measures the total value a supporter contributes over the entire relationship, not just one interaction.
For charities, LTV can include:
repeat donations
monthly giving
fundraising activity
volunteering time
advocacy and referrals
long-term engagement
Simple example:
If someone donates £20 today, then £10/month for two years, their LTV isn’t £20. It’s £260+ (and often more when advocacy is included).
What LTV tells you: How valuable relationships are over time.
What Is Return on Investment (ROI)?
ROI measures how much return you get relative to what you spend.
The classic formula is:
ROI = (Return – Cost) ÷ Cost
For charities, ROI might measure:
fundraising campaign efficiency
cost per donation
cost per volunteer recruited
cost per email subscriber
Simple example: If you spend £1,000 on a campaign and raise £3,000, your ROI is 200%.
What ROI tells you: How efficient a specific activity or campaign was.
The Key Difference
ROI looks at transactions.
LTV looks at relationships.
ROI asks: “Was this campaign worth it?”
LTV asks: “Is this supporter worth investing in long-term?”
Both matter. But they serve different strategic purposes.
Why Charities Should Not Choose One Over the Other
Focusing only on ROI can lead to:
aggressive fundraising
short-term tactics
donor fatigue
high churn
Focusing only on LTV without discipline can lead to:
inefficient spending
unclear priorities
weak accountability
The strongest charities use ROI to optimise tactics and LTV to guide strategy.
How LTV and ROI Work Together
A campaign might look weak on short-term ROI…
But powerful when you factor in LTV.
Example:
A welcome campaign that barely breaks even on the first donation may still be a huge success if it:
converts people to monthly giving
increases retention
builds long-term trust
That’s why relationship marketing often looks expensive upfront — but wins over time.
Why is this important to know?
Because charities don’t grow by maximising one-off returns. They grow by building supporters who stay.
ROI helps you stay efficient. LTV helps you stay sustainable. When you understand both, you stop making decisions in isolation and start building a healthier, long-term model for impact.
At VellumWorks, we believe knowledge should be free. That’s why this series will guide you, step by step, through everything from the basics to the most advanced strategies in marketing: no jargon, no gatekeeping, just education that empowers.
