No … I’m not talking about prospecting letters that break even.
Nor am I talking about telemarketing calls.
I’m referring to that most venerated publication of all nonprofits … The Annual Report!
Here’s a question from Agitator readers Bob Bland and Matt Wolcott that I can’t resist passing along for your comments:
"It is Annual Report season. Matt Wolcott at SCA and I were discussing whether or not they are valuable for individual donors, especially the really glossy and highly designed ones that most major nonprofits create.
Last year SCA had some issues with new auditors, who did not sign off on 9/30 results until late March. By then, it was so late that the usual Annual Report mailing was scrubbed and a minimal report with the financial was created. It was mailed to a very limited set of people. The main distribution was an online PDF.
The tradition at SCA and most places I know of is to send the Annual Report to the major donors who are listed in the report, whatever the level may be. But the traditional reports are so expensive that it is really hard to know if they are worthwhile, especially in an age in which color and photography has become normal rather than the exception.
Back in the day, the AR may have been the only time a donor saw color photography showing program accomplishments. Now, at SCA at least, full color packages are the norm rather than the exception and one-third of our donors (major and otherwise, no difference) get online communications that let them follow our program in colorful depth.
So Matt and I would like to know what you and other members of the Agitator universe think about Annual Reports. Are they dinosaurs?"
Bob Bland
I’m not ducking the question, Bob and Matt, but I’d like to hear the opinions of some fellow Agitators before I weigh in.
Tom
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Great question.
I just made an e-newsletter about how to get your annual report READ. It’s on my twitter stream, http://twitter.com/wildwomanfund
I’ve found lots of good ideas for how to do this in my searches in the last several months.
One of the best and CHEAPEST ways is to post your annual report on your website, each section as a separate webpage, so people who want to see graphs, charts, financials, can go there at once, and people who want to see pictures and stories from a particular program can go there quickly. This is huge for getting your transparency as an organization, setting donor fears to rest, etc.
It’s a huge improvement on waiting for that MASSIVE pdf to download! *Even big corporations are some of the worst offenders in this category!
But starbucks distilled their annual report down to a trifold brochure.
Another org that was all about food made an annual report that you had to BAKE in the oven to make the writing appear. And food. And recipes. It is beyond the reach of most nonprofits but that’s ONE reason to have a paper annual report.
Effective donor-centered communications with donors (and qualified prospects) is pretty much always good. Newsletters. Insider updates. Thank you calls. And yes, annual reports. Publications don’t need to be glossy and multi-colored and expensive. An annual report looks forward, not just backwards. An annual report is another place (sometimes the only place for some organizations) to recognize their donors. In your annual report: tell stories about donors; tell stories about how donor gifts make a difference; throw in some meaningful and well explained stats for those readers who like stats. Present (and explain) your financial situation. Recognize board members and staff. Make your annual report a donor-centered interesting storybook that is useful to your donors and prospects. Maybe your annual report is only 2 pages long. Maybe your annual report is an issue of your newsletter. But for sure, your annual report isn’t one of those corporate communications documents that talks image, costs too much money, and doesn’t grab the attention of donors. Yes, I still like annual reports, the right kind!
Over, Dead & Worthless. I hope that gets to the heart of your question. Last week on LinkedIn there was a topic with 40+ responses on the validity of putting an envelope in an annual report. No courage to even discuss wether or not the thing is worth the investment. The irony is the folks who claim it is worth while have never actually had the experience of not doing it. How many people want their surgeon to never have preformed the operation? I have much experience getting rid of this beast and have redeployed the money for a greater return in raising money. The Annual report is written for everyone, so it is not written for anyone. Great strategy sending this to key donors and it is not specifically for them.
Anyone leaving a comment here please state clearly wether your opinion is theory, because you have never gone without an Annual Report. It is difficult to take anyone’s opinion seriously if they don’t have any experience with the subject matter.
Today’s post is a great one. I’ve often considered the annual report one of the most important stewardship pieces an organization can produce, but deep down, I think I’ve been waiting for someone to challenge the status quo. In addition to reporting financial and program results to the community, an annual report is the primary place to list donors. Do we know if this listing is still important to donors? Do they value this? Are they inspired when they recognize names at higher giving levels than their own? Should we let the necessity of listing donors be the deciding factor on whether we produce an annual report as we’ve always known it?
I think annual reports are dinosaurs. I worked with one organization that printed a couple copies of its 2009 report for each table at their annual dinner in January and a few extras for community visits. The report offered the clear disclaimer that all financials were unaudited. The report was just two pages long,
I think the the lesson of annual reports is to find ways to share the kinds of information they typically contain with donors 3-4 times per year for ongoing cultivation.
Certainly, AR’s are expensive and time-consuming to produce. And I think Mazarine covers much of the reasoning behind continuing to publish one.
I would like to add that I believe they really are important cultivation tools. I think we have all received a call from a concerned major donor when he or she couldn’t find their name at the giving level they believed they should be listed at. I personally have dealt with numerous inquiries of this nature in my ten year non-profit career. Some donors are giving to be a “member” of your cause, even if you don’t have a membership program. In this sense, the Annual Report functions as a bit of membership directory. Donors check to see if they are listed, which suggests an interest in it on some level.
Having said that, I do think an online version is preferable to printing and mailing those more expensive pieces. However, I don’t know that all of our donors are on the internet regularly. I would suspect that knowing your audience is the key to figuring out whether or not you can go digital with an Annual Report–but I think it’s worth the effort to produce one regardless.
Penelope Burke, author of Donor Centered Fundraising, has been asking donors the same question in her research for many years:
Why did you decide to stop giving to an organization that you once supported? And for years, the #1 answer has been, “over-soliciation.”
But, she notes that when you probe deeper, they define over-solicitation as being asked for another gift before they find out what the organization did with the last gift. Her conclusion: “Over-solicitation is really under-communication.”
Given that, I think annual reports (and newsletters) continue to be important tools for stewarding donors. Organizations can certainly cut back on the glossy paper and expense, but they should not cut back on the information.
Love this discussion!
What makes most annual reports so deathly boring is that they are cover-to-cover organization-centred: do you think your donors really care about your mission statement, vision statement, 3-year strategic plan and your organizational structure?
What do YOU care about as a donor? You care about stories. You care about how your money is spent. You can — and should — create an Annual Report that is donor-centred.
You can use your Annual Report to engage with your donors and build a relationship. We’ve just created a “Gratitude Report” that we are enormously proud of, and our client is delighted with it. Totally unique, totally donor-centred.
And in terms of getting it into their hands, I bow at the altar of direct marketing. If your donors are showing you that they are connecting with you online, absolutely send an online version. But be cautious. My grandfather got a slick video e-mail (he’s 88 and has never heard of YouTube). He couldn’t figure it out so he minimized the window. 10 seconds later it started playing. He didn’t know where the voice was coming from. He shut the lid of his laptop and left feeling old. He would have liked to sit by the fire and read it. The charity didn’t give him the choice. We’ve done a multi-channel version, and did the data work to segment based on the donor’s preferences, patterns and connections.
Look forward to hearing more thoughts!
I’ll admit that I’m relatively new to the nonprofit world, and that the organization I work for is also relatively new, so maybe we’re making a mistake or something, but we’ve never published an annual report. We just try to be responsive to our donors and volunteers, communicate directly, efficiently and timely information about our progress and financial standing–and of course we tell lots and lots of stories and take thousands of photos. The whole idea of an annual report just doesn’t make sense to me–in fact, it would become a reason NOT to communicate with our stakeholders on a more timely basis because we’d have to have something to put into the annual report … That and a routinely updated website can basically serve the same purpose, no?
Maybe I’ve missed something, but with the greater pressure on nonprofits to build relationships with a shrinking pool of new donors, energy that isn’t completely focused on cultivation of existing donors on a regular basis just doesn’t make sense to me–but I could definitely be wrong here. The only time I read annual reports is when I’m trying to figure out how another nonprofit does something, and I’d probably be just as well off by going to their website/facebook page/or LinkedIn account to ask someone from the organization directly.
I’m all for messaging, but can usually do without so much of the editing and packaging as per several of your recent posts about removing the committee and editors in favor of a more real and realistic description of the great work a nonprofit does.
Is there a requirement to publish an annual report? Maybe not a regulation, but an expectation from donors, foundations or someone else? We’ve been getting grants for six years and no annual report. Major donors are the largest source of revenue for us and no annual report. So unless I’m missing something, the better question is, who are nonprofits really putting together annual reports for? Their stakeholders or their marketing departments and senior management teams so that they can rest assured that they accomplished something in the PREVIOUS YEAR.
I’ve never looked at the annual reports for the organizations (if they even have them) I support with my time, network and money. I support them because I can easily get a direct connection to the staff, leadership or clientele of the organization in a way that is emotionally real to me.
Maybe it’s more work to do it our way, but hey, if it works don’t fix it, right?
To do or not to do an annual report? An age-old question in the nonprofit world! And I mean age-old. I’m an equally old guy who has been at this kind of stuff for a lot of years, and the verdict on the annual report has been “out to the jury” throughout all of them.
Long before there were anywhere near the kinds of “whiz-bang” technology we have available today — the multiple means of electronic communication, the web-based channels galore — folks in the nonprofit sector stroked chins, puzzled over and opined about the real value of the annual report as a tool for general communication and donor cultivation.
I think the reason for that puzzling about value is based on two factors: (1) the annual report can be a pretty costly collateral item (depending, of course, on how free you feel to spend money), so it’s always going to be called into question by somebody; (2) the organizational rationale and overall strategy and goals in producing an annual report are either missing or not well-conceived in the first place. And the issue of donor communication/recognition/cultivation obviously needs to be a critical component of that rationale and strategy.
So, to respond to Jay Goulart’s admonition that we Agitator readers respond with our opinions only if they are based on real-life experience and not simply on theory, I say that I have battle scars to show for having tried to run toward both extremes with this question over the years. My bottom line? There is no single, one-size-fits-all answer to this issue. The answer can be very different for differing nonprofit organizations.
Lots of good observations, thoughts and suggestions here. On the whole, I’m on the same page as Simone Joyaux in this matter. I think she hit the nail on the head. If producing an annual report seems to fit with the organization’s overall strategy for corporate communications, financial reporting, PR/positioning, measuring community benefit/impact, and, of course, informing, educating, recognizing and cultivating donors, then produce one. The more positive communication and reinforcement of the organization’s case for support the better! Be sure to integrate the annual report with all other communication and messages. As Simone suggested, be sure the report looks forward, not just backward, tells positive stories, and recognizes donors for the differences their support makes.
Design and produce the annual report within a budget that fits reasonably and defensibly with the organization’s resources. Be creative with format and design and look for ways to have impact without unnecessary “glitz and glamour.” Focus on STORIES about people helped by the organization and its benefit to its service area. Utilize all channels of communication to deliver the report, including as a PDF attachment to e-mail and web-based platforms. Print a smaller quantity of hard copies if there is a need to mail to selected audience members/supporters.
Sorry this is such a long post, but I’ve written and produced so many annual reports that I cannot count any longer. I have very strong feelings about this issue, but the bottom-line answer is: figure out the best course of action for your own organization and produce a report that helps to MANAGE AND SUSTAIN POSITIVE RELATIONSHIPS.
Great question! I don’t know the answer from the donors’ point of view, particularly major donors who view charitable donations like investments and expect a report that essentially documents their ROI (as well as giving them due recognition for their support). But I can certainly confirm the challenge that Mr. Wolcott and SCA shared. By the time all the annual finances are officially approved and the numbers can make it to a graphics department for publication … well, it really feels like old news. And if we’re doing our jobs well, these major donors are already hearing from us in other ways about how well we’re using their funding and where the need for more support still exists. So it seems like a stripped down financial statement to meet basic reporting needs, distributed thinly but made available via the website, is appropriate. And what remains is the donor recognition piece. I think if we retire the glossy annual report, we can find other ways to give our major donors public kudos in a more timely fashion.
That said, no organization wants to be the only one to tell a donor that they don’t publish an annual report – sounds suspect! Will be very interested to read the follow-up to your article to see whether this is a shift we, as the nonprofit industry, can pursue together to change donor expectations to a more manageable, and just as fiscally transparent, technique.
Kathy Swayze is not fully reading Burke’s book. reread it and you will see that donors want to read about their money. You will also see that 80% say seeing their name in an annual report has zero imact on giving again. Any generic communications is hardly going to have any impact on giving. Let’s get it right..Also do you have any experience not producing one?
Sorry to add this but this is not really about an Annual Report…This is about wether you conclude that there is no other activity that would create a greater return for the organization. It s remarkable to me how many smart people can not seem to think any other investment could raise more money for the mission, which is the goal. I can not find an indusrtry that has succeeded by riding the back of generic communication. But then again I eat at restaurants that serve what I wish to eat, not what they wish to serve.
This is a great conversation! As many of the comments reflect, there are lots of new, interesting ways to share the information that charity watchdogs like the WIse Giving Alliance require for transparency. If pushed, I’d say the old model for the annual report is a t-rex, of sorts, but the need for thoughtful donor communications is, of course, ongoing.
I blogged about this topic and some of the reasons why for-profits have stopped producing big annual reports (changes in regulations) and how that might be a clue to donor’s expectations. (That blog entry is here: http://www.bigducknyc.com/blog/?p=1753) One might argue that if a donor doesn’t expect to get an annual report from the big for-profit they invest in they are less likely to expect your organization to send one.
Communicating clearly and transparently with donors is a ‘given’- but the ways we communicate are shifting daily- especially online and in this so-called “new economy”.
Back in December, Future Fundraising Now (Jeff Brooks’ blog) had a great post about a nonprofit called the Pride Foundation that publishes a Gratitude Report. Worth a read; links to online sample. http://www.futurefundraisingnow.com/future-fundraising/2009/12/the-solution-to-dysfunctional-annual-report-nightmares.html
I think annual reports remain a valuable tool in the marketing mix. I like the idea of a “gratitude report” as annual report. I would like to see one, to see how a gratitude report really is different from the tradtional annual report, or if the difference is in the use of language.
The main reason people seem to be saying annual reports are dinosaurs is cost: the cost to produce, print, and distribute annual reports. Since cost is such a factor, we say, annual reports likely don’t have to be as fancy as some today are — the goal is not to win the equivalent of a maxi for your communications director, right?.
But maybe it is — The goal of an annual report is to provide a mission statement, a vision statement, and to show how an organization is using donations by detailing specific programs and achievements in a way that illustrates how an organization is fulfilling its mission. The pictures tell a story. The typefaces and choices and design tell you a lot about the way the organization perceives itself, and wants you to perceive it. (Web sites and web annual reports do to, but the web annual report is usually just a pdf of the printed version. And, by the way, if I’ve just given you a gift of $500 or more, I think Im worth your time to print and mail me an annual report, instead of me having to spend my time and money to print it out.)
Annual reports, in my view, are supposed to provide a macro and a micro view OF PROGRAM. Seeing how an annual report changes from year to year is an exercise in watching an organization invent itself through language, pictures, emphasis, and what is included — a page for corporate partners? A page capsulating achievements into a scorecard? How many page recognizing donors?
And there is another reason annual reports are valuable, that no one has mentioned, related to my comment above about watching how an annual report changes. In my experience, the annual report plays a role internally in solidifying program direction, message formulation, and which achievements an organization values enough to include in an annual report. In other words, in some non-profits theannual report is the encapsulation in one place of raison d’etre past, present, and future. What is written in an annual report becomes the elevator speech to different constituents, as much as a proposal or a website “about us” section.
As such annual reports, whether printed or published on the web, unify an orgaization’s image of itself, imposing a discipline that is useful on staff often caught up in the “now” of deadlines and the “what if” of future direction. The annual report is the snapshot in time that donors and fundraisers alike can rely on to tell where an organization’s programs are, have been, and will be.
Let’s face it — the 990 gives far more detailed financial information, if that is what is wanted. An organization’s website gives a bunch of information, if one has the time to drlll down through its layers, and if it easily searchable. I repeat — if I’m making a donation that to me seems large — I’m want somthing substantive for my donation!
Well, thanks if you’ve rambled this far with me.
OK now that we’ve got some momentum on this topic, I’ll add this tidbit: When we published and mailed our trim and slim Annual Report “lite” to various segments of our house file (you can guess who these are I’m sure…), we didn’t get one single complain or for that matter, so much as a response from a donor about the report itself. Nothing.
So, if a tree falls in the woods….