So, if a tree falls in the woods….

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.

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”.

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.

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.

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!