Donor-Centered Nonprofit Annual Reports

nonprofit annual reports

It’s long been a time-honored custom to publish nonprofit annual reports, showcasing your organization’s mission, programs, accomplishments and financials, for supporters and the general public. Yet it’s a resource-intensive endeavor that bears examination if you want to maximize your return on investment.

Begin by asking: Why are we doing this?

Hopefully it’s not just:

  • For your own vanity.
  • Because you’ve got money burning a hole in your pocket for which you have no other use.
  • Because you have staff you’d have to let go if they didn’t spend a few months of their time working on this publication.
  • Because you’ve always done it.

Good reasons to publish an annual report are:

  • To compellingly tell your story.
  • To make it easy for people to grasp your vision, mission and values.
  • To clearly articulate last year’s most important impacts.
  • To showcase your authority, trustworthiness and transparency.
  • To make current supporters feel good about their engagement/investment with you.
  • To attract new major individual, foundation and business donors.

Donor-centered nonprofit annual reports are meant for donors, not you.

There’s a huge difference between organization-centric and donor-centric approaches.

Sure, you’ll get a benefit when people are inspired by your vision and impressed by your accomplishments. That’s what makes people want to join your team! But beware the all-too-common approach of creating, essentially, a big, fat brochure filled with every bit of information you can think of and data only you care about.

When it comes to your supporters, less is truly more.

In our digitally-revolutionized age, people are bombarded by information. They just don’t have the time, or inclination, to read a long report. They need you to metaphorically (1) pre-read it, (2) highlight the good parts, and then (3) send them the summary. Preferably, with pictures!

You need to focus on what current and prospective donors care about; then give that – and only that — to them.

Consider your audience.

Think carefully about who you need to impress.

Generally, nonprofit annual reports are created for major, or prospective major, donor-investors. You don’t send one to everyone. Every nonprofit is different. Some rely more on individual gifts. Others on foundation grants. Others on business sponsors.

Often it’s different strokes for different folks. If you’re primarily supported by grants you might include more financials than you would if you’re primarily supported by individuals. But, either way, remember those reading your report are people – first and foremost.

You don’t want to put people to sleep or cause them to merely skim what you’ve written.

Consider your resources.

You may be struggling with expenses you can cut so you can add in others that may be more donor-centered – and therefor more engaging.

It’s a great exercise to always consider whether there are strategic options that will accomplish the same goals you hope to achieve, but perhaps offer a higher return on investment. And it’s likely no surprise that one of the first things that comes up for the chopping block at budget/planning time (at least in organizations with whom I work) is the annual report. Why? Because they tend to represent a huge chunk of money (design, paper, printing, mail house and postage – not to mention all the staff time).

Consider what else you could do with that time and money that might achieve similar, even better, outcomes. After all, there’s nothing particularly interactive about most annual reports. And we know engagement is what drives investment! So look at strategies like P2P fundraising monthly givingmobile fundraising, interactive and resonant content marketing, and making your data more actionable (to name a few).

I’m not suggesting you do away with annual reports entirely.

They can be a wonderful way to showcase your accomplishments and tell your compelling stories. They can influence grantors and major individual donors to trust you. So I do think it’s a good idea to send them to folks you’re seriously cultivating for larger philanthropic investments. That being said…

Take a look at streamlining and downsizing your annual report.

You don’t have to go the traditional route. In fact, if you do your report may be a total waste because few folks will read it.

Short annual report styles are becoming increasingly popular. Why? It saves trees and money, and increasingly folks with limited time and attention spans appreciate having less information rather than more. They don’t want their donations going to produce glossy 24-page brochures.

Some organizations are doing annual reports completely online. Others are creating pared down versions that are mailed to fewer people. You can also consider a combination of these strategies.

Here’s one organization, Opportunity Fund, which showcases their annual report on their website home page.

nonprofit annual reports

When you click through, you’ll find an easy-to-read report focused on impact and filled with stories and testimonials. And for those who want more detail, there’s a link to click for the audited financials.

Here are some streamlining/downsizing issues to consider, together with some practical tips.

1. Get leadership buy-in.

If you’ve always published a big, fat annual report it can be a challenge to get leaders to let go. A little ‘show and tell’ can help.

  • Show them lots of other organizations are doing it. Collect examples of short, highly visual, donor-centered annual reports wherever you can find them. And forward links to online annual reports. [see Girls Who Code; Charity: water, and 350.org]

Girls Who Code makes this graphic fun, and the impact jumps out!

nonprofit annual reports

Charity: water introduces the report with a compelling photo that needs few words to explain their mission.

nonprofit annual reports

350.org includes video links.

nonprofit annual reports

  • Crunch the numbers so you can tell them the time/resources simplification will save. Show them how you might otherwise use the money/staff time you’ll save.

2. Consider omitting donor lists.

Some people love to see their names in print. So it’s tempting to go this route. And if you’ve promised donors you’ll list them, you have to adhere to your promise. This year. But keep in mind that a listing of names does not really tell a story of donor accomplishments. And once folks have found their own name, the rest of the list is pretty much a waste of paper. Consider these points:

  • No research I’ve seen shows it makes a difference. Anecdotally, people don’t complain unless they’re left off the list. Arguments folks make about why these lists work aren’t based in research.
  • Putting accurate lists together takes oodles of expensive staff time. You must generate reports, make sure you’re listing couples together (or apart if they’ve divorced), omit deceased, assure you’re using correct nicknames, ascertain you’re listing folks under the correct giving level, alphabetize everything according to the most appropriate last name, and… proofread ad nauseum.
  • If you’re printing the report, including a donor list means a lot of added paper.
  • You can still showcase donors who went above and beyond with pull-out stories about the impact of their giving. [See example, below, from Pencils of Promise and The Humane Society]

3. Consider omitting the letter from the executive director or board chair

Usually these are boring. You can use one, but it’s got to do something for you. Not just yak, yak. And not just a rehash or summary of what folks will find elsewhere in your report.

People really don’t want redundancy. Make it brief, friendly, jargon-free, and filled with gratitude towards your donors. Otherwise, leave it out.

Remember, people don’t care how you did things; they care that solutions were achieved. Stay away from talking about your processes, staff, volunteer numbers and even how much money you raised. Stick with demonstrable impact. Benefits, not features.

4. Consider more visuals and less text

Meaning at a glance is your goal. Can your reader “get it” without reading?

Possible formats:

  • 4 pg. PDF
  • 2 pg. PDF or trifold
  • Infographic
  • Postcard or Rack Card
  • Video

Photos of your work in action (especially headshots and close-up action shots) are best. Captioning the images helps convey a lot of info at a glance.

Graphics are good to depict facts and figures. If you don’t have design help, check out Canva or Piktochart.

Videos are terrific for auditory learners. You can find some examples here. And here are some video pointers:

  • Focus both on what folks see and hear (some folks will watch with audio off).
  • Uplifting music and pace. Can go royalty free or pick something popular and pay. If you use vocals, be sure they match your messaging.
  • Quality audio.
  • Consider multiple voices if using voice-over.
  • Consider a combination of still photography blended with life action. Or just stills with text overlay.
  • Consider a year-end highlight reel: 300 words. 12 accomplishments. Copy that can be read in two minutes. Narrator’s voice over stills and live-action video.

5. Consider the best time to publish and/or send

  • Calendar year vs. fiscal year? You want financials to match storytelling. If financials matter to you, go fiscal year.  If not so much, calendar year may be better as it’s the timeline your donors are on and this is when they expect to see annual reports. On the other hand, it can be useful to send the annual report in early September as a prelude that warms folks up to your annual appeal.
  • Don’t wait for audited financials to send it. You can always make a note that the financials are preliminary unaudited figures. It’s better to send it when it will have the most impact.

6. Consider a “Gratitude Report” as a donor-centered alternative

When all is said and done, your entire report should be seen as a giant expression of donor gratitude. This isn’t really different, but if you reframe your report this way it will keep you from using a lot of non-donor-centric lingo like “we” and “our” and focus more on what the donor accomplished.

If you want some great examples, look no further than the work of Agents of Good.

Here’s one I particularly like for Interval House. You can read a full critique of it on SOFII.

Bottom Line: Donor-centered nonprofit annual reports are fundraising tools.

Design them to make donors feel good so they’ll invest with you.

Remember: Any effective donor communication starts by very specifically answering the following questions:

  1. Who am I trying to reach with this content?
  2. What action do I want them to take after reading it?

Your annual report is not a legal requirement (that’s the 990). It’s not just financials. It’s not even just an impact report. It’s a sales piece.

Its goal is to fire up your donors so they’ll continue, or begin, their financial support of your work.

So consider what will inspire them the most?

If you’re not sure which way to go, you might consider a one-question supporter survey. Ask supporters if they’d prefer a printed report they receive in the mail, or an email from you alerting them the report is available online.

And whatever route you take, don’t forget to include an inserted donation envelope or a donate button!

For more ideas, check out my Pinterest board: Annual Reports, Nontraditional.

gift acknowledgement program

Claire Axelrad

Claire Axelrad

Fundraising Coach at Bloomerang
Claire Axelrad, J.D., CFRE is a fundraising visionary with 30+ years frontline development work helping organizations raise millions in support. Her award-winning blog showcases her practical approach, which earned her the AFP “Outstanding Fundraising Professional of the Year” award. Claire runs “Clairification School” online, teaches the CFRE course that certifies professional fundraisers, and is a regular contributor to Guidestar, NonProfit PRO and Maximize Social Business.
Claire Axelrad
By |2019-05-31T14:38:58-04:00June 3rd, 2019|Donor Communications, Reporting|

2 Comments

  1. Neil Schneider June 3, 2019 at 11:07 am - Reply

    This is pure gold. Congratulations on such a useful article.

  2. Stephanie Miller July 25, 2019 at 4:55 pm - Reply

    Thanks for these tips Claire! Where can I find research or evidence that changing the annual report style made a difference to donations, retention, or donor satisfaction? Is there any?

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