In the new year, a communications director’s fancy turns to thoughts of annual reports—those 24-page glossy booklets that your donors read cover to cover and respond to with generous donations.
Well, you can dream, can’t you?
In reality, producing a traditional annual report often feels like a painful process without any clear rewards. It can take almost a year to produce, cost tens of thousands of dollars, and end up in the landfill without being read. There’s not even any reliable way to track its effectiveness as a tool for engaging advocates and generating donations.
It’s enough to make you wonder if you should just stop publishing an annual report.
In this blog entry, I’ll give you several good reasons to keep doing your annual report—but shift to a more painless method that gets results using a nonprofit annual report template.
Why Publish an Annual Report?
If you’ve been publishing an annual report because you think you have to by law, you might be surprised to learn that’s not true. But there are are other, better reasons to reach out to your supporters in this special way once a year:
1. To show you’re making a difference
Showing the difference you’re making should be a top goal for your annual report.
2. To demonstrate effective use of funds
Those who contribute to your cause want to know what you’re spending their money on, and there’s particular sensitivity these days around how much you spend on administration. Your annual report is a good place to show you’re wisely spending the funds you get from government and foundation grants, private donations, fees for service, events, and other sources.
3. To thank donors
Annual reports typically include a list of the year’s donors, at least those who don’t want to be anonymous. That’s generally a good thing. Donors like to be thanked.
Now, is the traditional way of publishing an annual report the most effective way to do these three things? No. Here’s why:
First, demonstrating your organization’s impact once a year is like bathing annually: it’s going to make you lose a lot of friends. You need to demonstrate your impact day after day to create and keep those critical relationships with your supporters.
Second, just as donors need to see key performance indicators constantly, they need data showing effective use of funds throughout the year. Also, it’s hard to make the case that you're spending your money wisely when you're printing an annual report that's going right into the garbage. According to a report in the Chronicle of Philanthropy, “The Salvation Army discovered a few years ago that nobody opened about half the 28,800 printed annual reports it sent to its 7,000 field offices every year.”
Instead of spending more than $20,000 filling the landfills, how many meals and coats could the Salvation Army have provided? That’s why, in 2009, they went digital, producing a paperless annual report that includes videos as well as interactive financials and statistics. The videos are also used as television PSAs and community presentations. You can view their latest annual report here.
Third, while it’s true that donors want to be thanked, they’re not waiting by the mailbox to rifle through your annual report looking for their name like Steve Martin in The Jerk. They want to be thanked as soon as they contribute. And along with good old-fashioned letters or phone calls, online communication—via email and social media—turns your thank you into an opportunity for even more connection to your organization.
Going digital is only part of the solution. In my next blog post, I’ll show how to radically revamp your annual report process using a digital nonprofit annual report template, spreading the work out throughout the year and, most important, engaging your advocates and donors.