Julia asks for tips on creating a more engaging annual report. In this episode, Jeremy explains how to create a great nonprofit annual report. You’ll learn who the target audience is for the annual report, 5 goals for your annual report, and how to create an annual report your donors will love. Set yourself apart from other charities by creating an engaging annual report.

Full Transcript:

As if the end of the year isn’t busy enough with all of our fundraising campaigns, we now have to consider what to do with our annual report. Many nonprofits create manual report to highlight their successes and accomplishments throughout the year. Have you stopped and thought about your annual report more strategically? Today’s question is a broad one and I dive into why you produce an annual report, who your audience is, what you should include in your annual report, and what your annual report is likely used for. I know you’ll get a lot of value from today’s episode as you’re planning your next annual report.

Hey Jeremy. My name is Julia and we are working on outlining our annual report. Any tips or ideas to produce a great annual report?

What a wonderful question, Julia and one that is very timely as we had just had this conversation at Food for the Hungry. We’re making a strategic shift in how we message our annual report this year and what we’re including in it. First, let’s dive into who we are creating our annual report for. So for different nonprofits, audience may vary as to who is actually hoping to be using the annual report. Some nonprofits send it to all donors. Others just send it to key segments of donors such as monthly donors and major donors. At Food for the Hungry, we send it to major donors. We sent major or mid level donors and we use it as a piece to promote our work throughout the year. We send a digital version so we do a print version and a digital version. We sent the print version out to all donors. Out to everybody in our e-mail list so that they can see the things that were accomplished this year with their help.

So the question then is, who should you send yours too? It’s a great question and the answer depends on what your goals are for your annual report. In our case, it was a piece that’s designed to reinforce our work. We include an envelope for someone to respond with a gift, if they desire to. We don’t include an appeal in there. Just an envelope so they can easily send in a gift if they want to.

The annual report is used throughout the year as part of our process to engage with major and mid-level donors. I bet if you dig into your organization, you’ll find that the annual report is almost used like a general brochure. It introduces people to the organization. It shows the impact that they could potentially make as a donor. Might be used with foundations with government grants in other places to explain the story of who you are. As I mentioned, we send our printed annual report, we send it to major and some mid-level donors, and primarily we send it to them because of the costs of the printed piece, meaning we don’t send it to all of our donor lists. Just, it costs us too much money to send out to everybody.

We do create a digital version. Some years we’ve created a more complex digital version. Most years, we just create a PDF. There’s some flip book style services. Plug-ins for your website that you could use to create a PDF online that people could easily flip through on your website that is embedded into a landing page. There’s lots of different opportunities in digital. What we’ve found is in the years that we’ve created a more complex digital version that’s got integrated video and stories and more information, the number of people that actually tune in and read that thing or view the videos is so small that we ended up just moving towards, just having a PDF with a flip book style presentation in some years. That digital version, we do send that to everyone on our list. There’s no cost there for us to send it to everyone on the list. So, for anyone who might be interested in learning about what we’ve done over the past year. We think it’s a great tool to really communicate successes that they’ve been apart of.

So what is the goal of your annual report? This goes really hand in hand with who the audiences are. There’s a couple of things here. There’s five major goals that I think you’re annual report wants to achieve. The first one is to show the impact of your work. The annual report is a tool that helps build trust with donors when they can see the impact of the work that you’re doing, then they can really think that their donations are going to be equally used as well. Second is used to show successes. So you do have success over the year of program work. Of campaigns that you’ve run. Of things that you’ve done. You want to show these successes to donor audience.

Now these are successes of things you have accomplished, not just activities you’ve done. There’s an important distinction there. I don’t really want to talk about just activities. Activities don’t really produce much. It’s not the activities that are important, it’s the accomplishments of what you have done. And that brings us to number three which is to highlight what the donors have accomplished. I’m going to talk about this in a second but in the past, we’ve been very organizationally focused on our annual report, which, by its nature, you would think just common sense says it should be organizationally focused. But, when you get down to who the audiences are that are going to read this, you really need to focus on the donors and tell the story of your organization’s successes through the eyes of what the donors did. Not what you did.

Fourth, you want to highlight new programs. So when we start a new area of work, then we’re going to highlight that in our annual report and highlight the successes of starting that area of work. It’s a great tool for donors to see the breadth of what you accomplish and the breadth of what you’re trying to do with your work. So by highlighting new programs, if you have any, then it allows for donors to contribute to something they may not have contributed to in the past. And then number five, to report your financials and other stats. We’re going to get into details about that when we talk about what goes into an annual report, but just to say, when you report your financials and other stats, you don’t have go into such great detail as listing everything in there. You want to definitely report out your financials and report other key statistics. You don’t want to inundate your readers with facts. They’ll get bored. They won’t read it.

So if your audience for your annual report is a segment for your donors, especially major donors, then how should you write your annual report? Now this is an area that we’ve not been that strong in the past and we intend to fix it in this year’s annual report. As I look around at other organizations annual reports, I see a common thread where many nonprofit organizations are writing from a point of view that is a mistake. And the mistake that we write the annual report from the organization’s point of view, instead of the donors. The language is almost self-congratulating. We pat ourselves on the back for our accomplishments. We talk too much about ourselves, and we don’t talk enough about the donors. We use I and we more often than you or your. Sometimes when, last year when I read the first draft of the president’s letter that we included in our annual report, there wasn’t a mention there at all about the donor. There was no you or your. It was all, I, we, us, what we accomplished. You really want to tell the story of your accomplishments through the viewpoint or the lens of the filter of the donors point of view.

Ultimately, if you sum up how the annual report is supposed to make a donor feel, it’s a feeling of trustworthiness. You want to donor to read the annual report and believe that your organization is a good place to invest. So let’s talk about seven things that really are essentials that need to go into your annual report. First, you want to include stories of impact. These are stories that show how a donor made an impact and changed the life of beneficiaries that you work with at your nonprofit. Best stories. Need to include photos, videos, where you can link to a video on the landing page. Visuals. Telling your story through photos and visuals in the annual report is really crucial. People oftentimes will skim the annual report. Having photos in there will make an impact on them if they don’t sit down and take the time to read the entire story.

Second, you want to tell stories of how your organization has changed donors lives. Do you do this? Do you do this at your nonprofit? Do you tell stories of donors who have been impacted? You see, one of the problems a lot of organizations make, even if it’s unsaid promise is that when you give as a donor, your donation is going to change your life as well as the beneficiary that you’re serving. So tell stories of donors whose lives have been changed. If the target audience for your annual report, the majority of the people that are going to see annual report and take action are major donors, then be sure to include some major donor stories of things that they’ve seen in your work and why they invest in your work. Readers, major donors especially when they see other major donors give into your organization, and they learn the reasons why, they can relate to those reasons. And so, they’re going to want to give too based on the fact that someone else has trusted your organization and it’s giving.

Third, you want to highlight your major programs and your successes. So your major programs are the things that you’re doing in the field and the successes are the accomplishments of what you are able to achieve with those programs in the past year. Again, tell the story from the point of view of the donor. What was the donor able to provide? Did you provide clean water to a community of a thousand families in Nicaragua last year? Tell that story from the point of view of how that donors or donors came in and provided that clean water. Were you able to provide shelter for 300 homeless men last Christmas season? Tell that story of the donors that came in and the volunteers that came in and provided food for these men. The donors that came in and provided the money necessary so these men could have a shelter at coldest time of year.

Fourth, what you want to go into your annual report are accomplishments, not just activities. I mentioned this earlier, you want to talk about the things that you accomplished in your programs, not just the stuff that you did. And there is a distinction there. Accomplishments are things that you did and found success in. Activities are things that you just did. Activities are boring to donors. They don’t want to know about the new IT system that you put in place. They don’t want to know about the HVAC that you added to your building. I have seen these things in annual reports and it is not of interest to your donors. They don’t care. And in fact, it will probably have a negative impact on them instead of talking about the accomplishments that you’re able to do in the lives of the people that you serve.

Building a new building might be awesome and you might want to mention it in your annual report, but you don’t want to focus a whole story on building a new building for your corporate office. Now, if you build a whole new building that’s going to house homeless men, then that is a success. That is an accomplishment that you want to talk about. But if you’re building a building that’s going to end up really being overhead, then that is not something that is going to excite your donors.

Fifth, show gratitude and thank your donors. This is so key. This piece is such a great tool to show gratitude and to show thankfulness to your donors. It really builds up the trust in them to read these success stories and read these accomplishments that they know that when they gave that dollar, they helped someone on the other side and so by telling these stories of thankfulness, of gratitude to your donors, you’re going to make them feel good about their donation this past year. That you’re going to make them think about making donations in the future.

Six, financials and metrics. So in this part, as I mentioned, you don’t want to inundate people with data. You’ve got your audited financial statements. You’ve got your 990s. All of these things provide a ton of data to people that want to really dig in and find all the detailed information about the financials of your organization. That’s not what the annual report is for. You do want your top level financials in there so that they can see what the money was spent on. What your income was. What your expenses were. Where you put the money towards. All those things are great for donors to understand the financials of the organization, but you really want to be top level. You do not want to get into a ton of details in the annual report. Use your other instruments for communication for that.

You can also talk about metrics. We use a lot of infographics to explain both our financials and to explain the metrics of the organization. The number of people we’re serving. The number of lives that have been changed by donors. The number of accomplishments that we done. All the metrics that are associated with that. So graduating communities from extreme poverty. Things like that. We use a lot of infographics to help explain that story in a way that is really appetizing for donors that are interested in that information.

And then finally, number seven, you want a call to action for the next year. What are you going to accomplish over the next year that you really want donors to buy into? We use the annual report as both the looking back piece at what we’ve done, but also a looking forward piece for what’s next. What are we going to accomplish in this next year? Julia, thank you so much for the question about annual reports. It’s great timing as we enter into the month of December. A lot of our focus is going to be on end of the year fundraising, but we’re going to have this little portion of us that’s been pulled away to start really thinking and strategizing about our annual reports. And so it’s really a great time to really start thinking what needs to be included in it, who are we going to target with it, and what kind of language do we want to use in our annual report?

If you want some more information about annual reports, I’ve got a couple of articles that I’ve written on nonprofitdonor.com. If you go to nonprofitdonor.com and search for annual reports, you’ll find articles about writing your annual report, about producing it. You’ll also find some links to example annual reports for nonprofit  organizations. Some of the better ones I’ve seen. And I’ve also created a post on there about digital annual reports. There’s very few organizations that are doing great digital annual reports. But the ones that are really knocking it out of the park. So if you want to go see some examples of other organizations that have done really fine digital annual reports, then go check out that article on nonprofitdonor.com.

Thanks so much for tuning in this week, for asking that question, Julia, and for you guys tuning in and good luck here as we move into the end of the year fundraising. I hope and pray for you that it goes well, that you’re able to raise the necessary funds that you need to during the season.