Although the law doesn’t require it, most nonprofits produce an annual report. An annual report helps an organization stay accountable to donors and can be a great way to showcase the good work donors make possible, says Kivi Leroux Miller, a marketing consultant for charities. And at the most basic level, the report is “a way to annually take stock of what you’re doing and confirm that you deserve your 501(c)(3) status,” she says.
However, organizations have a great deal of flexibility in how and what they present to readers in an annual report. And today, many nonprofits are experimenting with creative ways to update this publication.
Traditionally, annual reports include elements like a cover letter from a board chair or executive director, a history of the organization and its goals, a full financial statement, and a list of major donors. And while most organizations still include many of these same elements, some are finding ways to convey the information in shorter, more engaging, and more visually appealing formats. Some newfangled reports tell stories through interactive web pages, infographics, and video.
“We’re seeing those core pieces transformed a little bit,” says Rachel Muhlstein, an account manager at Classy, a start-up company that provides crowdfunding tools for nonprofits.
Here are some ideas for refreshing your nonprofit’s annual report.
1. Engage your audience immediately. Scannability is the key word, says Ms. Muhlstein. Your audience—donors, volunteers, board members, future board members, grant makers, or others—should be pulled in right away. That can be done by using great visuals and clear infographics.
“Do something that will appeal to a very wide audience,” she says. “Your audience is everybody.”
2. Share accomplishments, not activities. Organizations tend to list things that they did, says Ms. Miller. But it’s important to take this a step further and share what those activities accomplished.
“The report should not be a narrative of your to-do list,” she says. In building their reports, she says, charities should ask questions like “What difference did that action make?” and “What has changed in the world because of these actions?”
3. Start early. Many organizations release their annual reports after their fiscal year ends, but it’s wise not to wait too long. “People are so used to getting everything in real time that releasing it so many months later doesn’t make sense,” says Ms. Miller. She suggests starting to talk about the report and coming up with a short list of the year’s highlights about three months before its planned release date. Based on that list, staff can start pulling together the other pieces, like videos or photographs.
She says some charities are even releasing abridged versions of their reports—or related year-in-review pieces—around Thanksgiving to incorporate them into year-end fundraising efforts. These are essentially the outlines of more comprehensive annual reports, which should come out early in the new year.
Ms. Miller says a common misperception is that an organization should wait to release its report until its audit is done. “That’s way too late,” she says. If the financial information isn’t all available, let the viewer know that more comprehensive information will be available online later in the year.
4. Consider a new medium. Traditional annual reports are printed documents that are mailed and often displayed on a coffee table in an organization’s lobby. However, that kind of report doesn’t always translate well online, where the best reports are typically concise and visually appealing. Instead of printing a long report, consider creating a two- or four-page report as well as a condensed version that fits on an oversized postcard, Ms. Miller suggests. These condensed reports can be mailed or presented online.
Some other organizations that have a big online report are sending a postcard to supporters to direct them to the online report. Neighborhood Centers, a Houston community development organization, used a series of 60 photos on Instagram as a way to direct more attention to its online annual report.
5. Tell your best stories. Rather than providing readers with a straight list of facts, “talk about it through the eyes of someone you’ve helped,” says Ms. Muhlstein. Instead of a letter from a board chair, Ms. Miller suggests using other voices—such as testimonials from clients, thought leaders, or community members—to tell the story of your organization’s accomplishments. .
The same goes for donor lists, which Ms. Miller calls outdated holdovers from pre-Internet days. Instead of listing all donors who have given over a certain amount, consider profiling a few specific donors who may have been giving small amounts but have done something unique or extraordinary for the organization. Charity:water, for example, highlighted a group of donors who climbed Mt. Kilimanjaro to raise money. And along with a visual breakdown of its donor demographics, the nonprofit crowdfunding site Watsi highlights a donor in its interactive online annual report.
6. Avoid data overload. Though transparency should be a guiding principle, it’s important to convey information in a way that makes sense—especially when presenting financial information. Remember, your report isn’t written for an audience of accountants.
“Instead of a full financial summary, we’re seeing a lot of organizations condensing that into the most important information and sharing it in a way that the average person will understand,” says Ms. Muhlstein. Your video, online report, or abbreviated financial statement can point viewers to a full audit, Form 990, or financial statement on your website.
Pie charts showing sources of income and expenses are one common and clear format. See how the National CASA Association used this device in its 2014 annual report.
7. Consider a call to action. The report should conclude by telling readers how they can help your organization, says Ms. Miller. Whether that means listing the different ways they can donate or offering opportunities for them to sign up to volunteer, give the readers of your annual report something to do after they’ve seen what you’ve accomplished so far.
