February 20, 2011

Digital Annual Reports Lure Readers—and May Save Some Cash

The Salvation Army abandoned its hard-copy annual report in 2009. The most recent digital report features video stories from families helped by the charity and interactive graphics about its financial status.

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. So it decided to scrap the hard-copy version, moving to an all-digital one in 2009. The charity, with headquarters in Alexandria, Va., now produces a paperless annual report, including video features on its programs nationwide, an interactive financial and statistical section, and a video message from the group’s leader. The videos do triple duty: They are also used in television spots and community presentations. Four national TV spots the charity broadcast during the 2010 holiday season were first shot as clips for the online annual report.

Because the digital content can be used in so many ways, it makes some of the high initial costs, such as producing videos, more cost effective, says Maj. George Hood, the charity’s national community relations and development secretary. The group saved about $25,000 in 2009 and twice as much last year, say the group’s officials.

What’s more, Major Hood says “the impact has been powerful because stories on video are more emotional.” Going digital has helped the Salvation Army reach more young people, who are far more receptive to video than to printed messages.

More and more charities are doing what the Salvation Army has done, creating all-digital editions of their yearly reports. The new versions make liberal use of audio, animation, and video (watchable even on smartphones), rather than long, text-heavy articles.

The Salvation Army is one of the few organizations to give up a paper version altogether, however. Most groups are making a phased transition: slashing the size and distribution list of the printed report and doing all they can to improve the online version. Some groups are also rolling the savings they have achieved in going digital into their fund-raising efforts.

To Go Digital or Not

While the costs of creating digital reports can be considerable at the outset, even small charities are finding ways to join in.

“If you aren’t doing your annual report online, even in a small way, you aren’t meeting people where they are today, and you’re handicapping yourself,” says Morris Ardoin, director of external affairs at the National Center for Children in Poverty at Columbia University, in New York.

His organization hasn’t ceased publication of its paper annual report, but it has scaled it back. It went from 20 pages in 2008 to 12 pages in 2010, and it published only 1,000 reports last year, compared with the 6,000 it used to produce annually. The budget for the printed version is now $2,900, compared with $6,700 in 2008.

His organization put those savings into three additional fund-raising mailings. While freeing up the money for additional appeals was important, he says, his real concern was that the center would have lost many of its donors if it hadn’t made the move to digital, because so many people today get their information online.

Making the transition to a digital annual report can be hard work. Here are suggestions from nonprofit officials on how to avoid problems.

Make sure it’s the right choice. Before getting rid of hard-copy annual reports, Charity L. Perkins, director of communications at the Duke Endowment, in Charlotte, N.C., advises groups to make sure the digital medium works with their audience and goals.

The Duke Endowment has 85 annual reports on its bookshelf, one for each year since its founding. “Trustees like a printed record for history’s sake,” she says. In Ms. Perkins’ previous work for a community foundation, she noticed that the development staff used printed annual reports effectively as a fund-raising tool and that, particularly when they were working with older donors, having their names in print, not on a computer screen, was important to them. Going to an “online only” annual report, she fears, might lose older donors for some charities.

After considerable deliberation, the Duke Endowment has decided to produce a smaller print annual report and a new online version that includes videos on key programs it supports, such as preventing child abuse, fighting hunger, and improving mental health. The latest print report is 36 pages, down from 80, in part achieved by dropping the printed list of grants awarded in the past year, which are now presented in a searchable online database.

Seek digital skills. Some nonprofits are bringing in experts from advertising agencies or digital production houses as consultants to help them create online reports. But other groups are retraining their publications staff members for the new medium. For instance, the National Center for Children in Poverty at Columbia University paid to send its print designer back to school to learn online production. “We would have lost this person if we hadn’t done that,” Mr. Ardoin says.

Sometimes the learning curve can be time-consuming. For its first online annual report last year, VolunteerMatch, in San Francisco, used Prezi, a Web platform similar to PowerPoint. The program cost the organization $60 and saved $17,000 in postage, envelopes, and printing, says Robert Rosenthal, director of communications for the group, which helps charities recruit volunteers nationally.

However, it took more than 100 hours of staff time to build it because it took time to learn Prezi, he says. This year, however, it will go faster, he says, and he hopes to add video.

Gather Web and print experts. Any effort to combine online and print communications should begin with a meeting of the organization’s staff members who handle each type of work, says Daphne Northrop, director of communications at the Education Development Center, an international nonprofit group based in Newton, Mass. “The Web-site people will have a much clearer idea of how much text works online, for example,” she says.

Last year, Ms. Northrop’s group integrated the design of its print and online reports—and, in reducting its 76-page hard-copy report to 18 pages, cut the costs associated with the paper version in half. The online version runs as a slide show. Gone are stories that ran as long as seven pages in the past, Ms. Northrop says. Some pages now have mostly graphics and professional photos with as few as 100 words of text.

The slide show takes about 90 seconds to watch, which is about the amount of time people spend glancing through printed annual reports, according to a consultant who advised Ms. Northrop’s team.

Keep videos short. Make online videos extremely compelling and short—three to five minutes, advises Carol Rugg, vice president of communications at the Charles Stewart Mott Foundation, in Flint, Mich. Then brainstorm ways to reuse them, she says, such as at fund-raising events.

Her organization created its first online annual report last year. She pays close attention to videos produced by other groups. “If you see enough of them,” she says, “you will know the elements that really work.”

Avoid frivolous features. “Don’t be taken in by all the bells and whistles out there,” Ms. Northrop warns. “One year, our online report included a swishing sound when you turned the page. A lot of people thought that was silly.”

Ms. Perkins, of the Duke Endowment, echoes Ms. Northrop’s caution. She sees too many groups adding features that are more distracting than functional. “Whether print or online, storytelling still needs to be the crux,” Ms. Perkins says.

Plan a distribution strategy. Getting the right people to see a nonprofit’s online report is the next challenge; at least a mailed report ends up in the hands of the right people, even if they don’t read it. Some groups, like the National Center for Children in Poverty, send postcards to supporters to alert them to the online report’s existence.

The Salvation Army, by contrast, rents e-mail lists of prominent people and asks them to forward the message to others. Major Hood says 35 percent of those who receive the e-mail message link click on it and see the annual report.

Many groups have found that they get the best visibility by making available small chunks of content on popular online destinations. Some groups break their annual report into pieces that work on YouTube or other sites that distribute videos. To drive traffic to those videos and to their larger report, they are blogging, tweeting, and using Facebook to spread the word.

Don’t assume all digital reports are money-savers. Bruce Trachtenberg, executive director at the Communications Network, a membership organization for people who handle foundation public relations, cautions that moving to an online report doesn’t necessarily save money. “What you save on paper and stamps you may pay in new technology costs,” he notes.

It might be a wash, or it might cost more money to do a good job online, he says: “And it might be better to do nothing online for now than to present something that isn’t very good.”

But as new software emerges that makes creating Web sites easier, Mr. Trachtenberg expects that the day is near when, with just a few keystrokes each December 31, an organization’s leader will be able to turn the year’s online posts into an annual report.

“When that happens,” he says, “it will become more of a living document—a conversation with the community throughout the year.”