Why Your Foundation or Nonprofit Needs an Annual Report

Don't shy from the spotlight! Organizations of all sizes and budgets can benefit bigtime from this classic and influential document.

As we start another year, it’s natural to look back at all we have done in last 365 or so days. But it’s also important to write that all down, reflect on its impact, and spread the word. Much like Cousin Martha’s year-in-review letter showcasing job promotions, family vacations, and graduations, your foundation's annual report is an opportunity to clearly -- and, sure, proudly -- share what you accomplished. It also can greatly influence how you do in the year ahead.

Why you need an annual report

Duke Haddad, executive director of development for The Salvation Army Indiana Division, likens it to a report card. You expect your children to come home from school with something to show for all their time -- proof they have done something, and well. So it’s not unusual that a donor -- or prospective donor -- would want proof of what you accomplished, too.

A well done annual report can:

1. Educate and encourage donors. People give because they want to make a difference, but may not have the tools or time to do that work themselves. They expect their funds to be used to make that impact. Providing them with an annual report that clearly shows how donations were utilized and the change they enabled builds their trust in your organization and can encourage another donation in the coming year.
2. Create awareness and partnerships. There is always someone new you can share your story with. If they aren’t already involved with your organization, your annual report is a common way new potential donors or local corporations looking to partner with a foundation will study up on and even judge you. Make sure they have the information they want and need.
3. Prove proper stewardship. In today’s society, doubt is everywhere. Organizations need to be held accountable. When you publish a clear annual report, you can easily share your organization’s procedures and actions and position yourself as honest and accountable.

What goes in an annual report?

An annual report need not be an expensive and time-consuming endeavor. It doesn’t need to be flashy or high-tech. It does, however, need to be clear, truthful, and true to your brand.

The basic checklist to follow is:

• Your organization’s mission and annual goals
• Basic financial breakdown -- how much came in, how much went out, and where to and from
• Giving and impact highlights
• Recognition of donors and volunteers
• A brief call for donations for any upcoming campaigns

Most of this information you already have in other collateral, so pulling it together is simple. Your financials and other potentially interesting data -- think number of grant applicants, percent of applicants awarded funding -- can be pulled from your dashboard in your online grants management platform.

When it comes to your giving highlights, focus as much as possible on impact over the actual activities that accomplished them. The amount given to a local food pantry is not as compelling as the number of children who didn’t go hungry.

Lastly, include photos: photos of your events, of your meetings, of the projects your funding went to. Photos are emotional drivers and engage readers, pulling them into your text, your impact, and your mission. One great photo can translate into one new donor.

Old school or high tech?

Annual reports are traditionally printed pieces that are mailed to current and potential partners; while design of a print piece can be done in-house or quite affordably, printing and mailing costs continue to rise. That’s one reason so many organizations are moving online with their annual reports.

While the design cost may be slightly more if you don’t have someone on staff with basic web design skills, distribution is much easier, a fact that can lead to even greater visibility and engagement. With no mailing budget limit, your list of recipients can grow as you do. You can share a URL to the report on social. And your current supporters can easily share the report with friends, family, colleagues, and more, allowing your report to achieve an almost viral quality and your organization the attention it deserves and needs.

Foundations and nonprofits: this is one instance where being humble won’t serve you well. Share, promote, and encourage others to help you do even more. This year-end could be the start of your best one yet.