Kivi's Nonprofit Communications Blog

This question came in last week to AskKivi.com:

“Should we include articles and photos of our fundraising events over the last year in our annual report? Based on your “Seven Easy Steps to Writing a Great Annual Report“, I would say no since it is an activity, not an accomplishment. What do you say?”

– Sally Coates, Episcopal Charities

Here’s what I told Sally:

I generally discourage it, with three exceptions: (1) You can clearly connect the fundraising event to an accomplishment, e.g., the money raised at the event paid for xyz, which resulted in xyz. You should still lead with the accomplishment, but you can talk about the fundraising for it a few paragraphs into the section. (2) Fundraising event photos are the only decent photos you have. Event photos are better than no photos at all. (3) You include the text and photos in the financial section of the report.

Do you have questions about nonprofit annual reports? Visit my site www.NonprofitAnnualReports.net and if you don’t find your answer there, send me a message at AskKivi.com.

A few months ago, I got a bit huffy when I saw that my husband and I were listed in a local nonprofit’s annual report as “Mr. and Mrs. Edgar Miller” for a donation we’d made. I’ve been living in a small town in the South for five years, so I guess I should be used to being relegated to “wife of” status by now, but my Berkeley feminist roots were pinched. I chalked it up to the cultural and generational divide between Boomer and older age groups (who make up the board of directors of the group and probably most of its donors) and my cohorts in Generation X who were raised to expect equality in all aspects of life.

I didn’t think about it again until the ever loyal husband told me he had informed the development director of the group about my little dining room outburst and disappointment in the group for not taking what I considered to be a more modern approach to their donor list. The next solicitation letter we received from the group a few weeks later was addressed to Mrs. Kivi Miller and Mr. Edgar Miller.

This issue came up again recently when I was working on a client’s annual report. Because of the way their database was set up, the donor lists included entries like “Mr. and Mrs. John Smith” and “Sally Jones and James Smith.” About half of the entries used Mr. and Mrs. and the others didn’t. In other words, if the two people who donated together were not married or the woman had kept her maiden name, she was included by name in the donor list. If she had taken her husband’s name, she was not. The staff noticed this aberration and spent a few days rejiggering their database reports to create a new list that included the first names of both partners, regardless of marital status. In this particular case, all Mr. and Mrs. courtesy titles were removed from the list. This particular group is very progressive, as are their donors, and it was definitely the right decision for that group.

So what should you do in your annual report?

I recommend that you list donors however they request to be listed. If someone fills out a donation slip with Mr. and Mrs. Edgar Miller, then print it that way. If they complete the form like we always do (Kivi and Edgar Miller) then list them that way. I quickly reviewed about ten annual reports from major nonprofits this week and found the majority used a mixed list. I don’t know how they are deciding when to use the courtesy titles and when to use the first names of both partners, but I hope it’s based on the donors’ stated preference.

What do you think? Is using the courtesy titles with the husband’s first name only as the default style for a donor list still OK in 2007? Should both first names always be used sans titles? Or is a mixed list based on donor preference OK, even if it makes your list look a bit messy and inconsistent? You know how I feel. Tell me what you think.

The Columbus Foundation asked me to write an article  on annual reports for  one of their newsletters. That article appears below. If you’d like a customized article for your foundation or association newsletter on  nonprofit annual reports or another nonprofit communications topic, contact me at kivi  *AT*  writing911.com  or  336-499-5816.

Even though nonprofit organizations aren’t required by law to publish annual reports, most nonprofit leaders recognize the value annual reports can provide. A well-written annual report will help you demonstrate your accomplishments to current and future donors, cultivate new partnerships, and recognize important people. Five questions are most frequently asked by nonprofit managers who are producing an annual report for the first time.

Do we really need an annual report? Yes. You don’t need a beautiful, full-color, glossy 40-page production, but you do need some sort of accounting of the organization’s work over the past year. Even if it is only a two-page flyer you photocopy, you should get in the habit of producing an annual report. It is better to start simple and to work up to more complete, professionally written and nicely designed reports over time than to produce nothing at all.

What’s the most important part of an annual report? The most important part of a nonprofit annual report is the description of your accomplishments. We want to know what you did, but more importantly, we want to know why you did it. What were the results? Why did you spend your time and money the way you did? What difference did it make? Connect the everyday activities of your organization to your mission statement. Don’t assume that readers will automatically understand how your activities help you achieve your mission. Connect the dots for them.

What needs to go in the financial section? The financial section of a nonprofit annual report should clearly explain where revenues come from and how they are spent. In addition to the information provided in traditional financial statements (abbreviated formats are fine in an annual report), it’s also helpful to include pie charts, bar graphs, or other visuals that help readers see the big picture and understand financial trends. A short narrative description is also essential. Explain in plain English the meaning behind all those numbers.

How do we handle the donor lists? Organize your list of donors however it makes the most sense for your organization. Most nonprofits organize donors by contribution level and then alphabetize each of those lists. You can also alphabetize the full list without regard to donation level. Be sure to double-check all names, both personal and organizational, in your donor lists. Spelling a donor’s name wrong in your annual report is a sure way to sabotage a future donation.

What should an annual report look like? If you aren’t sure how your annual report should look, spend some time looking at other annual reports to discover what you like and don’t like. You can find links to over 100 nonprofit annual reports at www.NonprofitAnnualReports.net. See how other organizations in your field or geographic area are designing their reports. Show the person who will design your report several samples that are line with the look and feel you are after. It is also helpful to show a designer samples that you don’t particularly care for.

To learn more about writing nonprofit annual reports, visit http://www.NonprofitAnnualReports.net where you will find tip sheets and a self-paced annual reports e-course. You can also sign up for the Nonprofit Annual Reports Insider, a free monthly e-newsletter.

I’ve compiled a list of the ten mistakes that I most often see in nonprofit annual reports. The top mistake? Focusing on activities instead of accomplishments. I’ve written about this one before. You can request a copy of the full list at www.NonprofitAnnualReports.net

Don’t feel bad if you’ve made some or all of these mistakes. There is very little guidance out there for nonprofits on how to write a good annual report. I’ve tried to fill that gap with www.NonprofitAnnualReports.net and especially with my e-course, which is now self-paced. You can start any day you’d like (including today) and the $149 fee includes a half-hour of consulting time with me. It’s structured as a four-week course, but you get six weeks to complete it. It’s full of practical advice, clear examples, useful exercises, and great resources. Learn more about the course here. It’s been favorably reviewed by every person who has enrolled in the course to date and by Joanne Fritz over at About.com. If an e-course is more than you need, you’ll also find free advice and some reasonably priced tip sheets at the site.

If you are interested in seeing some annual report samples from other nonprofit organizations, check out my updated list. The list contains links to the annual reports of many of the nation’s largest nonprofits. I’ve just updated it to include many of the 2005 reports that weren’t available earlier in the year. It’s a great resource if you are interested in seeing what others are doing with their annual report themes, content, messages, design, etc.

This is the time of year when I start to get lots of questions about nonprofit annual reports. The fiscal years of some nonprofits end in June or September to coincide with state or federal fiscal years and those folks are working on their reports now. Even organizations on the calendar year are starting to think about how they want to look back on 2006.

If you are tasked with writing an annual report, there is one bit of advice that is far more important than any other: focus on your accomplishments, which are not the same thing as your activities.

Maybe you attended lots of meetings with local business leaders, for example. That’s an activity. But why do you go to those meetings? What are you trying to get done by attending them? How do you justify spending all that time in those meetings? That’s what we want to know — what does your participation in those meetings accomplish and how does that relate back to your mission statement?

You revamped your website this year and added a blog. Great, but so what? Just about everyone else did that this year too. As a potential donor or volunteer, why do I care? What can your organization do better now that the site has been upgraded? Are you offering faster or more efficient service to your clients? Does the site include new tools that make it easier for you to connect with your community? Tell us how your new website and blog relate to implementing your mission.

During my annual report e-courses, we do an exercise where participants write down their activities and then convert them into accomplishments. I am constantly saying, “And that’s important because . . .” to get the students to connect all the dots between their activities and their mission statements. What’s in between are the accomplishments for the year.

Here is example of this conversation, and the thought process you need to go through.

Nonprofit: We hosted a golf tournament and a silent auction as fundraisers.

Me: And that’s important because . . .

Nonprofit: The events raised $20,000.

Me: And that’s important because . . .

Nonprofit: We need the money.

Me: For what?

Nonprofit: Our scholarship fund.

Me: Which is important because. . .

Nonprofit: These kids can’t afford college otherwise.

Me: And how many scholarships did you fund with $20,000?

Nonprofit: Five.

Me: So which sentence is the accomplishment that should lead the section on this area of your work?

We held a golf tournament and a silent auction.

Or

We helped five students attend college.

I hope it’s obvious that the right answer is the second sentence.

It’s easy to get caught up in all the work you are doing and lose the focus on why you are doing it. In your annual report, it’s essential that you step back and remember why.

This question came in last week to AskKivi.com, the site where you can ask me all those publications questions not answered on my other websites.

“What is a good ratio of program to budget information for annual reports for a nonprofit organization?”

I’d go with the 80-20 rule on this one. Eighty percent should be programmatic info and twenty percent should be financial reporting. If you have a 12-page annual report (self-cover) that means you’d have one two-page spread on your financials. That’s plenty, considering you also need to save some space for donor lists, which brings me to another question I get all the time.

“How many pages in our annual report should we devote to donor lists?”

On this one, I’d go with more like 10-20% tops. In a 12-page report, I’d try to get the lists all on one page, or at most, one spread.

It’s important to recognize your organizational funders and individual donors in your annual report, but not at the expense of adequately explaining your accomplishments and your financials. If you find yourself using page after page for donor lists, and you can’t afford a longer report, it is time to find another way to recognize lower level donors besides your annual report, such as inclusion in your newsletter or website.

If you are searching for help with writing your nonprofit’s annual report, check out www.nonprofitannualreports.net. I’m now teaching “How to Write a Nonprofit Annual Report” once a month, starting on the first Monday of the month. Each course lasts four weeks and includes instruction and exercises on all of the major sections of a nonprofit annual report. The course costs $119 and now includes 30 minutes of one-on-one consulting time, in addition to a course bulletin board where you can ask questions and get feedback on exercises from both me and other participants.