Lots of very constructive responses to our question of last week: Are Annual Reports Dinosaurs?

And it looks like we have a hung jury!

One group leans toward more timely and frequent donor communication, including in lieu of "saving it up" for the annual report. Another group says different strokes for different folks … so they wouldn’t necessarily discard the annual report.

One thing everyone agrees on: Make it donor-centric!

At the end of this post, I included excerpts from the comments that will give you a feel for the range of opinions. But many are quite specific in terms of practical advice … and I urge you to read them here.

My opinion? Call me a fence-straddler! I believe …

1. AR’s should definitely NOT displace regular, timely donor-focused reporting. If an AR is done at all, it should meet an explicit strategic and audience need.

2. There’s a key issue here of proportionality. First, an AR should not become an all-consuming exercise (in terms of staff energy and dollar resources) at the expense of consistent year-round donor communication. And second, an AR should not be "over the top" in terms of being out of character with the overall style and means of the nonprofit.

3. As noted above, make it donor-centric … not a celebration of your misson statement, org chart and staff pedigree. Remember: it’s the results that count … specifically, the results your donors (and volunteers) made possible by their generosity.

4. Use all media. If you do an AR, get it online … perhaps in its component parts to facilitate browsng and downloading.

5. Financial transparency is an absolute requirement. But obviously your website can provide all the needed information … with levels of detail your donors and prospects can self-select.

6. Do it well, or don’t do it at all! I’m not referring to slick production values here; I am talking about quality communications — from story-telling, to genuine reflection of your nonprofit’s personality, to design and layout "best practices."

7. I see ARs — if well done — as potentially most useful in the major donor prospecting context. In high dollar peer-to-peer cultivation and solicitation, the Board members and other missionaries like to have a single document (yes, a document) that integrates key achievements (success stories), the unique success strategy, the key people, and the basic financial profile. Ultimately, the "close" might well require a more customized approach that addresses the specific concerns and objectives of the individual prospect (i.e., donor-centric), but an AR designed expressly to support major gift solicitation can be an important conversation-starter.

I guess, as I think about what I’ve just written, I see the AR more as a prospecting tool than as a reporting tool for current donors. For the current folks, "reporting" should be ongoing and as tailored as possible to the known interests of individual donors or groups of donors. And in the format/medium they prefer.

No silver bullet here! Take a look at the comments below.

Tom

Simone Joyaux
Make your annual report a donor-centered interesting storybook that is useful to your donors and prospects. Maybe your annual report is only 2 pages long. Maybe your annual report is an issue of your newsletter. But for sure, your annual report isn’t one of those corporate communications documents that talks image, costs too much money, and doesn’t grab the attention of donors. Yes, I still like annual reports, the right kind!
   
Jay Goulart
Over, Dead & Worthless … I have much experience getting rid of this beast and have redeployed the money for a greater return in raising money. The Annual report is written for everyone, so it is not written for anyone.    

Katie Nelsen
I’ve often considered the annual report one of the most important stewardship pieces an organization can produce, but deep down, I think I’ve been waiting for someone to challenge the status quo … Should we let the necessity of listing donors be the deciding factor on whether we produce an annual report as we’ve always known it?
   
Dawn
I think annual reports are dinosaurs … I think the the lesson of annual reports is to find ways to share the kinds of information they typically contain with donors 3-4 times per year for ongoing cultivation.

Janice
I believe they really are important cultivation tools … I do think an online version is preferable to printing and mailing those more expensive pieces. However … I would suspect that knowing your audience is the key to figuring out whether or not you can go digital with an Annual Report–but I think it’s worth the effort to produce one regardless.
   
Kathy Swayze
I think annual reports (and newsletters) continue to be important tools for stewarding donors. Organizations can certainly cut back on the glossy paper and expense, but they should not cut back on the information.
   
Jen
What makes most annual reports so deathly boring is that they are cover-to-cover organization-centred: do you think your donors really care about your mission statement, vision statement, 3-year strategic plan and your organizational structure? What do YOU care about as a donor? You care about stories. You care about how your money is spent. You can — and should — create an Annual Report that is donor-centred.

You can use your Annual Report to engage with your donors and build a relationship. We’ve just created a “Gratitude Report” that we are enormously proud of, and our client is delighted with it. Totally unique, totally donor-centred.   

Andrew Kramer
…we’ve never published an annual report. We just try to be responsive to our donors and volunteers, communicate directly, efficiently and timely information about our progress and financial standing–and of course we tell lots and lots of stories and take thousands of photos. The whole idea of an annual report just doesn’t make sense to me–in fact, it would become a reason NOT to communicate with our stakeholders on a more timely basis because we’d have to have something to put into the annual report.

Is there a requirement to publish an annual report? … We’ve been getting grants for six years and no annual report. Major donors are the largest source of revenue for us and no annual report. So unless I’m missing something, the better question is, who are nonprofits really putting together annual reports for? Their stakeholders or their marketing departments and senior management teams so that they can rest assured that they accomplished something in the PREVIOUS YEAR.

Shannon McCracken
By the time all the annual finances are officially approved and the numbers can make it to a graphics department for publication … well, it really feels like old news. And if we’re doing our jobs well, these major donors are already hearing from us in other ways about how well we’re using their funding and where the need for more support still exists … And what remains is the donor recognition piece. I think if we retire the glossy annual report, we can find other ways to give our major donors public kudos in a more timely fashion.

Raymond J. Mitchell
Long before there were anywhere near the kinds of “whiz-bang” technology we have available today — the multiple means of electronic communication, the web-based channels galore — folks in the nonprofit sector stroked chins, puzzled over and opined about the real value of the annual report as a tool for general communication and donor cultivation.

I think the reason for that puzzling about value is based on two factors: (1) the annual report can be a pretty costly collateral item (depending, of course, on how free you feel to spend money), so it’s always going to be called into question by somebody; (2) the organizational rationale and overall strategy and goals in producing an annual report are either missing or not well-conceived in the first place. And the issue of donor communication/recognition/cultivation obviously needs to be a critical component of that rationale and strategy.

…I have battle scars to show for having tried to run toward both extremes with this question over the years. My bottom line? There is no single, one-size-fits-all answer to this issue … figure out the best course of action for your own organization and produce a report that helps to MANAGE AND SUSTAIN POSITIVE RELATIONSHIPS.