Fresh Air for Annual Reports

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When was the last time your nonprofit invested long hours and significant dollars in drafting, designing, editing, proofing, printing, and mailing a hard copy annual report? If you are scratching your head or thinking, ‘Never!’ you are not alone. With the ease of handheld video cameras, sending an e-blast, and posting a pdf, technology is morphing the traditional annual report into something else. But as these exciting alternative opportunities develop, let’s make sure we continue to honor the purpose: to let in the fresh air of transparency so our nation’s charitable organizations continue to earn the trust of the donating public.

A novel way to present an annual report that offers transparency as well as connections with stakeholders is to host a national conference call. That’s what GuideStar has done since 2014, demonstrating a new approach to the old concept of an "annual report."

We really want to evolve the definition of transparency. We were interested in sharing timely, substantive information in an interactive and easily digestible way,” explained James Lum, CFO of GuideStar, when we asked him why GuideStar chose to convene an “Impact Call” to present its accomplishments. “We wanted to model financial transparency and essentially be more forward looking than is possible through a traditional annual report.” GuideStar now convenes quarterly Impact Calls (convened via  webinar technology so GuideStar can share dashboards of financial information and depict other information visually). GuideStar shares a template so that other nonprofits can follow its lead.

According to GuideStar, the advantages of moving off paper, and even off its website, into real time, accomplish these goals:

  1. Sharing timely information: Sharing your nonprofit’s IRS Form 990 financial information immediately shifts attention to the past, whereas sharing a snapshot of more recent financial status is more transparent. Typically, by the time a nonprofit’s Form 990 is filed (sometimes on extension) it’s many months, if not a year or more, since what is reflected on the IRS form was the nonprofit’s actual financial situation.
  2. Accountable: In a conference call format members of the community are on the phone as the nonprofit’s leadership explains its financial position, mission accomplishments, and perhaps even its challenges. Those community members can submit their questions and get their answers during the call. A call provides real-time access, modeling accountability in a compelling way for those on the call (and for others who may listen to a recording.)
  3. Inclusive and Interactive: Let’s face it: reading a traditional annual report, even one chock-filled with lovely photos, is still passive. And watching a short video, while more entertaining, asks the viewer to accept a portrayal of the nonprofit that some may worry is overly choreographed. In comparison, simply the act of inviting stakeholders to be at once audience and focus group on an “Impact Call” is an inclusive gesture, signaling to donors and other supporters that the nonprofit has nothing to hide and is listening to community voices. Anyone can join GuideStar’s Impact Call, which means its results are being reported far more widely than to just its funders and board. 
  4. Comprehensive: Being freed from the traditional “table of contents” of annual reports allows a nonprofit to include the most relevant and timely information that goes beyond financials and includes programmatic outcomes and a prospective discussion of where the organization is heading.

How could your nonprofit reinvent its annual report? Whether convening a call, creating a video, or sticking with paper or pdf, try to personalize the nonprofit. By including voices (such as the Board Chair, senior staff, and perhaps even a loyal donor) and by creating space for interaction, you can portray the nonprofit less like a monolithic institution, and more like the diverse, empathetic, and human-focused organization it is. Accomplishments can be highlighted through testimonials and stories. And if you go the route of inviting the audience to ask or submit questions, that interactive process can present opportunities for explaining why additional help is needed from the community to advance the mission. Your nonprofit might even use an Impact Call to lay the groundwork for recruiting its future advocates: community ambassadors, donors, and even potential board members!

All this sounds great, but will it take a ton of time? Actually, it may not be as time consuming as you think. Preparing for the call might be similar to preparing for a presentation to your board members, especially if your nonprofit already shares timely financial reports or dashboards with board members. What will it take to set-up a webinar, create a PDF, or a YouTube video, compared with sending out a direct mail piece or an e-mail blast? What are the advantages or draw-backs of each?

Whatever method you choose: How is your nonprofit opening a window to share timely financial and impact information? It doesn’t do your nonprofit any good to wait a year or more to share financial and programmatic information with potential donors. Previously we pointed out the many creative and engaging ways nonprofits are using to turn the traditional “annual report” into a testament to their organization’s impact. We certainly don't want to imply that there is anything wrong with the old fashioned paper production annual report - but, we do want to underscore how important it is to provide the donating public with timely and transparent financial and programmatic information. The annual report is dead! Long live the annual report!

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