Tag: donors

Advice on Nonprofit Annual Reports

~ penningink ~ 2 Comments

A few months ago, I spoke to a group of nonprofit executives about the types of information nonprofit donors prefer. You can read more about that in a previous blog post.

I received an email following that presentation asking for some advice about whether or not to do an annual report. I thought I’d share my response here.

First of all, why should a non-profit organization do an annual report? They are not required by the Securities and Exchange Commission (SEC) as they are for public companies. This could be seen as a good thing if you’ve ever read the SEC’s instructions for an annual report, called a 10K in government parlance.

But many nonprofit organizations do annual reports anyway, and with good reason. One reason is simple accountability. Donors who contribute money in various amounts all want and deserve to know how well it was spent, and what was the return in terms of organizational mission. Staff, recipients of services, government agencies, and other publics may also expect to know what the organization did in the past year.

The annual report also serves as a fine promotional tactic and should be seen as a strategic aspect of the organization’s ongoing communication plan. Donors feel compelled to give again–or for the first time–when reading about accomplishments and seeing who else gave. Community members have a deeper understanding of the organization as opposed to just name recognition. This can lead to referrals for services and partnership opportunities as well as support.

The woman who emailed me also asked if an annual report could replace their newsletter. That’s a possibility, but you lose some frequency since annual reports only come out once a year. Another option is to make the annual report the fourth issue of a quarterly newsletter. It saves the money of an additional publication but maintains top-of-mind communication with key audiences and fulfills the purpose of an annual report. It could be an insert in the newsletter or a special issue format.

So then the question becomes, what sorts of content should you put in a nonprofit annual report? Here’s a suggested list:

  • First, have a theme each year that is told both in words and graphically. The theme should tie in to the organization’s mission generally but also be specific to unique success in the past year or a vision for the year(s) to come next.
  • Include a letter  from the president and/or board chair that reflects on the past year, looks ahead, and incorporates the theme. Go for personality and creativity as opposed to perfunctory, pedestrian language.
  • Include a list of board members and their affiliations as well as staff with titles. This is a form of transparency, but also personalizes the organization and provides implicit endorsement.
  • Donor profiles. Telling the stories of donors, including who they are and why they give, serve as both grateful recognition and powerful testimonials to motivate repeat and new giving.
  • Success stories. Nonprofits don’t exist to just gather funding, they have a mission. Telling personal stories about real people who benefited from that mission puts a face on the cause, treats the recipients of services with dignity, and provides all readers a deeper and more  accurate understanding of the organization’s work.
  • Finally, include the financials. This would include both sides of the ledger. For donations received, name donors (with permission) and possibly put them in tiers or categories of giving to show that all sizes of gifts are  welcome. If gifts were earmarked for specific projects or programs, show that also. Then, show how money was spent by category of mission, including administrative costs. This is again both a form of transparency and good promotion to show the need, responsibility, and diversity of organizational assets.

A good idea is to include an envelope or web address for additional giving. Track the responses that come from it, as well as comments from key publics for future reference.

Understanding Nonprofit Donors’ Preferred Types, Qualities and Sources of Information

~ penningink ~ 1 Comment

I was happy to speak to a sold-out crowd of 60 nonprofit professionals last week about how to reach out to potential donors based on the information they are interested in, not just what nonprofit organizations want to send them.

Discussing nonprofit donor information preferences at
the GVSU Johnson Center for Philanthropy.

The presentation was at the GVSU Johnson Center for Philanthropy, as part of its “Brown Bag Lunch and Learn” series.

I was sharing data and information from my chapter “Nonprofit Financial Communication: Donors’ Preferred Information Types, Qualities and Sources.” The chapter is included in the recently published Handbook of Financial Communications and Investor Relations. The study of the information nonprofit donors seek is an extension of my research on individual investors when they are considering purchasing a stock: “The Value of Public Relations in Investor Relations: Individual Investors’ Preferred Information Types, Qualities and Sources”.

Attendees were interested in the results of my survey of a sample of 173 donors to a large community foundation. The book chapter includes a lot of statistical analysis of results (which can be read if you acquire the book via the link above). In the presentation I hit the high notes of practical take-aways about the types of information (i.e. content), qualities of information (ranging from length to tone and more) and the sources of information (meaning the people or communication tactics). The brief results are as follows:

Top preferred types of information:

  1. Mission of the organization
  2. Impact of the organization and the donations received
  3. Where money is spent by category
  4. Location of organization (local, regional or national)
Top preferred qualities of information:
  1. Personalized appeal
  2. Focused on organizational need
  3. Stressing a specific giving opportunity versus general gift to organization
  4. Focused more on results of organizational work vs its need for support
Top preferred sources of information:
  1. The organization’s web site
  2. The organization’s newsletter
  3. Other donors (i.e. word of mouth)
  4. The organization’s annual report
  5. Conversations with staff of the organization (ie interpersonal)
It is interesting to note that the news media does not rank highly in the responses of donors as a source of information for donors to nonprofits. Media relations and publicity are helpful, but it turns out not the most persuasive form of communication strategy when trying to gain attention and raise funds. The news media was valued, but came in after other sources of information when donors were asked what was the “most useful” source of information and presented with people and organizations, not tactics. Their response in order of preference was:
  1. The nonprofit organization itself
  2. Other donors
  3. A charity expert (such as a financial planner)
  4. The news media
When so many people confuse “PR” for publicity, it is important to note that the strategic communications and relationship building aspects of public relations–the real root of the profession–are most effective in the minds of donors.
In my study, and to a degree in my Johnson Center presentation, I went over the association of variables. In other words, when donors are looking for specific types of organizations, they look to specific sources. I also explained that when they want certain qualities of information they favor specific sources. These are illustrated in the latter slides in my presentation, which is available on my Slideshare page.
The room full of nonprofit pros had a good variety of questions and observations. In the end, the discussion showed that public relations, and nonprofit public relations and fundraising, is far more sophisticated and strategic than “getting the word out” or “just raising awareness.” Nearly everyone said they left with something specific they could apply back at the office, which made me more motivated when I got back to my office.