As we turn the page on the final month of the calendar year, it’s normal to reflect on our accomplishments and set goals for the future. For individuals, saying these accomplishments and goals out loud (or writing them down) can help us remain accountable to ourselves for the coming year. For organizations, this process is an important means of stakeholder stewardship and engagement and typically takes the form of an annual or impact report.
Although the names are sometimes used interchangeably, there are some differences between annual reports and impact reports. As the more traditional of the two, an annual report features a full list of accomplishments, audited financials and a complete donor listing. However, we find that many nonprofits are shifting to an impact report, which is narrower in scope and focuses on the impact your organization has made in the lives of your clients and community. Additionally, there are hybrid formats, which incorporate a blend of accomplishments, financials and impact. Regardless of the type, this report should demonstrate your organization’s achievements to donors, volunteers and other stakeholders. In most cases, we believe impact reports provide a quicker and more effective way to achieve the goal of inspiring confidence and encouraging continued support. However, we encourage you to reflect on your organization’s accomplishments and financial position and select the type of report that will best convey how your organization is making a difference.
To that end, we wanted to share our top tips for creating a memorable report:
Message from CEO & Board Chair
We love when the CEO and/or board chair share not only their successes from the past year, but also lessons learned and calls to action for the upcoming year. Future plans help excite donors and set expectations. We like to keep this message concise and print it as a separate insert to the report, so staff and board members can add a personalized note on it to major donors.
Theme
We have noticed recently that many nonprofits now go one step further and develop a theme for each report. Having a descriptive title that encapsulates your strategy for the year can add some punch to your work and entice readers to learn more. Be sure to also include your vision, mission and values too.
Focus & Clarity
Not everyone will be reading the report for the same reason. Some will want to verify the ROI, and others will want to feel good about being part of making a positive change. To ensure everyone comes away with the information they need and a high-level understanding of your organization’s impact, avoid nonprofit lingo and use clear, straightforward language written at a high school reading level.
Accomplishments
Too often, social sector organizations get caught in the “activity trap,” sharing long narratives about everything they accomplished. While your supporters care about what you did, they care even more about the lives your organization impacted. So, remember to start with the why, prioritize your most important accomplishments and be concise!
Impact Goals & Diagrams
Don’t forget the data! We encourage you to include graphic visualizations of your most impactful data that can be quickly absorbed. Be sure to share outputs as well as outcomes (e.g., clients served, volunteer hours, money distributed).
Impact Stories & Testimonials
Data without stories is a missed opportunity. We love it when data is elevated through an effective story, quotation or testimonial that shares how stakeholders are impacted by the organization. Don’t make the mistake of just focusing your impact stories on clients – volunteers, staff and donors also have great stories to tell!
Financial Snapshot
An annual report includes a reporting of audited financials while an impact report includes a financial snapshot. A financial snapshot should include sources of funding in a pie chart and a brief expense overview that summarizes how your organization uses donated funds.
Donor List
An annual report includes a full donor listing, whereas an impact report may or may not include an abbreviated donor listing recognizing high-level donors and partners. Regardless of report type, we encourage you to take an opportunity to thank your donors.
Gratitude
One of the purposes of an impact report is to showcase achievements. However, these would not be possible without donors and volunteers. Much like an annual letter, an impact report is an opportunity to weave gratitude throughout and increase your stakeholders’ ambassadorship.
History
If you have had an anniversary in your organization or an individual program, help new and old stakeholders see the bigger picture by sharing a timeline of success.
Pictures
It is true what they say – a picture is worth a thousand words. Plan ahead to take pictures throughout the year and create a file for the report. Real photos of your clients and volunteers are far better than stock images in making an impression on the reader. And ensure that your pictures display the diversity of your work!
Paperless
A printed report can be helpful to many, but a digital version (written or video) can also be a value-add. We also love it when nonprofits make it easy for donors by adding links (to a digital version) or a QR code (to a printed version) for readers to donate or learn more about your organization. Whenever possible, share your report through as many channels as possible. Post it on your website, social media and send it via email to your entire mailing list. To save paper, you could even send a postcard with a quick snapshot and QR code linked to your full report!
Timing
Sending an impact report at the end of the fiscal year works best for most nonprofits. If your fiscal year coincides with the calendar year, then plan on a year-end report. However, if, for example, you provide education-related services, sending a report at the end of the school year may make the most sense.
BONUS: ESG (Environmental, Social and Governance)
While most social sector organizations track program and financial outcomes specific to their mission, corporations in the for-profit world are tracking ESGs. We anticipate that more nonprofits will follow this trend in the coming years.
By keeping these 14 key considerations in mind, you can create a report that shows stakeholders the difference their support has made – and inspire them to continue investing in your future work. If you have any additional tips on impact or annual reports, send them our way! We would love to learn from you.
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