Top Eight Reasons Why an Annual Report is Necessary Regardless of Your Nonprofit’s Size
When someone new joins a nonprofit team there is always a moment in the first few weeks where they have questions about data, financials, or programs. They probably swivel over to a colleague and ask for help, and without a doubt, they always end up hearing “you can look in last year’s annual report”. The annual report is the gatekeeper of knowledge. The pdf of public relations. A grant writing must-have. From the American Heart Association all the way down to a tiny nonprofit startup of two people, every nonprofit needs to have an annual report. Not convinced?
Here are our top eight reasons for having an annual report regardless of your nonprofit’s size.
1. Board Members
You want your board to see the work that you have accomplished throughout the year so they continue to advocate for you and your mission. Or maybe you do not even have a board yet. The annual report is something that will help with board member recruitment. Having a visual with data and stories is going to be the key to piquing interest with community members and will be an example of your leadership.
2. Grant Writing
Raise your hand if you’ve ever submitted a grant proposal and they asked for an annual report attachment? *All hands go up in the room*. When applying to foundations they often ask for this key collateral because they want a snapshot of the work you did throughout the year and the impact it has. Not having these materials on hand-even makes you seem unorganized and could hurt your chances of getting funding and also being able to attract grant writers. Keep in mind that if you hire a grant writer, they will be asking for your annual report.
3. Thought Leadership
The CEO of a nonprofit always has an opening statement about the current climate of their sector or cause, and this is your opportunity to show yourself as a thought leader in your area of expertise. When nonprofits do literature reviews or research for their programs, often times they site annual reports and nonprofit data from thought leaders in their field. You want to share your nonprofit’s findings so that others use you as a reference and refer to you in their own work.
4. Staff Communication
An annual report is like a yearbook for board members, staff, volunteers, and clients. Having a completed and polished piece of work is not only a portfolio piece for your staff, but using an annual report project as a team-building exercise is possible as well. For each annual report, it is all hands on deck to complete the nonprofit data, content creation, and marketing required for a report. Using this moment to bond and reflect with staff can be an uplifting experience for your entire team and a way to practice effective staff communication. Stressful and a lot of work? Yes. An opportunity for reflection and collaboration? Absolutely.
5. Attract New Donors
The biggest case for an annual report is marketing. You use it to market and sell yourself with grant proposals. You are using it to sell yourself to new board members. You are also using it to court new donors. When fundraising and requesting support from funders, they are going to want to see a report of your financials, your programs, and how you are on expanding beyond the horizon every year. You need something substantial, something visual, to show them that their donation is going to make an impact in their community.
6. Storytelling
In your annual report, the items that are going to convince someone to invest in your process will be photos, data, and especially stories from the field. Your annual report is an opportunity to dig down deep and explain the impact on a very personal and relatable level. This is your moment to share one or two of the moments from the year where you knew that your nonprofit was making a difference as told through the eyes of a client. Sure you can tell stories via your marketing agenda or through content creation on your social media. Yet those tend to be short snippets that lack the luster and full story that you can bring forward through your annual report.
7. Data for new employees
Let’s go back to the very beginning of this blog. When you hire new staff or bring on new board members, a lot of the information that they will have initial questions about can be found in your annual report. When you onboard new staff members you want to be able to catch them up as soon as possible on what your mission is, what you’ve been doing, and the data you have recorded over the year. Having an annual report is the fastest way to get everyone on the same page as they join your team.
8. Compass for next financial year
In summation, and most importantly, the annual report is used as your compass for the next year. It’s a point of reflection on your data, your financials, and how to move forward in the fiscal year. This compass will establish conversations that will guide your team forward. Without one, you can expect confusion and diminished returns on workflow. An annual report is a huge undertaking but the value it offers your staff, board members, and even your own understanding of your mission is absolute. Smaller nonprofits or those initially starting out, often neglect this vital piece of information in their first few years, when really these are the years where an annual report would be hugely beneficial.
At Mockingbird Analytics we offer consulting and coaching on annual reports and literature reviews for small to medium nonprofits. If you are stuck and unsure of what information needs to be easily accessible in your marketing and data collection, we can provide professional and experienced partners to guide you towards a complete, cohesive, and engaging annual report.