Reimagining the nonprofit annual report
The annual report has long been considered a must-have for nonprofit compliance and donor stewardship. They are also typically expensive, labor-intensive, and time-consuming.
Over the last five years, Candid has re-imagined our annual report approach to be more efficient and result in a more useful product that goes beyond compliance to support donor stewardship and brand awareness. Here we share how we turned an expensive print piece into a simple, online PDF with multi-purpose content to maximize the return on our investment.
Do you have to produce an annual report?
This summer, we asked a simple question on Facebook: Does a nonprofit need to produce an annual report? It turned out to be a provocative prompt, with nonprofit professionals weighing in with answers that ranged from “Yes, of course” to “traditional annual reports are a thing of the past.”
At Candid, we tend to agree with the latter. While nonprofits are required to file annual tax forms disclosing their financials, we’re not required to publish donor lists, produce and mail expensive print pieces, or churn out all new, original content. These traditional assumptions result in extensive staff involvement across development and communications departments; a long production timeline (up to nine months!); and significant print and mailing expenses.
That said, we believe that the annual report is a key tool for inspiring donor confidence by telling a compelling story to demonstrate your impact. We started to consider what changes we could make to speed up the process, cut staff time and costs, and make better use of the content.
Content overhaul: dropping the donor list and financials
We immediately focused on two of the most time-consuming and stressful pieces of our report’s content: the donor list and financial statement. We already post our financial statement on our Candid profile, where it’s freely and publicly accessible to all. We couldn’t see any compelling reason to continue including it in the annual report, especially since it meant the annual report was dependent on our auditors’ timeline. While we long assumed our donors cared deeply about having their names listed, a donor list isn’t actually required. Finally, the stress and time spent ensuring the list was perfect (in print, you only get one shot!) made it easy to reconsider.
We decided to drop both in 2019 and see how people reacted. To date, we’ve had no objections or concerns about removing either section.
Format pivot
These successful shifts made us wonder: what else could we change to make this process more efficient? First, we tackled format. Our existing process of extensive copy review, graphic design and layout, print production, and mailing was incredibly time-consuming and expensive, with quotes for printing and mailing services of up to $15,000! It also resulted in soul-crushing paper waste.
We experimented with a mini-website for our 2018 report, but it was almost equally time-consuming and costly. The plan for the 2019 report was to go back to a PDF and smaller volume print run to reduce printing and mailing costs and paper waste. But then, COVID hit. With no one in our office to mail the reports or in donors’ offices to receive them, we pivoted to a PDF-only format, distributing it via email and on our website.
The result was a better, faster, and cheaper process that reached more people, which we continue to use today.
The last hill: storytelling
There was one final thing dragging out the annual report timeline: content development. We had shaved off a couple months but were still spending a ton of time creating new storytelling content that wasn’t shared widely. So, in 2021, we shifted our approach yet again.
We revamped our editorial direction to make use of content written and already published on our blog that year. Google Analytics told us what pieces about our work readers were interested in, which made it easy to select pieces to re-publish in the annual report. We settled on including a mix of those highly relevant blogs with new content that was forward-facing to tell a well-rounded, compelling Candid story.
Reusing and repurposing became an essential theme. We posted the new content on our blog after publishing our annual report to ensure we were getting maximum return on the investment of the time it took to create. We also distribute blog content in emails, directly in donor communications, and on social media to get the biggest bang for our buck.
Lessons learned
As nonprofits, we often approach our work through a lens of what’s been successful in the past. Given the dramatic advances in technology over the past decade, it might be time to consider if your annual report process is working for your organization. We hope the lessons we learned at Candid inspire you to consider new approaches to alleviate the annual report burden, giving you back the capacity and time so many of us desperately need.
About the authors
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Kate, Digital Communications Manager, Candid says:
Thanks for this idea! We will pass it along to our Candid Learning team.
Mara J says:
Can you host a webinar on what should be included in an annual report?
Tom McArdle says:
Great Ideas! I limited our financials to one page with some pie charts and a narrative. No one complained. Reusing content is a great idea a a real time saver, and let's us focus on current intiatives. Thanks!
Zahra Hassan, Development Manager, Candid says:
Thank you all for taking the time to read our post!
In terms of foundations asking for our financials, we send our audited financials to our funders to meet financial reporting deadlines. For funders that have a financial report due earlier than we have audited financials available, we provide them with our unaudited financials. We then provide them with our audited financials as soon as they become available and make sure to communicate this to them.
We found that waiting for audited financials to become available held up the publication of our annual report and funders often required reporting in a more formal way anyway.
Kate, Digital Communications Manager, Candid says:
Thanks! You can see the 2022 and 2021 annual reports here as PDFs.
[email protected] says:
Hi John, thanks for asking about this. The Better Business Bureau requires nonprofits to: "Make available to all, on request, complete annual financial statements prepared in accordance with generally accepted accounting principles." We post our financials publicly on our Candid nonprofit profile and provide financials to current and prospective funders directly.
Terry Norwood says:
Did I miss seeing a pdf of your annual report so that I could consider this switch?
It sounds like a fabulous pivot.
Give yourself the appreciation for the hard work to help all non-profits work more efficiently.
Thank you.
Kate, Digital Communications Manager, Candid says:
Check out our webpage with our 2022 and 2021 annual reports to see what they ended up looking like after this process.
Kate, Digital Communications Manager, Candid says:
We don't have a template, but you can look at our 2022 and 2021 annual reports online to see what they look like now.
Kevin Tate says:
This was a helpful article. Would you have an example or a template of your Annual Report? As a fairly new Director of a non-profit it always helps to have a template to refer to.
Thank you,
Kevin Tate
PTSD VETERANS OUTREACH INC.
Sonja Wingard says:
This was a good sharing about what you decided to cut out but a short list of what you decided were essential elements to keep in would be helpful.
Kate, Digital Communications Manager, Candid says:
Great! We are happy to share more. A great place to start is candid.org/explore where we can learn a little and see some of our free offerings.
Nahid Noorani says:
Hello, I would like to know about Candid is all about.
Thank you
Best,
John Keightley says:
Really timely post as we were just having this conversation the other day. I am really motivated to adopt some of these approaches. One thing I am curious about is your comment about dropping financials. The Better Business Bureau Wise Giving Alliance has a specific standard about Annual Reports that requires organizations to include certain financial info. Are you not reviewed by BBB or is there another way you meet this standard?
Suzanne Geimer says:
Thank you for this right to the point info.
Ed Miller says:
Very usable information. Thank you.
Mary C. says:
The BBB’s Give.org Charity Standards include publishing an annual report in order to be accredited. Many, many foundations require Annual Reports as attachments in order to qualify for a grant. I appreciate the push to modernize and digitize the practice of publishing annual reports (as most under-resourced nonprofits already had done out of necessity) but framing it as “not required” is a stretch.
Tessa Dunning says:
DBE requires an annual report, a precis of activities, balances at beginning and end of year, number of members, new members. Fundraising activities, beneficiaries.