Sharing Bad News In Your Annual Report

A charity’s annual reports provide information about the organization’s mission, history and summarizes the achievements in the past year. The chief purpose of the achievements section is to make donors and stakeholders feel good about their financial contribution or participation in your charity, and to learn about the social impact the organization is making.

While charities have been publishing annual reports for many years, the leading charities have learned how to leverage the reporting to retain and attract stakeholders and donors to support the cause. Their success, in my opinion, is found in their ability to ‘tell their story’ in a compelling way, while being accountable and transparent when reporting significant activities (the good and the bad) of the past year.

The organization, Charity Navigator refers to “accountability as an obligation or willingness by a charity to explain its actions to its stakeholders, and transparency as an obligation or willingness by a charity to publish and make available critical data [information] about the organization.”

How the board of directors and executive management group embrace their responsibilities for accountability and transparency within the content of the report is critical to elevating the organization and building trust with stakeholders. This is essential when communicating negative occurrences that may compromise the relationship between the charity and its stakeholders.

Before jumping into the publishing process and investing significant time and money producing an annual report here are 6 tips to consider:

  1. Begin by establishing an editorial workgroup that can steer the creative and content decision-making on behalf of the board and executive management. A blend of governance volunteers, staff and key stakeholders can provide sound advice and direction to address the more contentious or challenging content.
  2. Often organizations reference or blend information from the previous year’s report. While referencing historical activity may help to provide important context or illustrate a pathway to the current year’s results use this comparative data carefully. Avoid ‘cutting and pasting’ the previous year’s narrative, template letters from the Chair and CEO or repeating claims of the previous year.
  3. Share current stories and visuals. One or two compelling fresh stories of the reported year is far more impactful than numerous stories and recycled visuals from previous years. Current stories can reinforce that donor investments are well-managed even if your charity has experienced some rough performance results during the year.
  4. No one likes receiving bad news, but everyone appreciates it being delivered  honestly, so come clean with any negative results or activity. Charities can garner more trust and support from donors when the leadership communicates proactively, avoids omitting or limiting essential financial data and provides some explanation for any significant change year-over-year.
  5. Sharing strategic plan highlights and any specific initiatives in the coming year is a positive note to end a report on, especially if the organization has navigated any    turmoil during the past year. Communicating the plan acknowledges the past challenges and demonstrates leadership in moving forward.
  6. Lastly, what you report may have legal and/or public relations implications, therefore obtaining outside legal and/or crisis communications counsel may be prudent.

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