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Dear Fundraisers: The Annual Report Is Yesterday’s News

May 14, 2013

Feldmann-headshot(Derrick Feldmann is CEO of Achieve, an Indianapolis-based creative fundraising agency. In his last post, he wrote about the importance of differentiating between your "sophisticated" and average donors.)

When I headed off to college for the first time, I had no idea what I wanted to study or what kind of career I would pursue after graduation. Like so many other "undecideds," I took classes from lots of different departments and hoped something would click.

Then, in my junior year, I discovered criminal justice. I had always enjoyed crime novels, detective stories, and hearing about unsolved mysteries, and after I took a few classes in the field, I convinced myself that maybe the law was my calling. Eventually, I marched into my advisor's office and declared my major: pre-law.

Well, as a pre-law major, I needed to take the LSAT in order to be able to apply to law school. But unlike just about everyone else taking the test, I didn't bother to study until the night before. Don't ask me why.

So, I took the test and, thinking I might have done okay (or even a little better than okay), I settled in at home and waited for the results. I checked the mailbox every day for an oversized envelope, and as days turned into weeks, my thoughts ran every which way. Law? What had I been thinking? The second part of the test wasn't so hard, though, and I'm pretty sure I did okay on the third part. Who knows? And, hey, I do love a good mystery.

Then, one morning, it was there, larger than life. I tore open the envelope and scanned the contents for the only thing that mattered, the score that was going to gain me entry to the best law schools in the country and change my life.

Wow. I blinked and stared harder. Could a person really score that low on the LSAT? It was a pivotal moment for me. I returned to school and wasted yet another month, still with no answers about my future career path.

After I graduated with a degree in criminal justice, I bumped around a bit and eventually found work in a university development office. I loved working with students and alumni, and before long I realized that fundraising was my true calling. To advance my career, I decided to go to graduate school, which meant I needed to take the GRE.

This time I studied every night for two months, and by the time I drove to the local test administering site I was as prepared as I could be. Two hours later, having completed the last section, I clicked the submit button and something interesting happened. A message popped up on the screen: "Would you like to see your unofficial score?"

How was that possible? It had taken a month to get my LSAT scores. I hesitated. Had I prepared well enough? Did I really want to know how I had done right then and there? Maybe I should wait?

After a long pause, I took a deep breath, clicked the "yes" button, and up popped my score. Huge relief. A score to be proud of, even. With the click of a button, I had received instant feedback on my performance, and the world was a beautiful place.

What does all this have to do with annual reports? Well, in case you haven't noticed, we live in a world where real-time feedback is fast becoming the norm. Whether posting on Facebook and checking three or four times a day to see how many of your friends and acquaintances "liked" your update, to online polls where your vote is instantly aggregated, to comment threads where your thoughts jostle with the thoughts of others, we are rapidly creating a world in which real-time feedback on virtually everything we think, do, and create is the norm. Why is that significant? Because it enables us to make better decisions based on actual performance and achieve our goals more efficiently and with less guesswork.

Of course, the nonprofit sector has its own feedback mechanisms. The typical nonprofit will create an annual report to provide information to its donors about its financial/operational performance and, quite often, how the gifts it received were used to advance its mission over the course of the previous year. Similarly, experienced fundraisers make a point of providing feedback to donors with respect to the impact of their gifts in face-to-face meetings and when making stewardship calls, usually once or twice a year.

But is that enough? As the pace of communications and feedback accelerates, is your nonprofit moving as quickly as it needs to in terms of reporting results to donors?

Take annual reports. In today's fast-paced world, very few people think the annual report is the answer to providing donors with the kind of timely feedback they want (and increasingly expect). Asking donors to wait a full twelve months to be updated about how their gifts are being used and whether those gifts had an impact is a recipe for losing their interest, if not their support.

Donors want and deserve quicker feedback. They deserve the kind of reporting that helps them understand how the gift they made last week or a month is going to be used to advance the mission or cause. They need to see the impact of their gifts through the eyes and in the words of the people who are benefiting from those gifts.

Nonprofits that whinge about their inability to report impact in a more timely fashion inevitably are the organizations that have chosen not to address the disruptive changes in technology and communications we've seen over the last decade and a half. Which is not to say that direct mail is dead or that we should abandon more traditional methods of communication such as the phone call or the personal note. Think of this, instead, as an urgent reminder that the need to report back to your donors in a more real-time fashion using any method at hand is no longer a luxury; it's a necessity.

Indeed, thanks to the Internet, the ability to communicate with almost anyone, anywhere, in real time demands that we "reframe" our notions of time. And your organization is no exception; it needs to adapt to the changes that are happening all around us and embrace a new feedback and reporting paradigm. The framework below is designed to help you and your colleagues do just that.

Immediate. How can your organization share the impact it had today with respect to its constituents and/or the communities in which it works? Share a photo of a person who was helped by your organization on your social networks and tell your donors, "Thank you. This is [fill in the blank], one of the people you helped today."

Short term. How can your organization share the impact it had this week? Create a page on your Web site that illustrates how your donors' gifts were put to work over the last seven days and let them know through e-mail or by postcard that you've created a page they should bookmark and visit on a regular basis.

Longer term. How can your organization share the impact it had this month? Send a postcard and/or dedicated e-mail at the beginning or end of every month that provides an overview of the impact your organization is creating, making sure to include key statistics and to highlight the impact of your organization's efforts on real people or in the community.

These are just a few ideas to get you started. The key takeaway is this: Reporting at a twenty-first century pace will help your organization maintain its relevance with donors and keep their passion for your mission/cause fresh and vital. It's not easy, and it may require an additional investment of time and money. But then, the world shows no sign of slowing down, does it?

And at your next development/communications planning meeting, don't focus the discussion on whether you should publish your next annual report in print or digital form (or both). Ask instead, "What can we do to report faster?"

-- Derrick Feldmann

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Posted by Vu  |   June 04, 2013 at 04:02 AM

Derrick, good tips. And I'm glad someone else also sucked at the LSAT on their first try! Unlike you, though, I just gave up and went into nonprofit.

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