Getting Ready for Annual Reports

Lori Halley 27 January 2012 2 comments

©Feng Yu – Fotolia.comWe’re now part-way through January so most of us are ramping up first quarter activities and focusing on planning for 2012. But some folks aren’t done with 2011 quite yet. I’m talking about those who are involved in producing their organization’s annual report!

While many organizations aren’t required to produce an annual report, a wide range of not-for-profits – from associations to charities and other fundraising groups – choose to report on their accomplishments and promote financial transparency. Of course we realize that the role of, and audience for an annual report are very different for an association reporting to its members than for a charity reporting to its donors. But whether mandatory or not, association or non-profit, an annual report can be a daunting task, especially for those new to this challenge.

And while it certainly isn’t crunch time just yet, we thought that while 2011 was still fresh in our minds, it might be a good time to get started mapping out some best practices to consider before you get too far along in your annual report planning process.

As someone who’s produced annual reports for non-profits, charities and professional associations, I know first-hand how difficult it can be to manage both the development and production of a report that can involve so many stakeholders. So starting out with some best practice guidelines under your belt might help with annual report planning and decision-making.

Best Practices for Annual Reports

The following Best Practices in Charity Annual Reporting, are offered by the Voluntary Sector Reporting Awards (VSRAs) which were created by the CA-Queen's Centre for Governance in partnership with the Institute of Chartered Accountants of Ontario to recognize Ontario's best non-profit Annual Reports each year. While these are designed specifically with Ontario non-profits in mind, (and you’re probably not creating an annual report to win awards) I think they offer some good general guidelines for annual reporting.

Top Ten Best Practices

  1. Include a strong introduction, with a table of contents, to significantly help orient the reader to the activities of the organization. An executive summary is a “must have.”
  2. State clearly the organization’s mission and relate the activities back to the mission throughout the report.
  3. Give a clear statement of performance objectives and targets and describe how they link to the mission.
  4. Disclose your organization’s risks, issues and challenges in the context of the mission.
  5. Tell the reader how your organization governs itself and how that governance structure reflects the mission of the organization.
  6. Have management discuss the financial information in light of the organization’s mission, vision and values; link that discussion to present operations, risks and future plans; all should be written in a concise “discussion and analysis” section of the report.
  7. Post the annual report and the audited financial statements (if not included in the annual report) on your website in an easy to find area.
  8. Decide on your primary audience and write the annual report for them using plain language appropriate to that audience.
  9. Balance carefully the “too much information” approach versus “lack of content” approach to arrive at a happy medium in the annual report. Ensure that one person edits the report so that it is internally consistent both with regards to content and to writing style.
  10. Avoid committee reports in favor of one broad-based board report that tells the organization’s story in a compelling and integrative manner. The committee reports can be posted to the website if they are considered important disclosures.

The VSRA document, Lessons from the Voluntary Sector Reporting Awards suggests that annual reports play an important role for non-profits. But they caution that “some organizations seemed to view the annual report as more of a creative writing project or an advocacy advertisement rather than an accountability document. Beautiful pictures, the latest graphic design and “cool” colour schemes do not make up for lack of content. … An annual report needs to use financial and non-financial information to relay the impact the organization is having on the community it serves.”

Along with the best practices noted above, the VSRA document includes a lot of guidance for non-profit annual reports, including the “Seven Things to Avoid.” You can download the Best Practices in Charity Annual Reporting Lessons from the Voluntary Sector Reporting Awards (PDF) here. 

Stay tuned for more on Annual Reports…

This is the first of a number of blog posts we’ll be offering with ideas and information on annual reports. So stay tuned for future posts that will include information on:writing tips; trends in annual report formats (e.g. online vs print vs video); ideas to create a more compelling story and more.

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Lori Halley [Engaging Apricot] Lori Halley [Engaging Apricot]

Posted by Lori Halley [Engaging Apricot]

Published Friday, 27 January 2012 at 9:33 AM

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Comments

  • kim said:

    Tuesday, 31 January 2012 at 5:30 PM
    Thanks for all the great tips. I also downloaded the best practices for when we begin developing our annual reports.
  • Lori said:

    Tuesday, 31 January 2012 at 5:32 PM
    Kim: Glad you enjoyed the post. Stay tuned to the blog for more information and tips on annual reports over the next month.
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