Your Annual Report: The Fluff Piece

Monday February 21, 2022 comments

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Hi. So, I have recognized that a lot of nonprofit leaders are really uncomfortable talking about money. And that is one of the reasons why we started The Nonprofit Ace Podcast was to get more people to say, "I can do this. It's not that complicated." I do recognize though that sometimes we need to go a step deeper and so we are having a webinar. I know. So we actually dig into how your financials and good reporting, understanding your financials will actually lead to better fundraising outcomes. Deepening your impact, serving your community more, all of those things. So, definitely check out the show notes for the link to sign up. You can see me there.

Hey there. It is Chyla Graham. Welcome to the episode of The Nonprofit Ace Podcast. I am a licensed, certified public accountant based in Denver, Colorado. My goal is for nonprofit leaders to be more comfortable talking about money. Today, I'm going to talk to you about the annual report. The annual report is a report that truly highlights the things that your organization thinks are important. So, it's going to talk about your accomplishments, how many people you serve. It's usually put into a nice, pretty packet and given out to funders. It's put on websites to say, "Hey. Look at what we did." It's a highlight of the last year of the organization.

The reason I wanted to talk about the annual report is because your annual report is a compliment piece. It is something that should say, "Let's give some more context to what are otherwise pretty sterile reports." And those sterile reports are your form 990, IRS form 990, the other one is your audit. Those are very standardized reports. It is very much fill in the blank. The only thing that's different in the 990, you get to talk about your service accomplishments. So you do get to say a little bit specific about what you do, but you can’t go into depth. Oftentimes, when I say give me a program service accomplishments, they give me like, "Here's a copy of our annual report." And I'm like there are not enough lines, no one's going to read that.

So, you want to think about, this is going to be the bigger. The 990 is going to give you the CliffsNotes for maybe five sentences, max. In your annual report you can do four or five pages. Go for it. Your audit report, it's going to be in your footnotes. You're going to be able to say, "This is what our organization does. Here are some things about us." But that's it, it's not going to be all great going through it. Because the expectation is that the reader already knows about your organization, and so you're not going to give them those fluff pieces.

The annual report is your fluff piece. It is your like, "Listen here. We may not have brought in a lot of money, but you want to know how much we did? Let me tell you. It is the ultimate time to shine. It is the place that you can say, "I want to list everyone who gave this money. I want to list all our volunteers." All of the things that you are just like, "I just want to show people all the work we do." That is what your annual report does.

What your annual report does not do is provide verification that this information is true. So what I want you to do is really think about how your annual report interacts with your 990 and how it interacts with your audit report. So if you're doing one or both of those two reports, your annual report should not contradict that information, you want it to clarify. So this is why, if you're going to do an audit or a 990, your annual report is going to come after this. So that any changes to any of your financial information is already reflected. So if you're going to say, "We raised 5 million dollars." But, you only have a 990 and half of that was in contributed services, the 990 doesn't talk about who contributed their time to do that. And so, if you say, "We raised 1.5 million dollars." And one million of that was, "Oh, somebody donated their time." And now your 990 doesn't say that, people are going to look at you suspect.

And so this is why you really want to say, "Let's see what all these reports are, let's overlay them so that we are saying the same thing everywhere." We are consistent in our storytelling. Remember that your annual report is to compliment and not compete or contradict any other reports that you're sending out. Your annual report is your fluff piece. It is your, "Oh, look at us." And how amazing you are. It is the place where you can put pictures, put whatever you want. You want to make a video? Make a video. Really think about it though as into why you're doing it. Annually reports can be really expensive.

One of the organizations that we support, as in I support personally by giving donations. My husband and I both support them. And we never donate together and we both believe in their work and we just set up our own things. They lived in the same house and they would send each of us a copy of the annual report. And I was just like, number one it cost you a lot of money to put this together. Then you had to ship it, and you shipped two of them to the same house? Why is your database not saying that this is a problem?

And so really think about, what are we willing to put into putting this together? And how are we going to maximize it? Because that was more frustrating than anything. We both looked at each other like, " For real, this is what they did?" And so really think about, as we put this annual report together one, are we inconsistent with any other reports that have been issued by people outside the organization? Our accounting, our auditors?

Two, have we put in the right type of information for what we want people to focus on or remember about us? And three, are we sending it to the right people? So are we making it available on our website for download? Are we emailing the link out as opposed to mailing it? Now, if we are mailing it, are we making sure our mailing list is accurate? And so being sure you have a relationship with the donor so that you know how to send out those reports and who to send them out to.

All right, that is all for now. You have a great day. Bye. Thanks for listening to another episode of the Nonprofit Ace podcast. Be sure to follow The Nonprofit Ace Podcast on your favorite podcast player so you never miss an episode. If you want to continue the conversation, follow me on Instagram. I'm @CNRGadvisory. I want to hear from you so be sure to send me a DM if you have any questions that you want to get answered. And leave me a review on your favorite podcast player be that Castbox, Google Play, Apple Podcasts, or Spotify. Thanks for listening.


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