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How-to Library • Featuring articles from past issues of Contributions

Appealing for Gifts with Your Annual Report
Is it a good idea?

by Stephen Hitchcock

QUESTION: The executive director of my organization wants to send our annual report to all of our past-year donors.  Is that a good idea and, if so, how should I structure our fundraising appeal around it?

ANSWER: One of the chief responsibilities of a development director or anyone involved in fundraising is to see that some of the executive director’s “brilliant ideas” get carried out – but in a way that aids your fundraising program or, at least, doesn’t hurt your development efforts. In most cases, there is a sound rationale or motivation for an executive’s great idea. The suggested execution or implementation is just off the mark.

That’s certainly the case with your director’s idea about sending the annual report to all your current donors. I’m sure she’s proud of the document and the accomplishments it reports. She may feel guilty about not having enough contact with donors. And, of course, she knows that nonprofits should strive to “be accountable.”

But I really hope you can work out a compromise with your executive director. If yours is the typical report – an 8 ½ x 11 booklet with lots of pages on glossy paper – I urge you to send your annual report to only the very best donors – no more than the top 20 percent and, ideally, only the top five percent.

of related interest OF RELATED INTEREST: In Open Immediately!, Stephen Hitchcock offers straight talk on direct mail fundraising. Each of the 81 focused chapters provides down to earth guidance on virtually every facet of raising money by mail.

In fact, as you select those top donors, you’ll want to include donors who haven’t given in the past year. Individuals who contributed substantial gifts two or three years ago, but not in the last 12 months, are perfect candidates for your annual report.

Please, though, don’t send your annual report to the majority of your donors. Having worked with dozens of organizations over three decades, I’ve developed a real antipathy to annual reports for the following reasons:

1) Annual reports are almost always late because it takes so long for the text to get written and approved by everyone. Then the designer makes it a work of art, and the printer adds extra time for special proofs and binding.

2) Annual reports almost always cost more than budgeted. There is now postal surcharge for anything larger than 6 x 9 inches or so thick it won’t bend easily. Thus, even if mailed at nonprofit standard (bulk) rates, the postage for most annual reports makes it prohibitively expensive to mail to large groups of donors.

3) With all the glossy paper, small type, and “striking” design, most annual reports aren’t legible to older donors with less than perfect eyesight. And the donors who contribute $25 or $50 wonder why the nonprofit organization is spending so much on this fancy annual report.

Several organizations I work with have come up with creative alternatives to sending their annual reports to all of their members or donors. Each of these alternatives offer significant savings in printing and mailing costs.

One of my favorite options is a Special Report to Members (or Donors). It’s a small booklet – eight to 16 pages – printed on less expensive paper. It’s sized so that it will fit easily in a standard No. 10 envelope or a 6 x 9 envelope. These sizes avoid the postal surcharge and have substantially lower lettershop charges. 

With text and photos, the organization’s major accomplishments of the past year are highlighted. Summarized financial information is presented, with an offer to provide full financial reports to anyone who requests them. (This is also a good place to remind readers that these reports are posted on your web site.) In some cases, organizations will include a listing of donors at various giving levels along with the names of the board of directors.

This Special Report to Members works best when there is a cover letter – as well as a reply device and reply envelope. The letter is a great opportunity to thank the donors or members for their generous financial support, which made possible the accomplishments described in the enclosed report. Some groups include a very soft ask in the letter and on the reply device. Others use the reply device to give recipients an opportunity to request a complete annual report.  In some cases, there’s an option to request information about charitable bequests and planned giving.

This mailing accomplishes the objectives of your executive director – connecting with your donors, providing information (which donors love), and demonstrating financial responsibility. All at a fraction of the cost of a full annual report – and without turning off your members or donors. A mailing of this type – with the cover letter – also does a better job of communicating thanks and appreciation.

Another alternative would be to include an abbreviated annual report as an insert in one of your regular newsletters. Again, the text will need to be brief and a few select photos will have to represent the breadth of your organization’s work. With this approach, you do save the cost of a separate mailing. The “annual report” (with its backward-looking perspective) is also presented in the context of the organization’s current, ongoing work.

One final option is a brief article in at least a couple issues of your newsletter. You can report that your Annual Report has been published, that you’re eager to send it to anyone who’d like a copy, but that you don’t want to waste money or paper by sending it to everyone. Perhaps there’s a toll-free number or an e-mail address to request a free copy of the report.  And you may want to encourage your newsletter readers to view the report online at your web site.

After all of this, I hope you don’t think that I’m completely opposed to annual reports. I do recommend that most organizations publish (in printed form) an annual report. It is vitally important to be transparent about how you are using funds that are contributed to your organization. For many foundations and major donors, this level of financial accountability is a basic requirement. 

It’s also appropriate that this annual report have a more elaborate design and be printed on higher quality paper. In this way, your annual report can help present your organization as a solid enterprise, worthy of continued investment on the part of funders. And, especially for major donors, listing their names in your annual report is an ideal vehicle for recognizing their generosity.
Recognition of donors should also be the organizing principle for an appeal letter that you might send with your annual report. I’m assuming, of course, that your report includes a list of donors who contributed at certain levels in the past year. I’m also hoping you are sending this report just to your very best donors – including those that may not have given in the last couple of years, but made generous contributions in the past.

Ideally, your letter would be personalized so you can tell those donors whose names are listed in the report, “I’m pleased that this report, on page 15, recognizes your extraordinary generosity as a member of our President’s Circle.” For those who haven’t given in the past year, you might write, “Although you weren’t among those recognized for their financial support in 2006, your generous gifts in previous years have played a role in our continuing success.”

For those donors who have given to you very recently or who give five-, six-, and seven-figure gifts, the cover letter should simply be one of thanks and appreciation. Perhaps you’d even want to hand deliver the letter and your annual report.

But for other donors, the letter that accompanies your annual report can ask donors to repeat their gift of the previous year – or, if possible, contribute at the next giving level. For example, “I hope you will once again make a gift of $1,000 and participate in our President’s Circle for 2007. Perhaps you might be able to contribute at the $2,500 level and join our Founder’s Society.”

The reply device for this annual report mailing would then offer the donor these two giving options as well as one that states, “At this time, I wish to make a gift of $___.” Once again, you should provide a line for donors to write out how they wish their names to appear in the next annual report. The reply device should also give the donor the following option: “I prefer that my support remain anonymous and that my name not be listed in the 2007 annual report.”

As you can see, great care is needed in producing these appeal letters that accompany annual reports. But if you limit the mailing of your annual report to your best donors, the task will be manageable. And if you include a highly personalized letter that encourages donors to increase their giving level – and receive greater recognition in the next report, then the results will make this extra effort very worthwhile.

Stephen Hitchcock is the author of Open Immediately, by Emerson & Church, Publishers.

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