Annual reports are as much for the church as for business today

Tell your church’s story professionally with the accountability that members expect in this economy.

By Tim O’Brien

No doubt as investors or participants in an employer’s 401(k)or IRA retirement fund, many congregants are used to perusing financial statements that affect them. They may or may not understand the fine details, but many a financial advisor has remarked at how good people can be at getting to the bottom line. With the current economic crisis placing challenges for people from all walks of life, the discussion of financing has become nearly a national obsession.

From the pulpit, the plea for donations is increasingly followed by the expectation on the part of church members of accountability and transparency. People may still be willing to give, some more and some less, but all want to know where their donations are going and how the funds are being managed.

Tradition worth keeping

For some religious traditions, the idea of delivering a “state of the church” address once a year has become common, while other churches may distribute printed versions of annual reports. Whether the reports are read or not, the consensus tends to be that there is something reassuring about receiving them.

The very act of creating and distributing an annual report is a statement in itself. It says that the organization is committed to remaining accountable to its “investors,” providing them with a full and accurate disclosure of activities over the past year.

In the business world, public companies are required to provide annual reports to investors. Some are pretty and some are just numbers on a sheet, but they all serve the same purpose. In the nonprofit sector, churches, charities and other organizations produce annual reports for a similar purpose.

They may define their stakeholders differently — from board members, elected officials, to community members and leaders — but they all seek to achieve a certain level of confidence among stakeholders as they move forward with new initiatives that will require new support.

Annual report for your church?

The annual report can be a versatile printed piece that is almost always current and serves a variety of uses. It helps maintain solid relationships with members, constituents and employees. It can be used as a brochure, an orientation piece, as part of a package used to solicit major donations and as a goodwill piece. It can also be a valuable employee recruitment tool. The report can be mailed the old-fashioned way as a printed piece or it can be accessed online.

How you develop and package your organization’s story of the past year is up to you, but hopefully it is a story worth telling. The style all depends on the organization. Some like to send out a simple annual letter from leadership, maybe two or three pages long, while others who want to project a larger image opt to produce comprehensive reports that look and feel like those produced by corporations. Many fall somewhere in the middle.

Most often, the annual report is designed to provide an overview of the past year’s initiatives and activities of the organization and provide information on the outlook for the future. It can be used by recipients to evaluate the organization’s progress toward its goals and the strength of the organization and its leadership.

What to include

Depending on how much you want to disclose, the annual report could contain a lot or very little in the way of financials. But nearly every good annual report is built around the message from the “chief executive” — the pastor.  This message should be an accurate accounting and explanation of the highs and lows of the past year (for the sake of credibility, not just the highs). It should provide context for the current performance of the organization and a vision for the future.

Other sections could include but are not limited to a review of departments, committees, projects, and a more detailed financial review in the form of charts and graphs or numbers. I have seen annual reports feature creative photography, profiles on employees or constituents and biographies.

In determining your approach, the best place to start is by arriving at the answers to the few fundamental questions: What impression do you want to give the reader in terms of how much money, time and effort went into the report?

Some want to provide the basics and do not want to give their annual report readers the impression that they spent an inordinate amount of time and resources just to produce the report itself. On the other end of the spectrum, some organizations use the report to create a big-league image and the related sense of permanence and success through high-end graphics, design and printing.

I once heard the story of two preachers talking about their different approaches to reporting on the financial activities of their churches. The older curmudgeonly preacher said, “If they want to know what’s going on, I give an annual reporting of my activities from the pulpit on the first Sunday in February. They need to come to church if they want to know what’s going on.”

To which the other preacher said, “Would you take a check from them if they mailed it to you or do you only take donations from the plate?”

“I take checks,” said the curmudgeon.

“Then, for the cost of a stamp you might want to consider some of those check-writers next time around.”

As often as not, most annual reports evolve over time, starting out as a letter and then growing into a more comprehensive report as organization realizes it has much more to talk about one year over the next. The key, however, is to try to achieve a straightforward writing tone and candor in discussing progress and challenges.

Getting started

The first steps in producing your own annual report will likely center on a possible theme that would drive both the design and the writing. You would then work with a designer, and possibly a writer, to come up with an approach that meets your tastes and needs. Tied to this is a solid production timeline, with assignments of responsibility for collecting individual components and information-gathering, along with a budget.

The general rule is that annual report planning should actively commence at least two months before the end of the fiscal year with the goal of distributing the annual report six weeks after fiscal year-end. This is the time for creativity in the approach and deciding which activities should be showcased and what types of information must be gathered to be included. This is also a good time to start thinking about photography, artwork and other graphics that may be useful in the annual report.

As plans proceed, however, one question should serve as the touchstone for all decision-making and it is the answer to the simple query, “How are we doing?”

Tim O’Brien is owner of O’Brien Communications, a corporate communications practice based in Pittsburgh, PA. []


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