Should My Business Publish an Annual Report (and how)?
Updated: Dec 29, 2020
Everyone expects a nonprofit organization to publish an annual report explaining how they utilized the past year's donated funds to effectively make this world a better place.
No one holds businesses to the same standard.
The reason for this is a simple law of exchange. In a business transaction, the consumer has an upfront choice whether to spend their money on this item or that. If they don't see intrinsic value in one product, they will choose another. When they make a purchase, the consumer perceives that they have received full value in return for their financial investment. At this time, the business has successfully upheld their end of the exchange and therefore has no obligation to communicate how they further plan to use their funds.
In the nonprofit transaction, constituents are being sold an idea more often than a tangible good. When a donation is made, the nonprofit has yet to fulfill their end of the exchange. The donor contributes their hard-earned cash and figuratively walks away empty-handed, trusting the organization to make good on the future reality they are selling.
A nonprofit's Annual Report (like this lovely example from Heal & Thrive Global) is therefore essential proof to the organization's customer that they have upheld their end of the transaction. The report is the 'product' that charities deliver to their investors; evidence that they have been diligent stewards of the dollars entrusted to them.
Ok, but I don't run a nonprofit, I run an enterprise. How does this apply to me?
As a business owner, you have more than likely heard about CSR, or corporate social responsibility. Many medium to large companies, like Intuit, have instilled these programs in order to use their influence and profits to accomplish good in the world while simultaneously improving their public image.
With B Corps and social impact companies on the rise, proprietors and consumers alike are realizing that it is not only the hallowed nonprofit that stands to change the world.
In some situations, businesses are even better suited to act as change-makers than charitable entities.
For one, they don't have to spend countless staff hours and administrative funds communicating how they spend their profits. Two, businesses can be formed more easily, inexpensively, and quickly than nonprofits, allowing them to fast-track their contributions to society. Three, businesses are funded by the market rather than the whims of donors, theoretically providing a more consistent and easily-budgeted cash flow.
If you are a proprietor of a business doing good, your customers need to know!
In this current age, all evidence suggests that those enterprises which will survive a post-pandemic era are the ones which prioritize (and communicate) a social agenda. In an article published by bthechange.com, Cone Communication’s first Cause Consumer Behavior Study is sited, saying:
"Customers will set a high bar for businesses to maintain philanthropic efforts, if not take on more, during a poor economic climate. The study also shares that 85% of Americans have a more positive image of a product or company when it supports a cause they care about and 79% would be likely to switch from one brand to another, when price and quality are about equal, if the other brand is associated with a good cause."
As consumers are becoming increasingly aware of the choice they have in supporting ethical supply chains and corporate practices, we want to be the business they choose when they vote with their dollar. However, they cannot vote if we do not provide them with the information they need to align their values with their spending.
While you may already do a great job of communicating your company's ethos on social media, your corporate website, or in branding materials -- I am here to tell you that an annual report is the missing component that will set your entity apart. You will not regret the resources invested in delivering this crucial content. You will LOVE sharing it out to your email list and social media channels. Your customers will DELIGHT in receiving it. They will then SHARE it with others. Yes, they will SHARE it.
This lovely little one-pager is going to sum up your year in a glance and communicate to customers how your values-based corporation benefits your community in beautiful ways.
Perhaps your brand contributes a percentage of profits toward environmental efforts, or your staff are supported to volunteer during work hours. Maybe you serve a marginalized population at reduced cost, or even pro-bono. It is quite possible that you ethically source raw materials and labor at greater expense to your bottom line.
Whatever the good you do, we need to know.
While the temptation exists to dismiss an annual report as self-promotion or braggery, I assure you it is not. An annual report is about inviting people into your larger story and encouraging them to conscientiously choose to support social impact companies with their income. Who knows? It may influence someone in your network to structure their corporation in a similar way, thereby multiplying the good within your community!
Bottom Line: Annual Reports are not just for nonprofit organizations!
If you've never considered publishing one before, don't be intimidated. We are here to help. Begin by asking yourself the following questions as you seek to communicate your social impact over the past year:
What is our company's mission/vision?
What is our "Why?"
What have we accomplished this year that we are most proud of?
Whom have we impacted in what (specific) ways?
How many (peoples, communities, landscapes) have we helped/served/changed?
How is the world different because we exist?
Why should our customers continue to vote for us with their dollar?
What are one or two goals we hold for next year?
Simply pop this information into an easy Canva or Venngage template online, add some images and quotes of individuals directly benefited by your giveback programs, include a graph or two, and share it out. Congratulations! You are on your way to cultivating a more informed and loyal clientele.
Value the idea of publishing an annual report but don't have the bandwidth to take it on yourself this year? Let Neema help, we love this sort of thing! Please don't hesitate to get in touch.