The Mr. Spock Prize
My friend Randy Samelson at Counsel & Capital is funding a prize for the best annual report designed for Randy and other “left-brain” donors. I am calling it the Mr. Spock Prize, and I thought some friends might be interested in applying for the prize as well as my response to Randy’s generous initiative.
Thank you for sending me your proposal to sponsor a $50,000 prize for the nonprofit or church that produces the best annual report for “left-brain donors.” As you probably know, while printed annual reports represent a significant expense for nonprofits (and there are even prizes for print design and graphics), they remain unread by most donors. I have seen stacks of unread annual reports on the desks of foundation staff.
In fact, in 2009 the Salvation Army learned that half of the 28,000 printed annual reports they distributed were thrown away unread. The organization’s response to go completely digital won them a prize. Charity:water also won a prize for the “best donation generator annual report” by replacing a typical annual report with everything donors needed to know on one web page with live content.
I am saying this to point out that people are waking up to the fact that annual reports are not all that valuable to the average donor, but they don’t know what to do yet. This is a great opportunity for you as you design the prize.
Prizes generally fall into two broad categories: Recognition for prior achievement (like the Academy Awards) or incentive-based prizes for stimulating innovation, problem solving and change (like the Ansari X-Prize which was given to the first team to build and launch a reusable spacecraft that could carry three adults to an altitude of 100 kilometers twice in two weeks).
It is important to decide which you want to reward – the best of what is current or to stimulate change. The recognition approach can become a beauty contest with the winner being subject to the judgment and tastes of a few people – regardless of the stated criteria. The incentive-based approach can have organizations doing backflips to come up with a solution that fits the criteria. For example, $100 million was spent by teams to win the $10 million X-Prize. Which do you choose?
First, it’s important to understand that only a small minority of people are making decisions based on the financial and statistical information contained in annual reports. The Hewlett Foundation found that while 85 percent of donors say that a charity’s performance is very important, only 35 percent conduct research on giving and just 2 percent give based on a group’s relative performance. For most organizations, the development department produces the report which is why much of the information you value is tucked away in the back or not there at all.
If you give a prize for something that very few donors and organizations value, then your universe of candidates shrinks dramatically. Is there something you can do that will not only reward the format and content but will encourage change in the organization?
Second, what can the prize do in addition to rewarding $50,000? You have the opportunity to spotlight not only an organization that might in turn generate more donations or more attention to the cause, but you can also raise the visibility of the importance of how organizations think about their work and how they communicate that to donors. Other donors may begin to say, “I never thought about that but I now think that is something I would like to know.”
For instance, your proposal asks an organization to share both its successes and failures. You also ask the organization to describe its most daunting obstacle or most likely opportunity. That is a perspective not typically shared in an annual report – or if it is it gets lost in the pictures and stories of people served. Practically, a nonprofit cannot answer every question or address every single interest you have, but if they see the benefit and other donors do as well, then the importance of this way of thinking and communicating will likely increase.
The value of the Baldridge Award for Excellence was it not only codified the principles of quality management in clear and accessible language, it also provided a different framework for executive leadership to assess its progress toward new goals. It was more than an award for excellence. It redefined the term itself, and I suspect your end goal is similar. You do not want merely to encourage better annual reports. You want to change the way the game is played.
My best guess is most organizations will continue to write annual reports in the way that appeals to and satisfies the interest of their current and potential donors. For many, it will be more work than it is worth to make these changes and think about annual reports differently. For others, it might make sense to include your format almost as an insert for left-brain donors while keeping the basic content – printed or digital – the same. But, for a few, you may catch them at a moment when they are not only open to changing something as generic as an annual report but the criteria and the challenge will stimulate them to use it as an opportunity to approach their mission in unexpected ways. For that you will both be grateful.