The Impact Report: A Vital Tool in the Nonprofit’s Toolbox

Nonprofit consulting firm, Root Cause, conducted a study on the giving process and the psychology behind donor motivation. 

DonorDirect summarized the study as finding:

Seventy-five percent of respondents look for concrete information about a charity’s achievements before making a decision about where to give. These potential donors place a high importance on confirming an organization’s success rate and whether or not it focuses on immediate or long-term changes. Fifty-one percent of donors seek out this information when planning to contribute to a charity for the first time.

This inherent need for donors to understand the impact of their donation is often called “donor impact transparency.” In the nonprofit world, this hardly needs research to make its case: We inherently understand that those who invest in a cause — either monetarily, with their time or effort or in any other way — want to know their investment is being put to good use.  

Nonprofit Impact Report

In order to meet this need, nonprofits are producing and distributing nonprofit impact reports. A nonprofit impact report is a vital tool that nonprofits can use to address the inherent psychological need that donors have to understand how their donation is positively impacting the cause they care about.

According to Whydonate.com:

A nonprofit impact report, also known as a charity impact report, is a powerful tool that showcases the positive change and impact that a nonprofit organization has made in its community or in the world. These reports provide valuable insight into the organization’s mission, goals, and the effectiveness of its programs and initiatives. Charity impact reports not only serve as a means of accountability and transparency for the organization but also serve as a compelling communication tool to inspire donors, stakeholders, and the general public.

Stakeholders

A nonprofit impact report serves different stakeholders in distinct ways.

• Donors. Identify the impact their donations are having on the cause they care about.  
• Board members. Provide transparency into the nonprofit’s activities and highlight achievements.
• Nonprofit beneficiaries. Specify the nonprofit’s goals and identify how it has helped recipients in the past.
• Community/potential beneficiaries. Highlight the nonprofit’s missions and goals and identify past performance.

When creating a nonprofit impact report, care must be taken to first consider the stakeholders for whom it is intended and then craft the messaging and content of the report.

An impact report serves the inherent need donors or prospective donors have in knowing how their donation has helped/can help the cause they care about, and it serves stakeholders by providing transparency into their activities. Nonprofits of all shapes and sizes would benefit from producing an annual or every-other-year impact report.  

Contact research@napco.com to discuss collaborating with NAPCO Research on your own impact report.  

Editor’s Note: This article is the first in a multi-part series on nonprofit impact reports.

Part 1: The Impact Report: A Vital Tool in the Nonprofit’s Toolbox
Part 2: The anatomy of an impact report
Part 3: Case study: Nonprofit impact report