Leveraging Financial Transparency as a Marketing Tool

Establishing credibility with donors (or, as Convergent Nonprofit Solutions refers to them, investors) is the very first step in building your Asking Rights. This is because trust is a major motivating factor for investors to start contributing to your nonprofit.

The good news is that overall trust in nonprofits is up 5 points in 2024—but even after this increase, it’s only at 57%.

Nonprofits like yours must prove their worth to investors to build a secure support network and weather downturns in giving. The best way to do so is by integrating hard evidence, such as financial records, into your marketing campaigns.

In this guide, we’ll cover everything you need to know about financial transparency and how to add it to your nonprofit marketing plan. Ultimately, you might join the nonprofits who raise over 50% more in contributions simply by being transparent with investors. 

Resources for Presenting Financial Information

Familiarizing your team with relevant financial information and forms is crucial for properly incorporating financial records into your marketing campaign. For example, you should know these elements:

Form 990

This is an IRS form that nonprofits must file each year to remain a 501(c)(3) organization and retain their tax-exempt status. According to File 990’s guide to filing nonprofit taxes, “filling out Form 990 and other nonprofit tax forms requires extensive information about your nonprofit’s financial situation and initiatives,” like gross receipts, fundraising activities, and staff salaries. Note that there are different types of Form 990 based on the nonprofit’s size. Shorter forms, like Forms 990-N and 990-EZ, don’t require as much information as the full Form 990.

Form 990 is a useful financial resource to add to marketing materials because it’s already public-facing, meaning you won’t have to worry about exposing sensitive information. In addition to the IRS’ search tool, websites like Guidestar publish Form 990s for nonprofits across the country.

Annual Report

This resource details your nonprofit’s activities over the course of a year. Annual reports typically include financial information such as:

• Income statement, which provides details on revenue and expenses.
• Balance sheet, which presents the nonprofit’s financial situation at a specific point in time.
• Cash flow statement, which shows the nonprofit’s inflows and outflows of cash.
• Functional expenses report, which breaks down expenses further into categories like programs, management, marketing, and fundraising. 
• Investor contributions, which is the total amount donated throughout the year and which efforts were supported.

If you represent an experienced nonprofit, you’ve likely already created and sent an annual report. However, confirming that you’ve featured all important information is crucial for full transparency. Don’t be afraid to include any other organization-specific forms or metrics you want to highlight that we didn’t mention before. 

Transparency Page

Annual reports often target supporters who already know about your mission and activities. However, your team must also convince new investor prospects to support your nonprofit.

To do so, you need to start at the beginning of the prospective investor’s journey with your organization. They likely start learning about your nonprofit on your website. To catch their attention at this stage, create a page dedicated to spreading transparency called a “Transparency Page.” On this page, you can include information like:

• Why transparency with supporters is important
• Your approach to embracing transparency
• Where potential investors can find further information

Ensure all pages stemming from your Transparency Page are easily accessible with clickable buttons. That way, potential investors can find everything they need to make an informed decision about supporting your nonprofit.

Best Practices for Communicating Financial Information

Creating credibility-based marketing campaigns requires more than simply highlighting your financial materials in your next newsletter. Here are some tips for packaging your financial information in your marketing materials.

1. Contextualize with emotional storytelling and real impact.

Chances are, your investors' main concern is how their investment will influence your mission. Throwing analytics and jargon at them won’t tug at their heartstrings the same way a story will. You can complement your financial information with touching stories by:

• Contextualizing data. Helping investors see the tangible results of their generosity is more engaging than a fact sheet alone. For instance, instead of saying, “We raised $10,000 last month,” a food shelter could say, “We fed 150 families last month.”
• Incorporating testimonials. Get to the heart of your cause by centering beneficiary stories. With their permission, ask them how your cause impacted them and tie these results to your financials.
• Creating a narrative arc. Stories are so memorable because they keep readers engaged the entire time. Present your story with a plot, characters, and conflict, using data to set the scene throughout the narrative.

Essentially, you should use the same storytelling techniques you always use while marketing for your mission—data will make your case for support that much more compelling.

2. Balance transparency with investor privacy.

This is perhaps the trickiest, yet most important balance you’ll have to strike in this process. After all, sharing too much information can break investors’ trust in your mission altogether.

The best way to maintain investor privacy while conveying meaningful insights is to share aggregated data. Instead of sharing individual contributions, share high-level insights (such as the total amount a campaign raised versus specific contributions). You can also anonymize case studies if needed—they’ll still bring an emotional impact without using identifying information.

That said, the data you decide to share all depends on what information investors are comfortable with being shared. For example, a major capital campaign contributor might allow their name on a new facility you’re building (and being featured in your annual report), but a smaller investor might wish to remain anonymous. Before sharing information in marketing materials, ask permission from featured investors—this way, nobody feels uncomfortable.

3. Make your financial reports accessible.

Financial reports can inherently be confusing and daunting for investors new to the nonprofit world. Making your financial marketing materials as understandable and approachable as possible can encourage investors to actually read them, improving your ROI. Your marketing materials featuring financial data should be:

• Familiar. For investors who already know about your nonprofit, make these reports visually similar to other communications from your organization. Fifty & Fifty recommends using your brand elements, such as your color scheme and typography, to stylize these reports to make investors feel comfortable. 
• Digestible. Looking at a financial statement head-on can be confusing and uncomfortable for investors. Split your data up in digestible formats, such as with tables and intentional white space, so investors don’t feel overwhelmed.
• Direct. While including a complete set of information is important for transparency’s sake, don’t overwhelm them with irrelevant data. For instance, if you want to highlight your nonprofit’s fundraising progress, you might highlight only your Form 990 and investor contributions reports.  

Contextualizing financial records in marketing materials requires an understanding of what investors find important. Before rolling out a new marketing campaign, ask loyal investors to look at a draft of the content and provide feedback so you can streamline the content more if necessary.

To get started with these techniques, your nonprofit needs standard methods of collecting and formatting information. That way, you’ll never provide your investors with inaccurate information.

Also, like any other marketing strategy, keep investors in the loop by sending updates to your normal marketing channels, like email and newsletters. By remaining consistent, accurate, and direct, your financial-centric marketing campaigns can prove your track record of success to existing and potential investors.

About the Author

Javan Van Gronigen
Creative Director | Founder
 

 

As Founder and Creative Director of Fifty & Fifty, Javan is the tip of the proverbial spear. Javan started his digital design career 20 years ago as Art Director for what is now one of the world’s largest digital agencies (Mirum, a JWT Company). He then moved on to Invisible Children where he was responsible for managing the team and all digital assets through the entire historic Kony 2012 campaign. At Fifty & Fifty, Javan has participated in and led every project, including 300+ websites, campaigns, and brands.