Nonprofit annual reports are more than just a performance review of campaigns held within a year; they are an effective tool for developing donor relationships and earning donors’ trust.
With a well-crafted annual report, your nonprofit can demonstrate its impact, practice transparency, restate its commitment to doing good, and thank its donors, supporters, and stakeholders all at once. As such, you need to be strategic, thoughtful, and intentional when preparing your nonprofit’s annual report.
To help you get started, this article will discuss the following:
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What is a Nonprofit Annual Report?
A nonprofit annual report is a document that outlines the organization’s most relevant takeaways from the past year. Pertinent topics like major accomplishments, successful fundraising campaigns, and financial standing over the past year are detailed in the annual report.
Annual reports are usually written, designed, and shared with board members, donors, and other stakeholders at the end of the fiscal year. Here are three benefits of sharing your nonprofit’s annual report.
1. Annual Reports Underscore Your Nonprofit’s Commitment to Being Transparent
Every nonprofit should prioritize being transparent with their donors, and annual reports are one of many ways to do just that. By reading your organization’s impact stories and observing charts, graphs, and summaries about your campaign performances, stakeholders can understand the process behind critical decisions made and strategies implemented over the past year.
2. Annual Reports Showcase Your Nonprofit’s Progress
With an effective annual report, nonprofits can highlight their progress over time, let stakeholders know the outcomes of the efforts made in the past year, and reaffirm their commitment to achieving their organizational goals and fulfilling their mission. These statements can assure supporters that everything’s running smoothly.
3. Annual Reports Can Be Used to Steward Donors
Every donor wants to know that their money is being put to good use. By clearly detailing the outputs, outcomes, and impacts created over the past year, nonprofits can showcase the value of each donor’s contribution. More so, you can use your report as a tool to encourage previous donors who have been on the fence about making more donations to recommit to your nonprofit’s cause or make larger contributions.
What to Include in a Nonprofit Annual Report?
Annual reports are like snowflakes: no two are alike. However, some standard components need to be included to paint the complete picture of your nonprofit organization’s past year.
Here are five essential components of a nonprofit annual report.
1. Cover Page
The first page should set the tone for the entire report and tell the reader exactly what they’re looking at. The text on your cover page should stand out and detail your organization’s name, the phrase “annual report,” and the year you’re reporting on. Also, don’t forget to include your organization’s logo.
For an excellent example of a cover page, look at the Toronto International Film Festival’s 2019 Annual Report. Their cover page contains all of the elements listed above and a simple yet attractive design.
2. Message From the ED(s) or CEO(s)
One of the first pages in an annual report should include a message from your organization’s Executive Director or Chief Executive Officer. This message should recap how the year has gone for the organization and show appreciation for donors’ support and the nonprofit’s team’s work.
TechnoServe’s 2020 Annual Report has a fantastic example of a CEO statement (pg. 1). Pay attention to how TechnoServe personalizes the message with their senior leadership team’s headshots, titles, and signatures.
3. Impact Summary
Your nonprofit’s annual report is another opportunity to recount each of your programs’ outputs, outcomes, and impact. Try to be as specific as possible when describing the progress made. This detail helps donors, staff, and volunteers associate a quantifiable outcome with their contributions.
Check out the impact section (pg. 9-11) of DREAM’s 2016 Annual Report. DREAM effectively describes its impact on childhood development through engaging data visualizations, simple text, and emotionally evocative images.
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4. Financial Statement
Stakeholders want to know how organizational resources are being managed. Within your financial statement, outline your nonprofit’s revenues, expenses, and assets. For example, Team Rubicon’s 2016 Annual Report has sleek condensed financial statements (pg. 40), which clearly and concisely provides an overview of the organization’s finances.
5. Thank Yous
Best Practices for Nonprofit Annual Reports?
Follow the following five best practices to create the perfect annual report for your nonprofit organization.
1. Develop A Theme
A relevant theme can tie your report’s individual sections together and provide it with an increased emotional resonance. Consider using a theme centered around a commitment made in the previous year or a different uniting topic. For example, during the pandemic, many nonprofits went with the theme ‘resilience’ to assure their stakeholders that they were weathering the storm.
2. Gather Input From Stakeholders
To paint a complete picture of your organization’s past year, it’s crucial to receive input from a representative group of stakeholders. Consider asking your donors, volunteers, staff, and especially your beneficiaries for what they think should be featured in the report.
3. Keep It Simple
Don’t feel like you have to touch on every single thing that happened over the past year. Doing so would lead to an overly long report that no one would finish. Instead, listen to your stakeholders to understand what people want to read about most.
Additionally, when writing each section, limit your words and try to convey impact, finances, and other sections through infographics like pie charts. Data visualization tools can help you simplify complex data and create an easy-to-understand annual report.
4. Tell Impact Stories
While it’s great to take a step back and reflect on the totality of your work, showcasing a few impact stories is a fantastic way to contextualize your progress. Consider including some heartwarming donor, staff, and volunteer stories to exemplify how your work helps those in your community.
5. Publicize Your Annual Report
Make sure to publish your report on your website, share it on your social media channels, and share it with your mailing list and social network. You should be proud of all the fantastic work you’ve done over the past year, and now it’s time to show off a little!
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Annual reporting is all about telling the story of your nonprofit’s performance and progress over the past year. While every organization’s story will be different, each will need its main characters, compelling plot, and visuals to tie everything together. Follow this guide, and you’ll leave your stakeholders with the most heart-warming story they’ve read all year!