An expertly crafted nonprofit annual report can do more than summarize your organization’s activities from the past year. It can be a powerful tool for advocacy, engaging new supporters, and educating the public on pressing issues related to your nonprofit’s work.
In the following article, we will walk you through the basics of developing a compelling nonprofit annual report and provide you with helpful examples and an easy to use annual report template for nonprofits.
With this article as your guide, you will be well on your way to creating an engaging annual report that will bolster your organization’s work and engage new audiences and funders.
Let’s get started!
First thing’s first—what exactly is a nonprofit annual report?
An annual report is a document prepared each year by nonprofit organizations that summarizes their achievements, impacts of their work, and finances from the previous year. An annual report also gives nonprofits the opportunity to thank their donors and inform supporters about their vision and goals for the future.
An annual report, unlike a 990 form, is not required by the government but is an optional report a nonprofit creates to promote their work and better engage their audience.
While there are several variations of an annual report, the main objective of the document is to provide supporters with a transparent view into the nonprofit’s operations, mission, vision, and goals for the future. A successful annual report will keep existing supporters engaged while drawing in new audiences.
We will explore the features that make up a successful nonprofit annual report in the following section.
Now that you have a firm understanding of what an annual report is, it is time to break the document down piece by piece. We will go over the Do’s and Don’ts for crafting a report that is compelling, informative, and well-designed.
Let’s dive in!
A nonprofit’s annual report should be used to reflect on the achievements, successes, and overall operations over the previous year. As such, this is the perfect time for a nonprofit to reaffirm its mission and vision, and recommit to the values established through those guiding principles.
Emphasizing your mission and vision can also help keep your annual report organized around a specific theme and/or message. Take a look at how the San Diego Zoo Wildlife Alliance created an engaging visual to lift up their mission and vision statements and how those guiding principles support their organizational values.
One of the most important aspects of a nonprofit’s annual report is the overview of financials from the previous year.
While every nonprofit organization is legally required to report on their finances to the IRS via their 990 form, the annual report gives nonprofits the opportunity to report these financials on their own terms and in a much more succinct way that is easy for any supporter or reader to understand.
The financial report is a crucial way in which the annual nonprofit report increases trust between the audience and nonprofit. It shows that the nonprofit is willing to report out their financial information with supporters, showing exactly how the organization earns revenue and where those dollars go.
Beginning your annual report with a message from your organization’s executive director is a great way to help set the tone for the report and provide a brief overview on the organization’s successes and operations before diving into the details.
The executive director can help voice the pressing challenges and barriers your organization and participants face and set the scene for the broader community or societal context. Your executive director is the perfect person to provide readers with insight into the future of your organization and how your work will change or continue over the next several years.
In addition to a message from the executive director, you should also include a message from the board of directors or the board president/chair. This can be done by providing a brief message that aligns with the executive director’s or by making the message a joint statement between them.
Remember, it is important to not only tell your audience about your impact but to show them as well.
This is where data and metrics come in handy!
When reading about a nonprofit they support, most readers will want to see solid evidence of the efficacy of the organization’s work. Sharing key data points, outcomes, and metrics can help undergird statements about the organization’s achievements.
Most organizations that receive some kind of grant, whether public or private, are typically required to track information and outcomes about their programming and the impact on participants. You can leverage this information you have to share with certain funders by including it in your report.
Instrumentl has a handy guide that can help you develop a successful grant evaluation plan.
Sharing key metrics about program outcomes can also help increase trust with your audience. Solid data to support your mission can help assure supporters that their donations are going to services that are making a tangible impact on people’s lives.
When it comes to crafting a successful annual report for a nonprofit organization, brevity is key. Too much text and detailed information can make readers disengage with the content and choose to stop reading.
The best way to keep readers engaged is to incorporate photos and infographics where appropriate. Infographics and images help communicate high level information about the organization’s achievements without the unnecessary detail or specifics that—while important to the organization—may not be important to the reader.
A thank you to donors and supporters is a simple but imperative piece of a successful nonprofit annual report. No nonprofit organization can succeed without a robust network of donors who provide flexible funding that ensures the organization can sustain operations day-to-day.
Studies have shown that donors who feel appreciated are more likely to be engaged and remain engaged. In fact, donors who receive a message of thanks from a nonprofit organization within 48 hours of donating are four-times more likely to donate a second time.
An annual report should at the very least list the name of donors who have given over a certain amount (e.g. $1,000 or more), a list of corporate sponsors, a list of foundations or grantmaking organizations that gave financial support, and a blanket thank you to all of those supporters for partnering with your organization to advance your work.
If you have the capacity, go right ahead and name every single person or entity who has given to your organization!
Perhaps the most important piece of any nonprofit organization’s annual report is illustrating impact. This can be accomplished in a myriad of ways, several of which were mentioned above.
However, one of the most meaningful ways to communicate impact is to share participant stories or stories of impact to help better connect your audience with your work.
Storytelling is a powerful tool, and putting a face to your nonprofit’s work can help personalize your mission and make supporters feel like their dollars have had a meaningful impact in furthering your organization’s efforts.
Take a look at Instrumentl’s guide on how to create compelling stories that will engage donors.
Now that you understand what to include in a nonprofit annual report, let's take a look at three important “don’ts” when creating your nonprofit’s annual report.
Too much time spent highlighting staff and executives or lauding the achievements of board members may take space away from what should be the main focus of any nonprofit annual report: the work and the participants.
Messages from organizational leadership should be brief and centered on the direct work and impact the nonprofit is making in the community, region, or the world. Readers will want to hear from leadership and get an understanding of what direction the organization is heading in, but at the same time, it should not be the central focus of the report.
There is a fine line between sharing an impactful story and exploiting the experiences of vulnerable individuals who may not be allowing their story to be told with informed consent.
Be sure to have a formal plan in place within your organization to obtain stories and information from participants. Consider your participants’ live experience and whether or not they can share their personal stories and remain safe. This could mean sharing their story but using a pseudonym and not including a photograph.
It is also important to ensure that participants are sharing their stories with informed consent. This means that participants fully understand what personal information they are allowing to be shared with the public, that they have provided written consent, and that they can approve, view, or edit any information that can be shared with the public.
Many nonprofit organizations serve vulnerable people and individuals who have experienced harm or trauma that they may not want to reiterate—a process that can be retraumatizing for many individuals. Consider if sharing their stories would do more harm to the participant.
This article from NTEN provides a great deal of information to consider when telling participant stories and crafting narratives for your annual report or any document or publication created by your nonprofit.
Remember, a nonprofit’s annual report should be accessible to many different types of audiences and stakeholders—meaning you should not approach the financial report section the way you would a 990. You should not have to be an accountant to understand the finances in a nonprofit’s annual report!
The annual report’s financial section should be a succinct, informative, and high level overview of your nonprofit’s financial revenue and expenses during the prior year. You should not be including detailed line items, cost centers, or use any finance or accounting jargon that may confuse your reader or make them disengage with the report.
You can keep your financial statements simple by using engaging infographics to communicate a great deal of information to the reader. For example, Women Employed created two simple donut charts that efficiently breakdown the type of revenue generated and how that income was spent.
Just as important as the content of your annual report is the way it is formatted and designed.
Some annual reports may only be a single page, especially for smaller nonprofits that have a limited budget and scope of work. Other nonprofit organizations will prepare a lengthy document that includes participant stories, interviews, images, a thank you page for donors, and other content that is of interest to stakeholders.
An organization like the American Cancer Society prepares a 17 page booklet that includes an overview of their mission, their pillars of work, and an extensive breakdown of their finances including graphs indicating where their revenue comes from and how those dollars are spent.
As the world becomes increasingly digital, the majority of nonprofits now make their annual reports available online via direct links to a pdf document. Once the report is published, nonprofit organizations will use the publication as a marketing opportunity, contacting their supporters via e-mail and encouraging them to read the document.
Some nonprofits will even publish their annual report on a webpage on their website, which can be easier to read and browse through for readers instead of navigating a pdf document.
For example, Habitat for Humanity houses their annual report as a multimedia webpage. Unlike a downloadable pdf, this format is easy to digest and doesn’t necessitate downloading or resizing the pages or images for easy readability. The report is also readily searchable by providing a bar at the top of the page which will immediately take you to whatever section you wish to review.
While annual reports are commonly made available digitally for ease of access and distribution, many nonprofits still make their annual reports available in print. Smaller organization’s may send out a one-pager or postcard mailer with a brief review of the year’s achievements and a call to action for supporters.
Raising Readers is a nonprofit organization that publishes a succinct one-pager as their annual report, including a brief overview of outcomes and achievements along with an overview of the organization.
Before you decide on an appropriate format for your nonprofit’s annual report, be sure to consider your audience, how much information you will need to communicate, and the best way to communicate it. Remember that a great design and layout for your annual report can be just as important to communicating information about your work as the actual writing and content.
So now you have all the information you might need to get started on your annual report. However, even with all this information, this process can still seem like a daunting task. With so much to consider it can be helpful to have an easy to follow template to guide you through the process.
Look no further! Below is a brief annual report template for nonprofits to help you layout your annual report and stay organized.
- Should include the year of the report (e.g. Fiscal Year 2022) and the name of the organization
- This section should include the mission and/or vision statement
- Include outcomes, data, and metrics to undergird achievements
- Include a participant story of impact
- Include infographics or images related to your work or achievements
- Include revenue and expenses
- Include infographics that will make the content more dynamic (e.g. a graph)
- Include individual donors, corporate sponsors, foundations, and any other supporters
- Be sure to emphasize gratitude and include a message of thanks to your donors
Please note that this is just a brief outline of things that are typically included in a successful nonprofit report. Work with your team to decide which areas should be emphasized or which may need to be left out depending on the scope, scale, and needs of your organization.
Looking for more tips on how to write your nonprofit’s annual report? Take a look at Instrumentl’s guide on how to write an engaging and compelling nonprofit annual report for your organization.
When writing your nonprofit annual report, keep in mind that you are working to engage your existing audience and network of supporters while also working to reach new individuals and inspire them to partner with you in support of your mission.
It is important to keep the content succinct, pithy, and engaging while also communicating the essential information your supporters need to know.
With the information in this article, you have all the necessary tools, resources, and tips to help guide you on your way to crafting an amazing annual report that will highlight the incredible work your nonprofit is undertaking.
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