An annual report is an excellent tool for nonprofit organizations to cultivate relationships with new donors and continue stewarding long-time faithful supporters. As such, for many nonprofits, their annual report is a cornerstone of their communications strategy and allows for valuable outreach throughout the entire year.
Your annual report can spotlight program successes, impact stories, and how your nonprofit was a responsible and transparent caretaker of supporters’ donations. In addition to sharing financial information, an annual report allows your nonprofit’s leaders to speak directly to donors, showcase the volunteers and staff that fulfill your purpose, and illustrate why your programming is valuable and needed within your community.
To help you construct your annual report, we’ll review the basic elements your report should contain.
Writing an annual report for nonprofit organizations
When drafting your annual report, first consider these two questions: who the report is for and what the report’s format will be.
Audience
Your organization’s annual report will attract the attention of various audiences within your community. In addition to current donors and prospective supporters, the annual report will be of interest to grantmaking foundations and corporate sponsors who have funded your nonprofit in the past. They’ll be curious to see how their funding made a difference to your organization, and your annual report will fill in some blanks for them.
Additionally, an annual report may interest future partners, who can use it to determine whether your programs align with their funding opportunities. Finally, if your organization receives government support, your report will interest local committees and elected officials who make budget decisions.
Format
Determine your report’s format. An organization’s annual report can be a high-cost, glossy full-color magazine, but it can also have a lower-cost, simple format, as long as it represents your nonprofit. The report can be an old-fashioned hard copy, a downloadable PDF, or both. You can produce it in-house with online publishing tools, or you can hire an outside vendor.
At its most basic, an annual report should include the past year’s financial highlights, perhaps in table or graph form, with a few key takeaways pulled out. Answer basic questions donors will have about your finances, such as how much revenue you earned, where it came from (donations, earned income, government funds, etc.), and how it was spent (administrative, programmatic, etc.). Donors and funders will want to see clearly how their contributions impacted your organization’s work.
What else should my report include?
Financial information is important, but your annual report should include a few other sections to interest supporters. When deciding what to put into your report, consider adding these elements:
- Address from your leadership. Highlight your nonprofit’s leadership, from the Executive Director to the Board Chair with an address from them to your donors. A letter from the ED or the Board Chair (or both) highlighting the past year’s successes is a great way to open the report.
- Constituent testimonials. Do you have a volunteer who can share a story about the work they have done with your nonprofit? Is there a long-time or beloved staffer who can speak to the fulfilling work they do? Do you have any great photos of your programs in action? Feature these stories and pair them with relevant images to convey your organization’s unique story to your audience.
- Donor roster. One optional section of an annual report that has proven helpful for donor cultivation, retention, and stewardship is the roster of donors. Often left toward the end of the report, this list of donors provides a visible “thank you” and a compelling nudge to support the organization based on the number of others who already do so.
The timing of your report matters. The information featured needs to be current and compelling to interest donors. Ensure your content will be relevant by publishing it within the first quarter of your new fiscal year.
With reliable donor database software and management, many parts of an annual report are easily pulled together: financial information, donor information, and volunteer and programmatic statistics are often easily at hand. Securing letters and statements from contributors such as board members or volunteers may require more hands-on management, so it’s best to begin this process even before you plan your report’s design.
The bottom line
With effective planning and compelling storytelling, your annual report will be an authentic representation of your nonprofit’s important work. It gives readers a sense of the value your organization places on transparency, accountability, and impact. An excellent annual report will satisfy current donors and funders and attract new support. Within a few short pages, your organization will make a case for support that can retain loyal supporters and entice new ones!
