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Every year nonprofits present their accomplishments and projects to their supporters and the general public in an annual report. An annual report details an organization’s mission, growth over the course of the year, projects that helped serve the community, statistics related to the organization’s cause, and much more. Ultimately, your organization’s annual report can be used to cultivate new partnerships with major donors and sponsors as well as recognize those who have helped you reach your goals thus far.  A successful, captivating annual report can make the difference between reaching your goals for the upcoming year or falling short. With so much at stake, it’s no wonder that organizations take the creation of their annual report so seriously. From in-depth brochures to interactive web pages, the annual report has changed drastically over the years. While the design and content of your report will vary depending on the type of organization, there are essential annual report best practices that every nonprofit can use:
  1. Create a plan for your nonprofit annual report.
  2. Include all the nonprofit annual report requirements.
  3. Focus your annual report on your donors’ accomplishments.
  4. Use visuals in your annual report to keep readers engaged.
  5. Be honest about your nonprofit’s progress.
  6. Highlight major contributors in your nonprofit annual report.
  7. Inspire supporters to take action.
With these tips and our annual report templates, you’ll be prepared to create a report that recognizes your donors and inspires others to help you succeed. In addition to our best practices, we’ll delve deeper into the benefits of annual reports. Our bonus section will explain how the information in annual reports can help feed charitable giving databases (like DonorSearch’s), which can boost your prospect research.   Let’s get started!   Nonprofits need to organize a plan of action before creating their annual report.

1. Create a plan for your nonprofit annual report.

When your organization starts a new fundraising campaign, creating a strategy is the first step — and the same goes for your annual report. You’ll need the help of multiple departments to assemble all the information as well as compile and design the document.  First, every successful nonprofit annual report has a clear purpose and audience that your organization needs to determine.  It’s likely that your audience will be your supporters as well as prospective major donors, corporate sponsors, and foundations. At its core, your annual report should persuade your audience to support your cause, but you might have smaller objectives (i.e., highlighting a new project or attracting more local sponsors) specific to your nonprofit’s goals. Now that you’ve established your audience and goals, you can schedule your plan of action. Your annual report strategy might include:
  • Delegating responsibilities and timelines to team members.
  • Interviewing supporters for their feedback.
  • Compiling financial statements.
  • Collecting key metrics from fundraising campaigns.
Depending on your organization’s fundraising campaigns and programs, you might not be able to cover everything you’ve accomplished. That’s why you should try to boil down all your activities to a few major achievements. By centralizing your accomplishments around 3-5 core themes, you will help keep your annual report focused, leading supporters to your core objective.  When your nonprofit has a clear plan, not only will the process of creating your report run smoothly but the end result will also have more direction and purpose.   Your nonprofit will need to include essential components known as nonprofit annual report requirements.

2. Include all the nonprofit annual report requirements.

If you look at a nonprofit annual report, you’ll see that most include similar elements no matter what type of cause they support. While it’s fine to get creative with your additional sections so that your report stands out, you also need to make sure that all the essential information is present. Moreover, your accomplishments might change from year to year but the underlying points should stay the same. Including these elements will keep your annual reports consistent and create the foundation for what you want to include.  When you look at a noteworthy annual report, you’ll find that the organization has covered the following key points:
  • A clear mission and focus. If you could boil down your organization’s values and purpose into a single sentence you would have your mission statement. Since supporters won’t be the only people reading your report, your mission statement needs to be at the very beginning. Readers should know about your organization’s mission and what change you hope to make before jumping into the data.
  • A list of projects you initiated. From fundraising events to volunteer efforts to community programs, let readers know what your organization accomplished over the course of the year. The majority of your report should focus on these projects, breaking down your achievements into metrics your readers can understand.
  • A financial statement. Let’s face it: supporters want to know how their money is being used. Being honest about your organization’s expenses helps to establish trust among your supporters. Plus, it shows potential donors that your nonprofit can manage funds responsibly and effectively.
  • An account of major contributions. In addition to showcasing your organization’s success, your annual report is also about thanking those who helped you achieve your goals. Listing out and thanking your major contributors, influential staff, and board members should be a necessary part of our report.
Throughout this article, we’ll expand on how your organization can make these elements exceptional, but for now, look at this example of how a hospital can explain their mission in a moving way: Here is an example of how you can explain your organization's mission in an annual report. In our example, Inner City Hospital has displayed their mission statement predominantly and included their history to give readers context.   Your nonprofit annual report should focus on your donors' accomplishments rather than your organization's achievements.

3. Focus your annual report on your donors’ accomplishments.

As we’ve mentioned before, your annual report is a chance to present all the good your nonprofit was able to accomplish. That being said, it’s easy for nonprofits to get stuck in the mindset of congratulating their accomplishments without focusing on their donors’ support. Instead of centering your report on your achievements, make it about your donors. This goes beyond switching the language of your report to address your donors. A nonprofit annual report that puts donors first focuses on how projects and programs were realized because of your supporters’ donations and time. For example, your annual report can focus on the many volunteers that donate their time to your organization like in the image below: This annual report template shows how you can include your donors accomplishments by giving them a voice.. In the volunteer section of this report, the hospital focuses on recording statements from volunteers and displays images of them helping patients. Alternatively, when you talk about the various projects your organization has implemented, make sure to mention the campaign that funded the project. Let readers know that your supporters helped you reach (or even exceed) your fundraising goal and how their funds and support impacted your cause. By showing readers that your accomplishments were achieved because of supporters, donors and volunteers know that you’re aware of all they do. Not to mention, it shows potential donors that your nonprofit is built on the support of passionate people. Therefore, your team should take every opportunity to direct attention to your supporters accomplishments.   Keep your readers engaged by using visuals in your nonprofit annual report.

4. Use visuals in your annual report to keep readers engaged.

When your team creates your nonprofit annual report, they will compile all your efforts and data from the past year and condense it into a 10-page document. That’s a lot of information you want supporters and prospective donors to read! With so much information to convey, using visuals is a great way to turn information into an image that readers can easily understand. Plus, the more visuals, the more engaged your readers will be.  Think about it: if you were asked to read a report full of paragraphs of text, you’re likely to skim the information or give up after reading the first page. Once your team spends all their time and effort creating an annual report, you want people to read what you’ve put together. Visuals have many benefits, such as:
  • Breaking up blocks of text so the reader has a more enjoyable experience.
  • Transforming complex data into easy-to-understand information.
  • Conveying your cause in a way that puts your readers in the shoes of those you support.
After all, you’ve been tracking key fundraising metrics. It’s important that information is captured in a way that will interest the reader and show how you’ve progressed. Here is an example of how you can display key information in your annual report using graphs. In the image above, the Inner City Hospital used charts to break down the source of funds they received and how those funds were used throughout the hospital’s various projects and departments. If your organization is creating a report on the web, incorporating interactive elements that allow donors to click through information or watch videos can also keep donors engaged in your report. For more inspiration on how to design an online annual report, check out DNL OmniMedia’s list of top nonprofit websites.   In your nonprofit annual report, you should be honest about your organization's progress.

5. Be honest about your nonprofit’s progress.

While your nonprofit report is all about highlighting your success, it’s important to be honest about your organization’s progress. Sometimes your goals won’t go as planned — and that’s okay! It might seem counter-intuitive to mention some of the challenges your organization faced over the course of the year, but being transparent is the best way to build your donors’ trust. By briefly mentioning your missteps and how you plan to correct the issue in the future will show donors and prospects that you’re proactive in solving problems. Use your annual report to address:
  • Changes you’re going to make in the future based on the data you’ve compiled.
  • How you plan to implement feedback from your supporters.
  • The causes of your set backs (if you know what they are).
Remember, you don’t have to go in-depth about your organization’s road bumps, but including them will paint a full picture of the previous year’s progress and show donors that despite your challenges, you were still able to accomplish so much.   Highlight your major contributors in your annual report.

6. Highlight major contributors in your nonprofit annual report.

As we mentioned in section three, focusing on your donors’ accomplishments allows you to show your appreciation in a genuine way. Part of showing your thanks is by highlighting donors that went above and beyond for your cause. These overachievers could be major donors, volunteers, or other supporters that helped your mission grow. Traditionally, nonprofits will recognize major donors by listing out their names and the project they contributed to somewhere in their annual report. Although listing your major donors does highlight their support, it fails to tell their story in a way that captivates your readers. In addition to listing out your major contributors, why not spotlight those who have supported your nonprofit? Look at this example: This nonprofit annual report example shows how you can highlight your major contributors. Not only does the example thank the major donors for their help, but it also tells the story of their support and how the funds went toward improving the pet-assisted therapy program at Inner City Hospital. In contrast, your organization could highlight a volunteer through an interview, giving the supporter the opportunity to tell their story and reasons for supporting your cause. There’s no better way to persuade prospective donors to get involved than letting them read about someone that excelled as a volunteer for your organization. Thank your supporters by featuring them in your nonprofit annual report and giving them the chance to speak about why they’re passionate about your organization. Getting a chance to share their thoughts can help cultivate deeper connections with your existing supporters and build new relationships with prospective donors.   Your nonprofit annual report should inspire donors to take action.

7. Inspire supporters to take action.

Remember that your annual report has clear goals, and one of your objectives is likely to get people to contribute to this year’s fundraising campaigns. Make sure that your annual report leads readers to this goal. What’s more, you’ve done a great job of conveying your mission and inspiring readers. After reading your report many readers might be wondering, “What’s next?” Dedicate space in your annual report to let readers know how they can support your cause. Ask them for donations by linking to your online donation form (if your report is online) or directing donors to your nonprofit’s website (if your report is in print). Additionally, direct readers to other ways they can get involved, including:
  • Volunteer opportunities
  • Corporate matching gift programs
  • Upcoming fundraising events
  • Online fundraising campaigns
The more opportunities you provide, the more likely they’ll find a way to contribute that fits their interests. Finally, don’t forget to mention other places where readers can learn more. Include your website URL, phone number, address, and social media handles so potential donors can continue to learn more about your nonprofit.   Learn how annual reports and prospect research go together.

Bonus: How annual reports relate to prospect research.

Now that you’ve made it through our annual report best practices, we’re here to share another way these yearly accounts can benefit your organization. Did you know that the information you compile into your annual report can help feed charitable giving databases? DonorSearch, for example, culls hundreds of annual reports to collect the giving history of major donors.  Think about it: annual reports hold a lot of information about major donors, including the nonprofits and types of projects that they support. Your organization can generate prospects using the information from other annual reports. Let’s say that your nonprofit helps feed hungry children. If the Inner City Hospital (from our examples above) highlighted a major donor that contributed to the pediatric intensive care unit, your organization can use that information to help you determine if the donor would be willing to give to your organization. Prospect research professionals can find a wealth of information on major donors that might be ideal prospects for your organization just by looking at the annual reports of organizations with similar values and missions.  While your annual report is a tool that can be used to cultivate better relationships with existing donors and encourage others to support your cause, you can also use the information from other nonprofit reports to fuel your prospect research.
An annual report is an effective way to close out the year by highlighting your achievements and thanking those who have helped you along the way. With our tips, you can create an effective annual report that donors look forward to every year. And don’t forget, the annual reports of other nonprofits also offer value. The information within those reports can offer deeper insights into your prospects. Want more information on annual reporting and prospect research? Check out even more helpful resources: pr_cta_02
Nonprofit Annual Reports: 7 Best Practices [Templates]