Nonprofit annual reports sometimes get a bad rap in the mission-driven world. After all, it can be stressful and time-consuming to distill an entire year’s worth of your nonprofit’s work into a single report that is digestible, engaging, and convincing. Additionally, many nonprofits struggle to effectively leverage their annual reports once they’ve put in the work to create them.
However, a thoughtfully-written and well-designed nonprofit annual report can be an invaluable fundraising tool. Ultimately, it can be used to cultivate new relationships with donors, sponsors, volunteers, and other community members. It also recognizes those who have helped you achieve your goals thus far.
A captivating annual report can make all the difference between reaching your goals for the upcoming year or falling short. With so much at stake, it’s critical to take the creation of your annual report seriously—and seek guidance on how to make it a truly useful resource for your nonprofit’s community.
That’s where this guide comes in. In it, you’ll find everything you need to know about nonprofit annual reports including:
- What is a nonprofit annual report?
- Nonprofit Annual Report Template & The Elements to Include
- Choosing a Format for Your Annual Report
- 6 Best Practices
From in-depth brochures to interactive web pages, there are dozens of ways you can approach your next annual report. Regardless of the plan of attack you choose, with our help, you’ll create a report that inspires your audience to continue supporting your work. Let’s go!
What is a nonprofit annual report?
An annual report is a document that nonprofits compile and release every year. It’s designed to highlight the organization’s major accomplishments, inspire readers about the organization’s mission, build trust, and thank donors and volunteers for their support.
Benefits of Creating an Annual Report
We know you’ve probably asked yourself this before: Are nonprofits required to create an annual report? The answer is no. The only document you are required to produce is an Annual Filing or a Form 990, which helps your organization maintain its tax-exempt status.
But there are a lot of benefits to creating an annual report, and these benefits can vary depending on your organization’s needs. Regardless, it’s vital to first establish the broader purpose of your report. It’s not merely a fact sheet; if you treat it as such, it’s likely to be disorganized and overwhelming. Having a plan and an ultimate goal for the report helps focus the material around a common objective and keeps the report as effective as possible.
For most nonprofits, the ultimate goal—and the ultimate benefit—of the annual report is simple: to retain current supporters and attract new ones. In order to accomplish this, the annual report must fulfill several smaller purposes, each of which is a huge benefit to the long-term health of the organization:
- Inspire the audience about your mission.
- Show the effectiveness and impact of your organization.
- Build trust through financial transparency.
- Show appreciation for your current donors.
Even though annual reports aren’t required, you can see why nonprofits create them anyway. Though they reflect on the past year, they can also establish a framework for moving forward in a positive direction in the year to come!
Benefits for Prospect Research
It’s commonplace for nonprofits to include their major donors and which project they contributed to somewhere in their annual reports. Did you know that this information can help feed charitable giving databases that you can use for prospect research? DonorSearch, for example, culls hundreds of annual reports to collect the giving history of major donors.
Prospect research professionals can find a wealth of ideal prospects for your nonprofit just by looking at the annual reports of similar organizations. Let’s say that your nonprofit works to reduce food insecurity for local children. If a local hospital highlighted a major donor in their annual report who contributed to the hospital’s pediatric intensive care unit, your organization might want to target that person as a potential major donor.
While your annual report can 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.
Nonprofit Annual Report Template & The Elements to Include
If you’re new to the nonprofit space or are looking for a more effective way to communicate your annual report information, it can be useful to work off of a template. This template is a representation of a page of your annual report or a shortened digital version you can deliver via email. The use of graphics and images is an effective way to divide the space and produce a more visually-appealing layout:
This template includes all the essential elements of a nonprofit annual report—a clear mission statement, major achievements, a financial statement, and an account of major donor contributions. Let’s look at each of these elements in more detail.
A Clear Mission Statement
Since dedicated supporters won’t be the only people reading your report, your mission statement should 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. If you’re writing your first mission statement or looking to fine-tune your existing one, here are some inspiring examples:
- “The American Red Cross prevents and alleviates human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity of donors.” –The American Red Cross
- ”Our mission is to create a world where every person has the opportunity to live a healthy, productive life.” – The Bill and Melinda Gates Foundation
- “To provide effective means for the prevention of cruelty to animals throughout the United States.” – The American Society for the Prevention of Cruelty to Animals
You can also include your vision statement alongside your mission statement. Your vision statement is a sentence that describes the future state your nonprofit is working toward—in other words, what the world will look like when your mission is accomplished!
Major Achievements From the Past Year
From fundraising events to volunteer efforts to community programs, let readers know what your organization accomplished in 12 short months. The majority of your report should focus on these projects, breaking down your achievements into powerful statistics your readers can easily understand.
You might report how many total dollars were donated, how many volunteer hours were worked, or the number of social media followers you gained. Reflect on your organization’s audience and what would be most interesting to them, but don’t forget to share your biggest accomplishments!
A Financial Statement
Let’s face it: supporters want to know how their money is being used. Being honest and transparent about your organization’s expenses establishes trust among your supporters. Plus, it shows potential donors that your nonprofit can manage funds responsibly and effectively.
Work off of your Form 990 to provide this information. Also, provide full context for where every fundraising dollar went.
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 is a necessary part of your report.
You should also include a general statement of thanks to your volunteers and donors of all sizes. Though you likely have a more personalized thank-you cadence for each donor at the time they give a gift, a general shoutout will leave them feeling appreciated and seen by your organization!
Choosing a Format for Your Annual Report
Once you add each of the elements listed above to your annual report, you’ll need to decide how to present the information to your nonprofit’s community. In other words, you’ll need to choose a format for your report.
To begin with, you’ll almost certainly want to publicize your annual report on a dedicated page of your website. Usually, nonprofits have a page reserved specifically for providing annual reports and public filings over the years. How you further publicize it to your donors and stakeholders will depend on what you know about your audience.
Not all of your donors will need or want to receive your full annual report. Smaller one-time donors, for example, would likely appreciate a postcard or a brief email announcing the release of your report with information about where to access it. Meanwhile, your high-impact donors, partners, sponsors, and grant funders will want to read your full PDF or printed pamphlet. Being conscious of each supporter’s level of interest allows you to meet them at their commitment level and provide the appropriate type of report for them.
Consider cost when choosing how to format your report. If you like the space offered by a bound-book format but want to avoid high printing fees, consider printing books for only your most significant donors and sticking to a digital copy for the rest of your supporters. It’s totally up to you to decide what will fit your organization’s (and your donors’) needs.
In general, a combination of hard copy and digital annual report materials will reach the widest audience. Let’s discuss some of the most popular forms of each.
Hard Copy Reports
- Traditional bound book: These can range from a few to around 100 pages long and are great for containing a large amount of information in a substantial, tangible way. If you find yourself leaning toward this option for your annual report, just make sure to keep the content engaging—it’s not meant to be an essay!
- Self-mailer: These are convenient because they don’t require recipients to open an envelope—the document is the envelope. This ensures that more recipients actually read your annual report. Self-mailers have enough room for a combination of copy, images, and graphics like tables, charts, and graphs.
- Postcard: If you’d like to maximize digestibility, postcards are a good choice. With well-designed infographics, pictures, and statistics, supporters can understand how your organization did last year without putting in very much effort. Because of space limitations, you’ll have to sacrifice some copy, so if you want to tell detailed stories or include a long list of donors, stick to a longer-form option.
- Brochure: Still considered a quick read, brochures are a middle ground between a postcard and a book. Because the space in brochures is naturally divided by folds, designing a brochure may be easier than a self-mailer.
- PDF: If you want the room that a book offers but don’t want to print, PDFs are a good solution. You can make them as long or short as you like, plus you have the benefit of embedding other digital content like links, videos, and PowerPoint presentations.
- Video: Video annual reports are effective because they show rather than tell the audience what you’ve been able to accomplish. Make sure your final video comes across as professional—pay close attention to everything from scripts to lighting and camera angles.
- Interactive report: Don’t shy away from dedicating a page on your website to an interactive annual report. Your audience could click through slides, expand graphs for more information, or hover over GIFs and videos to play them, making for an immersive experience.
If you take the approach of using multiple methods, consider who the audience is for each type. For less engaged supporters, condensed versions of your annual report are appropriate, while your institutional funders will be interested in a more comprehensive report.
6 Nonprofit Annual Report Best Practices
Now that you know what to include in your annual report and your options for how it will look, you’re likely ready to dive into the nitty-gritty of creating your own. Put your best foot forward by leveraging these six best practices!
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 team members or 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 your organization needs to determine.
It’s likely that your audience will be your current 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 can keep your annual report focused, leading supporters to your core objective.
When your nonprofit has a clear plan, the process of creating your report will run smoothly and the end result will have more direction and purpose.
2. Focus your annual report on your donors’ accomplishments.
As we’ve mentioned before, your annual report is a chance to showcase all the good your nonprofit accomplished. That being said, it’s easy for nonprofits to get stuck in the mindset of celebrating their accomplishments without highlighting 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:
In the volunteer section of this report, the hospital focuses on recording statements from volunteers and displaying images of them helping patients.
Alternatively, when you talk about the projects your organization worked on over the past year, 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.
This should go for all the types of support that your community shows you. In addition to your volunteers and major donors, don’t forget to highlight the support that comes from smaller donors submitting matching gifts, volunteer grants, or in-kind donations.
By showing readers that your accomplishments were achieved because of supporters, your donors and volunteers will 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.
3. 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 single document. That’s a lot of information for supporters and prospective donors to read!
With so much information to convey, using visuals is a great way to turn information into an image readers can easily understand. Plus, the more visuals there are, the more engaged your readers will be.
Think about it: if you were asked to read a report full of paragraphs of text, you would likely skim the information or give up after reading the first page.
After your team spends hours of their time creating an annual report, you want people to read what you’ve put together.
Along with capturing and keeping readers’ attention, 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 your beneficiaries’ shoes.
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 your progress.
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.
4. 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 projects 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, you’ll show donors and prospects that you’re proactive in solving problems.
Use your annual report to address:
- The 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 setbacks (if you know what they are).
Remember, you don’t have to go in-depth about your organization’s bumps in the road, 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 a lot.
5. Highlight major contributors in your nonprofit annual report.
As we mentioned above, focusing on your donors’ accomplishments allows you to show your appreciation in a genuine way. Part of showing your thanks is by highlighting donors who 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 reports. Although listing your major donors does highlight their support, it fails to tell their story in a captivating way. To show your appreciation in a more personal way, consider including stories about some of your major donors, or ask them to share what your mission means to them.
Look at this example:
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.
A similar approach could be highlighting a volunteer through an interview, giving the supporter the opportunity to tell their story and explain reasons for supporting your cause.
There’s no better way to persuade prospective donors to get involved than letting them read about the experiences, motivations, and impact of other supporters in their own words.
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. Having the opportunity to share their thoughts can help cultivate deeper connections with your existing supporters and build new relationships with prospective donors.
6. 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.
An annual report is an effective tool for closing out your year. It empowers you to highlight your achievements and recognize everyone who has helped you along the way. With the tips in this guide, you can create an effective annual report that donors look forward to receiving every year.
And don’t forget 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—annual reports from other nonprofits also provide value to your work. The information within those reports can offer deeper insights into your prospects!
Want to continue reading about other ways to improve your fundraising and overall performance? Here are some recommended resources:
- Creating Perfect Donor Prospect Profiles: A Guide & Template. Prospect profiles guide the donor cultivation process for your gift officers. Learn how to create detailed profiles so you can develop strong relationships with new major donors.
- Your Annual Fund: A Definitive Guide to Boost Your Strategy. Your nonprofit’s annual fund is what helps you keep your donors open. Learn more in this guide.
- Wealth and Philanthropic Screening by DonorSearch. You should take a research-based approach to finding more supporters for your mission. Learn how DonorSearch can help with wealth and philanthropic screening!