Using annual reports to inspire support for your nonprofit mission
Annual reports were once considered simply a formal financial statement. Today, they've become one of the crown jewels of nonprofit communications — a powerful way to tout achievements and financial performance, cultivate partnerships, recognize significant donations and provide a glimpse of future goals. Even better, annual reports help attract donors while fostering a culture of transparency and accountability.
Telling your story: Key elements
Unlike for-profit annual reports, which are sent to company shareholders and other investors, nonprofit annual reports are geared toward current and prospective donors or funders and other key audiences.
Most annual reports adhere to a typical format — information on the most recent fiscal year's activities toward the front, financials and lists toward the back. Key elements often include:
- Foreword. This introduction to the annual report is typically penned by key leaders, such as the chair of the board and the executive director or chief executive. It's a good place to share your organization's mission and explain why you do what you do.
- Impact and results. Here's your chance to highlight accomplishments and success stories front and center. At the same time, be honest about any low points or challenges — and, if possible, what you're doing to combat these.
- Financials and related information. Use charts and other easy-to-read formats to provide the necessary details, such as sources of income and how the money is spent. Focus on the details that would mean the most to your current or prospective supporters.
- Donor acknowledgments. The annual report is a logical place to publicly thank your donors. Be careful to keep the size of donor lists in check, though, and to double-check spelling and respect requests for anonymity. Some donors insist on listing the amount of the gift, while others are adamant about not wanting this information disclosed.
- Invitation for support. Describe specific ways people can help you achieve your mission. It might be as simple as including information about how to volunteer or the ways gifts can be made — planned gifts, gifts of stock, by credit card and so on.
- Logistics. Include office locations, contact information, and a list of executive officers and directors.
Making a statement, start to finish
To make your annual report as compelling — and effective — as possible:
- Keep content short, simple and focused on achievements
- With appropriate permission, use photos to highlight programs and the people they help
- Write a convincing caption for each photo
- Highlight significant statistics with charts and infographics
- Explain financials in plain language
- Humanize accomplishments and statistics with stories, personal profiles or short quotes from program participants
How you design your annual report is up to you. It may be short or long, in color or black and white, traditional or trendy, and so on. It all depends on your organization, mission, legal requirements and budget. You might choose to "go green" and offer only electronic annual reports, or perhaps supplement an electronic format with a limited number of printed copies.
Above all, keep sight of what matters most — creating an annual report that gets read and that inspires support for your mission.
The Balance: 10 tips for writing an excellent nonprofit annual report by Kivi Leroux Miller (2016)
National Council of Nonprofits: Nonprofit annual reports
Free Management Library: What a great idea! The nonprofit annual report by Marion Conway (2011)
Network for Good: Top five questions about nonprofit annual reports (2007)