How to Write an Annual Report for Your Nonprofit
Should nonprofit organizations write annual reports anymore? After all, the IRS requires exempt organizations such as charities to make public their yearly tax documents and their applications for exemption plus their exemption letters.
Those documents, such as 1023 that you filed for exemption and three years of your annual financial form 990 should be available at your office and, when possible, on your website.
Consequently, it is optional to produce the typical annual report for public consumption, but it is recommended. A published annual report, whether in print or online, helps establish trust with supporters and donors. Consider it part of your communications program.
An annual report can help you demonstrate your accomplishments to current and future donors, cultivate new partnerships, and give recognition to important people.
However, nonprofits often struggle with what should be included in an annual report and what should be left out.
Annual reports have also changed significantly over time. Once rather ponderous brochures written in language that only insiders could understand, annual reports now speak to a broader group of people and use easy to comprehend text plus many more photos and infographics.
Annual reports come in all formats, sizes, and presentations. Many are posted on websites rather than printed and mailed. An annual report could be a video, a postcard, or a slideshow. Many annual reports become the nonprofit's case for support, to frame a fundraising campaign.
Annual reports might not even be called that. They might be a "report to our community" or a "call to action." They often use themes to organize the information, such as "a day in the life of" or "transformation."
The key to a successful annual report today may be simply using your imagination, hunting out many examples from charities similar to yours, and figuring out what your audience enjoys. A younger audience will love something digital, while an older donor pool might prefer a more traditional approach.
The following ten tips will help you develop an excellent nonprofit annual report, whether you stick to the tried and true or push the boundaries of all the media available to you.
Focus on Accomplishments, Not Activities
Donors want to know what you did, but more importantly, they want to know why you did it. What were the results? Why did you spend your time and money the way you did? What difference did it make? Connect the everyday activities of your organization to your mission statement. Don't assume that readers will automatically understand how your activities help you achieve your mission. Connect the dots for them.
Stop Talking About Internal Stuff
Getting a high-speed internet connection in the office and new accounting software may be significant accomplishments from where you sit at your desk, but they have nothing to do with your mission. Inspire donors with achievements related to your mission in your annual report and leave all the administrative items for your report to your board.
Don't Brag About Your Fundraising Accomplishments
Donors expect you to raise money, but fundraising achievements should not be celebrated in your annual report on the same level as your mission-related results. Readers would rather know what you did with the money than how you raised it. While it is appropriate to include information on how well your fundraising efforts are going, it is best to place this information in the financial section of your report, rather than front and center.
Include Photos In the Annual Report
Yes, photos are worth a thousand words. Many of the people reading your annual report will not read it. So, show them what you have been doing with the liberal use of photos. These pictures should show the people or animals that you help, not your board members, CEO, or major donors. Today's donors expect a story from you, and that story can be told even better with great photos.
Invest in an excellent digital camera, or spend some money on a professional photographer. It is also fine to use stock photography if you are on a tight budget, as long as you choose those images carefully. Type' royalty-free stock photos' in your favorite search engine, and you will find numerous sites. Your photos should feature faces more than things. Write captions that tell your story.
Now that you have got them looking at the photos, tell a story with your captions. Don't just state what's in the picture. Connect the photo to an accomplishment. If people read nothing but the captions in your annual report, they should still get a sense of the excellent work you did last year.
Include Personal Profiles
Donors love real stories about real people. General summaries of your work will put your donors to sleep. Explain what you have accomplished overall, and then humanize your statistics with some personal profiles. Highlight how your work helped a particular individual. Share a volunteer's story of how they made a positive difference.
Explain Your Financials
Many of your donors will not know how to read a financial statement or won't take the time to read it. Include a paragraph or two that explains in plain English what the tables say. Try putting some of that information into an infographic. The very act of designing an infographic forces you to simplify and simplify some more. Text about numbers makes people's eyes glaze over.
An infographic grabs the reader's attention, and these figures will likely be remembered. What numbers should you include? How about where does your money comes from and how you spend it? How many people did you reach? What are your primary fundraising strategies? Did you create any cost-savings tactics this year?
If You Need More Space, Trim the Donor Lists
Nonprofits need to strike a balance between using the space in their annual report to discuss their accomplishments and using it to recognize donors. If as much as half of your annual report is donor lists, you should consider scaling the lists back to make more room for text and photos.
Small-dollar donors can be recognized in other ways, such as lists in newsletters. Also, consider honoring donors in different ways, such as calling them out on social media or posting photos of them after an event.
Triple-Check Your Donor Lists
There's no better way to sabotage a future donation than to spell the donor's name wrong in your annual report. If you are uncertain about a name, don't guess. Check it with the donor. Also, carefully check the names of government agencies and foundations that gave you grants. The names people call these organizations in conversation are often short-hand for the full legal names that belong in your annual report.
Tell Donors How They Can Help
Never leave a potential supporter hanging, wondering how they can help you. Once you have inspired your readers with the good works in your annual report, conclude by telling them how they can help you do more. How can they support you with their money or time? Ask them to volunteer. Remind them of planned giving options. Tell them about gifts of stock. Steer them to ways to use their credit card to donate. Be clear about the best ways to help.
IRS. "Public Disclosure and Availability of Exempt Organizations Returns and Applications: Documents Subject to Public Disclosure." Accessed March 21, 2020.
Council of Nonprofits. "Nonprofit Annual Reports." Accessed March 21, 2020.
MDG. "It’s All About the Images [Infographic]." Accessed March 21, 2020.
Bridgespan. "Why Nonprofits Need to Be Storytellers." Accessed March 21, 2020.
International Journalists' Network. "Writing photo captions." Accessed March 21, 2020.
International Journalists' Network. "5 easy-to-use tools for creating infographics." Accessed March 21, 2020.
PR News. "Infographics: A Great Communications Tool for Nonprofits [INFOGRAPHIC]." Accessed March 21, 2020.