I've scoured the Internet, gathering and synthesizing the latest best practices on how to write a nonprofit annual report. You can find my sources for this post at the very end of what's below. Here, we’ll cover (1) why annual reports are important, (2) things to consider before we begin to write, (3) the basic elements that a report should include, and, (4) finally, where to go for inspiration, i.e., where to find examples and templates.
1. WHY creating a nonprofit ANNUAL REPORT is IMPORTANT
The main reason to write an annual report is to tell donors and prospects about accomplishments that had an impact. As one author notes:
You don’t need a beautiful, full-color, glossy 40-page production, but you do need some sort of accounting of the organization’s work over the past year. Even if it is only a two-page flyer you photocopy, you should get in the habit of producing an annual report. (Network for Good. Top Five Questions)
Properly produced, an annual report can also help to sway potential donors, connect with our closest supporters, and honor those donors and volunteers who have helped us reach our goals. In addition, it can be a versatile communications and cultivation tool:
A well-done annual report is a versatile, durable communications piece. It reminds supporters why they give and how their gifts are used, it reinforces people’s connection to your organization, and it serves as an important donor touchpoint. Annual reports can also serve as a cultivation piece used in donor meetings, as well as a direct solicitation piece. (P. Chesnut and S. Young. How to Write a Winning Annual Report).
2. PRELIMINARY CONSIDERATIONS for a nonprofit annual report
a. the nonprofit annual report audience
Before we begin to write, we should think about the report’s audience. One commentator suggests the following exercise:
To determine your audience it is helpful to take a few minutes to conduct the following exercise: write down the top 3-5 stakeholder groups that currently read your annual report and the 3-5 stakeholder groups that you want to read your annual report.
Don’t just write down “donors,” in either category. Be more specific than that. Think about categories like:
* Direct mail donors
* Major donors
* Foundations (Some will ask specifically for an annual report).
* Corporations
These categories are especially important when thinking about the types of donors we want to reach in the future. Donor prospects are a key group that we want to read our annual reports. (S.Rosen. Five Steps to a Winning Annual Report).
Craft the report with that audience in mind. This means providing print copies to those members who engage with us primarily through direct mail and creating an online version for everyone else. (E. Chung. Create a Nonprofit Annual Report Your Supporters Will Actually Read). It also means using plenty of images and making the report scanable. (E. Chung. Create a Nonprofit Annual Report Your Supporters Will Actually Read).
b. nonprofit annual report VISUALS
Perhaps the greatest challenge in writing a nonprofit annual report is to engage and inspire readers from beginning to end. We digest visual content 60,000 times faster than text; so, it is not surprising that experts recommend going light on copy and heavy on images:
Convey the impact your nonprofit has had through pictures or infographics or a combination of the two. Avoid huge blocks of text (that may not be read!) and opt for more pictures and fewer words. (C. Zhang. 7 Tips for Creating an Effective Nonprofit Annual Report).
One commentator cites the annual report of the Wildlife Conservation Society as exemplary for its use of graphics, like the one shown below:
It uses photographs as a means to evoke emotion and place emphasis upon the nonprofit’s mission: to save wildlife and wild places worldwide through science, conservation action, education and inspire people to value nature. (K. Yaker. 9 of the Best Nonprofit Annual Reports)
C. style of a nonprofit annual report
Experts agree that we should write as if we were having a conversation with a friend. (P. Chesnut and S. Young. How to Write a Winning Annual Report). We should also strive for simplicity and brevity in our writing. One commentator cites the Sierra Club Foundation’s 2016 Annual Report for exemplifying these practices, noting that:
The Sierra Club Foundation produced a phenomenal annual report with the use of shorter paragraphs. In each page of this report, short paragraphs are followed, or surrounded, by pictures. This allows readers to search through the report without difficulty. Lengthy sentences should be limited to certain parts of annual reports, but organizations will find that short paragraphs, supplemented by illustrations, suffice. (K. Yaker. 9 of the Best Nonprofit Annual Reports from 2016).
3. elements of a nonprofit annual report
A well-crafted nonprofit annual report has the following eight elements:
a. mission statement
The mission statement should be prominent early in the nonprofit annual report. Why? As one author explains:
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. (Donorsearch. Nonprofit Annual Reports: 7 Best Practices).
B. An accounting of accomplishments
There is broad agreement that an accounting of accomplishments should receive top billing in a nonprofit annual report:
[L]et 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. (Donorsearch. Nonprofit Annual Reports: 7 Best Practices).
In recounting our successes, we should explain how they were realized “because of [our] supporters’ donations and time.” (Donorsearch. Nonprofit Annual Reports: 7 Best Practices). One commentator offers the photo below as example of this practice:
(Donorsearch. Nonprofit Annual Reports: 7 Best Practices). It is also important to be as specific as possible about how monetary donations were utilized. (C. Zhang. 7 Tips for Creating an Effective Nonprofit Annual Report).
We are encouraged to centralize accomplishment reporting around 3 to 5 core themes. The goal, here, is to keep the report focused, leading supporters to draw a few key conclusions about the material presented. (Donorsearch. Nonprofit Annual Reports: 7 Best Practices).
We should also skip the internal stuff, e.g., new accounting software, as well as fundraising achievements. The litmus test for inclusion should be whether the accomplishment is a mission-related result. (K.L. Miller. How to Write an Excellent Nonprofit Annual Report).
In addition, we should strive for honesty and transparency, i.e., discuss the things that didn’t go as planned:
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). (Donorsearch. Nonprofit Annual Reports: 7 Best Practices)
Statistics should be a part of accomplishment reporting, but we must choose carefully and try to convey them in a way that will evoke emotion. By choosing carefully, I mean that we should report on our “better off” measures and not simply on “how much” of a certain service we provided or “how well” we provided the service. For a workforce development program focused on retention, an example of a “how much” or “output” measure would be how many people enrolled in soft skills training. A “how well” measure might be how many people completed the training. Finally, a “better off” or “outcome” measure would be how many of those completers were retained in a job for a year. We should report to our donors on the "better off" or "outcome" measures wherever possible. An effective way to ensure that the numbers convey emotion is to pair them with a photograph, as shown in the image below:
(L. Clevenger. 7 Best nonprofit Annual Reports with Ideas to Steal for 2018).
C. a showing of thanks for your supporters
The nonprofit annual report is also the place to show appreciation to those who helped us achieve our goals by listing out and thanking our major contributors, influential staff, and board members. (L. Clevenger. 7 Best nonprofit Annual Reports with Ideas to Steal for 2018). Most organizations list donors by contribution level and then alphabetize those lists. (Network for Good. Top Five Questions about Nonprofit Annual Reports.). To captivate our readers, experts recommend that we spotlight those who have supported our work. One author offers the following image as an example of this practice:
(L. Clevenger. 7 Best nonprofit Annual Reports with Ideas to Steal for 2018).
d. financial information
Supporters want to know what we are doing with their money and that we are managing resources responsibly and effectively, so it is important to include a financial statement in the nonprofit annual report. The statement need not be highly detailed; rather, what is called for is an easy to understand graph and or chart. (C. Zhang. 7 Tips for Creating an Effective Nonprofit Annual Report). One author cites a report by “Be the Match” as being a good example of this practice:
(C. Zhang. 7 Tips for Creating an Effective Nonprofit Annual Report). A paragraph explaining the visual information is also helpful.
e. letter from the organization's leader
A nonprofit annual report will probably also include a letter from the organization’s leader and/or board chair. That element should speak to what has happened in the past year, exude thanks to the organization’s staff and supporters, and provide a vision of what lies ahead. The tone of the piece should reflect the fact that the annual report presents an opportunity to be candid and transparent about the organization’s finances and outcomes and build trust with its audience. (National Council of Nonprofits. Nonprofit Annual Reports).
f. calls to action
Calls to action are also important elements. The report should inspire supporters to action:
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, and online fundraising campaigns. (Donorsearch. Nonprofit Annual Reports: 7 Best Practices)
The more opportunities we provide, the more likely our readers will be able to find a way to contribute that fits their interests. Finally, we shouldn't forget to mention other places where readers can learn more. Include the organization’s website URL, phone number, address, and social media handles so potential donors can continue to learn more. (National Council of Nonprofits. Nonprofit Annual Reports)
G. EXECUTIVE SUMMARY
Depending on the length of the piece, it may be prudent to provide an Executive Summary that will help to make the report scanable. (E. Chung. Create a Nonprofit Annual Report Your Supporters Will Actually Read) For shorter reports, this may be accomplished via the leader’s letter. For longer reports, the Executive Summary may be a separate report element.
H. TABLE OF CONTENTS
Finally, given the broad array of nonprofit annual report elements discussed above, it is a good idea to incorporate a table of contents to make things easy to find for your readers. (L. Clevenger. 7 Best nonprofit Annual Reports with Ideas to Steal for 2018).
4. WHERE TO GO FOR INSPIRATION in writing your nonprofit annual report
For inspiration in designing your nonprofit annual report, navigate to www.nonprofitannualreports.net. The site contains over 100 annual report examples. (Network for Good. Top Five Questions). In addition, the following sites provide templates:
- Social Solutions’ Annual Report Template
- Domo’s Custom Reports
(C. Zhang. 7 Tips).
Getting our annual reports in the hands of our donors prior to soliciting them for an annual gift can be a strategy for increasing year-end donations. For more on writing annual appeal letters, check out this post.
resources for writing a nonprofit annual report
Chesnut, P. and Young, S. How to Write a Winning Annual Report for a Nonprofit Organization (8/2/2018) (Available at: https://www.campbellcompany.com/news/how-to-write-nonprofit-annual-report).
Chung, E. Create a Nonprofit Annual Report Your Supporters Will Actually Read (Available at: https://www.classy.org/blog/create-nonprofit-annual-report-supporters-will-read/).
Clevenger, L. 7 Best nonprofit Annual Reports with Ideas to Steal for 2018 (Available at: https://www.wholewhale.com/tips/top-7-nonprofit-annual-reports/).
Donorsearch. Nonprofit Annual Reports: 7 Best Practices (Available at: https://www.donorsearch.net/nonprofit-annual-report/).
Miller, K. L. How to Write an Excellent Nonprofit Annual Report (6/25/2018) (Available at: https://www.thebalancesmb.com/write-nonprofit-annual-report-2502336)
National Council of Nonprofits. Nonprofit Annual Reports (Available at: https://www.councilofnonprofits.org/tools-resources/nonprofit-annual-reports).
Network for Good. Top Five Questions about Nonprofit Annual Reports. (12/11/2007) (Available at: https://www.networkforgood.com/nonprofitblog/top-five-questions-about-nonprofit-annual-reports/).
Rosen, S. Five Steps to a Winning Annual Report (Joan Garry’s Blog: https://www.joangarry.com/annual-report/).
Yaker, K. 9 of the Best Nonprofit Annual Reports from 2016 (8/10/2017) (Arreva Blog: https://blog.arreva.com/9-of-the-best-nonprofit-annual-reports-from-2016).