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Your nonprofit organization’s annual report is one of the most critical resources you compile each year. It showcases all of the progress you’ve made toward your goals, demonstrates that your organization is using its revenue properly, and increases transparency with donors, grantmakers, and other stakeholders to ensure continued funding. Plus, some states require that nonprofits file their annual report with the government to maintain their 501(c)(3) status.
Because your annual report is comprehensive and serves many important purposes, the prospect of writing it can seem overwhelming. To reduce stress and help you produce the best nonprofit annual report possible, this guide breaks down the process into five simple steps. Let’s get started.
1. Define your nonprofit’s accomplishments
As you begin writing your report, look back over the goals your organization set for this year. Did you meet or exceed them, and if not, how close did you come? Also, consider your program outcomes, any work completed on long-term projects, and progress made toward the overarching objectives in your nonprofit’s strategic plan.
Brainstorm a list of all of these accomplishments, then organize them in order of importance, which depends on how your organization defines success. The top three to five achievements on the list will form the backbone of your annual report, and you can incorporate the rest as is appropriate.
2. Conduct interviews
Including impact stories can take your annual report to the next level, as storytelling helps audiences contextualize your accomplishments and connect emotionally with your nonprofit’s purpose. Consider interviewing the following individuals as you prepare the report:
- Supporters who have each contributed to your organization in significant ways, such as recurring donors, longtime volunteers, and passionate advocates.
- Your nonprofit’s staff members and board members.
- Beneficiaries of your initiatives.
After you conduct each interview, ask permission to use a quote or segment from the interviewee’s testimonial in your annual report. Even if they don’t give permission or you can’t find the right place in the report for a direct quote, the interviews can provide unique perspectives on your organization’s accomplishments that can inform the report’s overall structure and contents.
3. Organize your financial information
Providing transparency surrounding your organization’s finances is an essential purpose of your annual report. Both current and prospective stakeholders need to know that your organization is using their contributions effectively and ethically in order for you to continue bringing in sustainable revenue to fund your programs and projects.
Many nonprofits include their IRS Form 990 as an appendix in their annual report, but this isn’t a requirement as Form 990s are already publicly available on the website of the Secretary of State or Attorney General where the organization is incorporated. Either way, you should include a few charts or graphs of key financial data and explanatory notes for each in the body of your report so readers can understand your organization’s financial position at a glance.
4. Compile essential lists
Nearly every nonprofit annual report includes several lists of names, but the way you go about compiling each list will depend on your organization’s size. Make sure to include lists of your:
- Board members. Name your board chair first, then list all voting members. If you have any non-voting, honorary, or advisory board members, include their names under a separate heading to ensure stakeholders know what type of role each of the organization’s directors plays.
- Staff members. Smaller nonprofits with only a few employees may include all of their names, while larger organizations may only include executive-level staff and occasionally mid-level management. How many staff members you include depends on the available space in your report, although the names of your executive director, chief operating officer, chief financial officer, and any vice presidents should always be included.
- Donors. Most organizations set a threshold for donors’ yearly contributions to determine which names to include in the annual report. It’s common to organize your major and mid-level donors by tier and then list their names alphabetically within each tier.
You might also include a note collectively thanking small donors at the end of the donor list to recognize everyone who makes your organization’s work possible without writing out all of their names.
5. Format the full report
Now that you’ve collected the basic information for your annual report, it’s time to put it all together. There are a variety of report formats you can choose from, including:
- Downloadable PDFs
- Print booklets
It’s often advisable to use more than one format to ensure all stakeholders can access the information that interests them. For instance, a casual donor might only need to watch a few minutes of a video to get a sense of what your organization does and be motivated to take action. However, a grantmaker might want to read a PDF in detail to ensure they choose the right nonprofit to win their grant.
Start thriving with a comprehensive annual report
Your nonprofit’s annual report is a key resource for a variety of stakeholders and essential to your organization’s ability to thrive. By organizing your nonprofit’s accomplishments, interviews, financial information, and lists into an accessible format, you’ll be able to showcase your organization’s progress over the past year and build on that progress in the near future.