How to Write an Annual Report for a Nonprofit: The Ultimate Guide
Want to know how to write an annual report for your nonprofit organization? Then you’re in the right place. In this blog post, we’ll outline all of the sections included in a great nonprofit annual report. Think of this framework as the ultimate checklist for writing and designing the best annual report possible.
Before we jump in, let’s address some major questions.
Whether you’re new to the nonprofit world or a seasoned veteran, annual reports can often feel both daunting and complicated. Despite being a necessary element to nonprofit work, it’s not always clear what the purpose of an annual report is, or what should be included in it. Understandably, nonprofits want to ensure that their investment in any project, especially one like the annual report, is worth their time and energy.
So, if you’re curious about what an annual report really is and what it accomplishes, keeping reading—we’ll help break down all the basics.
What is an annual report?
Think of an annual report as a “year in review”—like a yearbook of sorts, but for donors, supporters, and partners to take a look at the highlights of any given year at your organization. Of course, a lot can happen in a year (nonprofits know that best), but with an annual report, you can summarize all of the year’s milestones including your impact, accomplishments, new developments, and more.
Annual reports can be created and presented in a variety of ways—both digitally and in print. Depending on the needs, audience, or even constraints of the individual nonprofit, you might choose to create a printed booklet or pamphlet (which could then be mailed to supporters and donors or handed out at events). Or, in line with more frequent developments in the space, you could turn to digital creation—by using platforms like Yearly, nonprofits can easily and more effectively create an annual report that intrigues readers with more vibrant visual elements like photos, videos, and crisp layouts.
Why is a nonprofit annual report important?
An annual report is a great opportunity to show your donors exactly where and how their money is being spent. It also gives them and other supporters a unique opportunity to view the inner-workings of your organization. By showing your communities your detailed financial information, stories of impact, successful initiatives, and more, your nonprofit will create trust through transparency.
Think of it as a win-win—your supporters feel good about their donations and ongoing partnerships, and you feel good letting them know that their contributions are funding your mission in real, meaningful ways.
Do all annual reports need to look the same?
Nonprofits are all different. Some are small charities and others are huge national organizations. Other nonprofits are hospitals, while others are education and advocacy based. Some focus on peer-to-peer fundraising and others rely only on federal funding. Plus, each annual report should have its own theme, based on the organization’s mission and values.
Because nonprofits vary in their day-to-day operations, most nonprofit annual reports do not look the same. While there is a basic structure that most organizations should follow (hence, the reason for this blog post!), every charity’s report is going to look a bit different from others in the industry.
What format should my nonprofit annual report be in?
While there is no “right” medium for your annual report, using free digital software is usually the best bet. Going digital with your annual report allows you to include interactive elements like videos, donation links, and graphics. Plus, it makes your annual report shareable on social media.
Choose a software that allows you to create an annual report template for years to come. That way, you’re not reinventing the wheel year after year.
Now that we’ve covered the basics, let’s get into how to write an annual report for a nonprofit. Namely, all of the necessary sections for your yearly review.
The nonprofit annual report checklist
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Cover photo/design
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Table of contents
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Message or letter from leadership
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Statement of mission and values
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Accomplishments
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Impact stories and testimonials
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Accurate financial data
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Volunteer and donor recognition
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Staff and board lists
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Future goals
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Contact page
Though the above list is a great starting point, it’s necessary to dig into more of the details—keep reading!
1. Cover photo or design
Every great annual report needs a cover design. Like any great brochure or book, your annual report should have a title and an eye-catching visual element. Consider using a photo of your staff, beneficiaries, or a royalty-free stock photo.
Make sure your organization’s name and logo (if you have one) are front and center. No matter where your annual report ends up, your audience should know exactly what they’re about to read.
2. Table of contents
Unfortunately, not everyone will have time to read your annual report from front to back (though we wish they would!). In order to deal with this, be sure to include a table of contents so readers can jump to whatever section they’re most interested in.
This will prevent readers from feeling frustrated, or endlessly scrolling through your annual report without finding the answers they want. Focus on your supporters’ time and be sure that every piece of information is labeled and easy to locate.
3. Message or letter from leadership
A fundamental part of any nonprofit annual report is a letter or message from the organization’s leadership. Whether that leadership is the executive director, the founder, or a senior board member, most nonprofits include an introduction from one of their key staff members.
Usually, this letter addresses the readers, the communities the organization serves, and those that have supported them throughout the year. Think of this letter as an introduction to a book, or an author’s note. In this letter, the “author” (charity) is speaking directly to the readers and introducing them to the annual report.
The inclusion of this element makes your annual report feel professional and trustworthy. Plus, it helps to set the tone for the rest of the content to follow.
4. Statement of mission and values
Though we assume that most of our supporters and donors know what our mission and values are, that’s not always the case. When writing your annual report, make sure to cover all the basics, including who you are as an organization. Remind supporters of what you value, and what your goals are—and why.
This not only refreshes the minds of some of your consistent supporters but also introduces you to potential new readers. And, hopefully donors.
5. Accomplishments
One of the biggest components of any annual report is the inclusion of program and initiative updates. When supporters donate to your cause, they want to know exactly what kind of impact their contributions have had. That’s where this section comes in.
In this part of your annual report, consider adding the following elements:
- Intentions and goals behind certain programs and initiatives
- Charts that showcase measured impact
- Timelines of progress
- Highlights of each program and/or initiative
- Custom donation links
In this section, be sure to get specific about your accomplishments and setbacks. The more granular you can be, the better. Remember, trust and transparency are everything when it comes to donor retention!
6. Impact stories and testimonials
In order to give your supporters a holistic update on your work, it’s crucial to include impact stories and testimonials. Or, evidence of your impact on real people, in real situations. Think of this section as the “product reviews” page, where customers can assess whether a purchase is worth their money or not. In this section, proof of your impact will convince them to remain loyal to your cause.
In this part of your annual report, consider adding the following elements:
- Video testimonials from beneficiaries
- Photos of impacted communities and people
- Quotes from recipients of aid
- Custom donation links for easy contributions
7. Accurate financial data
Most nonprofits are required by law to submit financial statements at the end of every year. Your annual report is an excellent chance to contextualize those findings for supporters to understand.
In this section, it’s important to be transparent and simplify some more complicated statistics. Categorize your financial findings into categories that include layman’s terms, not industry specific jargon.
In this part of your annual report, consider adding the following elements:
- Revenue (donation amount, federal funding, etc.)
- Expenses (administrative costs, operational costs, program expenses, etc).
When putting together this financial information, be sure to create a pie, graph, or line chart that helps with data visualization so readers aren’t confused.
8. Gratitude
Of course, the best annual reports feature lots of gratitude. Because nonprofits often rely on the support of others, it’s crucial to thank donors and stakeholders in your reporting.
In this part of your annual report, consider adding the following elements:
- Photos of volunteers, donors, and more
- An honor role and donor list
- Specific achievements made possible by the generosity of your communities
- Spotlights on specific partners and contributors
9. Staff and board lists
While the inclusion of contact information and staff lists feels rudimentary, it is important. Including staff information allows your nonprofit to feel more trustworthy and real.
- Staff headshots
- Staff bios
- Contact information
- Address of organization
10. Future goals
Lastly, readers should finish your annual report knowing exactly where you’re headed next. After all of the gratitude, and reflection of the past year, be sure to include future goals to inspire action.
In doing this, your supporters will feel driven to continue contributing. They’ll know that you work, and their work, is not yet over.
11. Contact page
When readers are done with your report, they should know exactly how they can contact you. Consider listing an email address, a phone number, you social media accounts, and more. That way, supporters can be directly in touch with any questions or comments.
5 Best Practices for Writing a Great Nonprofit Annual Report
Now that you understand exactly what needs to be included in an annual report, let’s address some few best practices. Regardless of your mission, there are certain tips all organizations should keep in mind as they pull their reports together.
1. Get organized
Because annual reports carry so much information, as we’ve discussed, it’s easy to feel overwhelmed by the prospect of creating one.
Before you jump in, make sure you and your colleagues are organized. Gather the proper materials and content (financials, stories, photos, etc.) and decide on both a timeline for progress and completion. And of course, don’t forget to delegate—be clear about who in your organization will be handling each step of the process (who will be gathering information? Writing the report? Editing it?). By breaking down the information and separating tasks, you and your team will feel much more prepared to take on the report.
2. Be strategic
Annual reports can often feel like an enormous, unfiltered compilation of statistics and stories—especially when there’s little to no strategy behind them. And while you can often feel pressured to include everything in your annual report, it’s important to break down the key elements and create an outline before beginning so everyone on your team is aware of what information should be included or excluded.
3. Focus on your audience
It’s always important to keep your donors, supporters, and partners in mind while you create your annual report. Because they’re the primary audience, you’ll want to be sure to include statistics and highlights that will be most compelling to them—choose information that will make them feel good about their contributions, and will encourage them to continue giving.
4. Invest in visuals
Annual reports are usually pretty long, and many people don’t have the attention span to read the entire thing, word for word. The solution? Visuals.
Do your best to pare down the text, and in its place, include videos (if you’re going green with your report) to show readers your impact, instead of telling them about it. Additionally, prioritize the design and other graphic elements (the colors used, the layout, etc.) in order to make your annual report a bit more interesting for you reader.
5. Practice transparency
Nonprofits often feel pressured to only include successes in their annual reports. In truth, it’s more important to be honest—it’s okay, and even expected, to be clear about any pitfalls along the way to progress. Despite how hard it might be to include some perhaps less glamorous events of the year, the inclusion of these failures builds trust with supporters, which is key for any nonprofit.
Ready to start creating your annual report for free? Check out Yearly’s free trial!