What is a nonprofit annual report?

An annual report is a common publication of nonprofit organizations documenting their achievements and performance over the previous year. Well-rounded reports balance forecasting the future of the organization and establishing goals with reporting historical data and program information. 

A good nonprofit annual report has goals!

When developing a good annual report, start with the end in mind. If your organization runs through the motions and produces a report because you always have, consider reexamining the purpose. Using the same template for five years in a row or mailing a print piece with no way to track engagement doesn’t serve your mission. An annual report should be a distinct piece of your communications and marketing assets. Since annual reports are big projects, it’s okay to expect more of this signature piece. 

Here are five goals to pursue when developing a great nonprofit annual report:

Goal #1: Provide Clarity & Accountability

Traditional nonprofit annual reports focused heavily on financial performance and statistical data. While text-laden, multi-page diatribes are now less common (thank goodness!), there is still a need to include enough detail and transparency and build trust. Here are some clarifying details your donors might be interested in:

• Financial reporting in comparison to budget
• Programmatic breakdown of resources
• Campaign and project progress
• Team and board member position changes

Don’t be afraid to use graphs, charts, and graphics to depict the data. As a nonprofit organization, your 990 tax return is publicly available, and if donors want to dig deeper, they can. However, since most donors won’t take the time to do further research, provide enough detail so readers don’t fill in the blanks with assumptions. 

Pro Tip: If you have active donors on your board or fundraising committee, consider approaching them to review the draft annual report before you publish it. They will likely be honored to be part of the process and appreciate the opportunity to give input.  

Goal #2: Inspire Conversation

Think about your most involved donor or volunteer. Then ask yourself what to include in your annual report that might even surprise them. There’s no point in stating the obvious or repeating previously shared information. Think of your nonprofit’s annual report as a showcase piece that inspires curiosity and conversation. 

Stories of mission impact are critical, but sharing stories of the board or team development and collaboration with partner organizations demonstrates your nonprofit’s interest in continuous improvement. These types of stories also lend themselves to showing your team’s dynamic, individual personalities, and culture. 

Creating showcases of donor experiences also provides your top supporters with a way to start a conversation with their network. How awesome would it be for your top donor to share their story through your annual report? It takes the pressure off your donor to try and cultivate an opportunity and ensures the right information is shared. 

Goal #3: Honor Supporters

Take the notion of showcasing your donor experiences one step further. Your annual report is a fantastic opportunity to highlight supporters who helped foster transformational change through your programs. Donors are more likely to understand your mission and its impact when they see how their peers helped carry it out. 

The peer pressure factor is real, too. Take the United Way, for example. By categorizing donors based on giving level, they consistently keep aspirational levels of giving in front of their supporters. While not all donors want their contributions called out, others consider it motivational—both for themselves and for their community. 

Consider unique ways to shine light on those who make your work possible. A video reel of testimonials or even quotes from supporters and volunteers is far more powerful than a list of names. 

Goal #4: Give Readers Something Easy to Remember & Hard to Forget

Take care to not dedicate too much space to telling one story that, while moving, is too complicated for anyone to fully understand or relay. A great annual report shares concise stories that demonstrate the connection between support and impact in short order. Ideally, your readers are so moved by what they read that they share it with their network (see Goal #2 to Inspire Conversation above). 

Using effective storytelling practices helps narrate your organization’s impact without unnecessary fluff or complications. Ideally, provide readers with a narrative that is unforgettable and tied to the following equation: 

Support + Program = Impact 

To be effective, simplify your stories. Enable your reader to easily identify their position in the equation (hopefully, under Support) and how necessary they are for it to work.

Goal #5: Impress

There is nothing worse than a great story or compelling case that’s presented poorly. If showcase material comprises your annual report, make sure it’s presented in a showcase fashion! 

Muskegon, Michigan Community Foundation Annual Report 2020 pg. 5

Good design makes your message memorable. When developing an annual report, or any other marketing asset for that matter, you should consider the impact it will make on your audience. Ask yourself “what is our goal?” Then don’t be afraid to get creative. A creative design will allow you to engage with more of your audience and make a larger impact. By doing this, you are more likely to achieve the goals of fundraising, donations, or awareness.

-Trevor Dickerson, Creative Director at New School

Whether you dazzle donors through a dynamic print piece or a multimedia approach using video, make sure to impress. 

There’s Always Next Year

If you’re reading this post-publication of your annual report, do not fear. There is always next year. Start planning early and download the Guide to Great Annual Reports and research what styles and media types to use. Work with your team and volunteers to ensure you’re capturing stories and storing the necessary information to retell them when it comes time to produce your next annual report.