Nonprofit Annual Reports: 8 Essential Tips [& Template]
Many nonprofit professionals greet annual report creation with groaning and moaning. This is because nonprofit reporting has a bad reputation. These reports are considered a time suck and poor use of funding. Plus, in the aftermath of COVID-19, nonprofits like yours are forced to face and reanalyze the impact that the virus had on the organization.
However, you don’t need to dread the creation of your annual report! When well-crafted, this document can be a vital tool to retain and grow gifts from your donors.
This article is designed to guide your organization through the creation process, transforming your annual report into this helpful tool. We’ll walk you through tips to make your nonprofit annual report as effective as possible (with helpful templates along the way to provide formatting examples).
Without further ado, here are the tips we’ll be covering in this guide:
- Your nonprofit annual report should support a larger strategy.
- Create a donor-centric nonprofit annual report.
- Consider the nonprofit annual report requirements.
- Choose a nonprofit annual report platform.
- Choose compelling visuals for your nonprofit annual report.
- Be honest and appreciative in your nonprofit annual report.
- Use your nonprofit annual report to look forward.
Ready to dive a little deeper into nonprofit annual reports and how you can craft yours to maximize the impact at your organization? Let’s get started.
1. Your nonprofit annual report should support a larger strategy.
Annual reports frequently go astray when they’re treated separately from the rest of your nonprofit’s strategy.
Don’t just create your annual report for the sake of creating it. This is what gives these reports the reputation of being a waste of time and energy. But when your report supports a larger purpose and strategic plan for your organization, you’ll be able to make the best use of the document.
Consider your nonprofit strategies and how your annual report can support those strategies. Generally, the report will make the greatest impact on those strategies which have subjects who directly interface with the document — your donors, supporters, and stakeholders.
The greatest strategy supported by your annual report is likely your fundraising strategy. For instance, when it comes to your donor retention (a key element of a successful fundraising approach), you should use your nonprofit annual report to:
- Remain transparent about financials. Donors respond positively to honesty about your financials. Be sure to explain exactly what their donations are funding, including your projects throughout the past year, campaigns accomplished, and constituents served. We’ll cover this in more detail later.
- Provide donors with hope for the future. Encourage your supporters to dream with you and invest further in the world you’re creating together by working towards your mission. Use your annual report to discuss how your past projects fit into your future plans and how you’ll continue to accomplish goals.
- Show appreciation for your supporters. Your supporters are the reason you’ve been able to accomplish so much in the last year (even throughout the turbulence brought about by a global pandemic). Therefore, show them the appreciation they deserve. Try highlighting top contributors and partners who helped you throughout the year.
Before you start crafting and creating, consider what it is you’re trying to accomplish with your nonprofit annual report. This will help guide the creation process, ensuring you include the elements in the report that will best support each of your objectives. Donor retention is one of the most common strategies supported, but your annual report can be used for much more.
2. Create a donor-centric nonprofit annual report.
As you write your annual report, the temptation might be to use the document as a platform to brag about all that your organization has accomplished. However, this won’t be enough to capture and keep the attention of your supporters.
During the creation process, be sure to write your report in a donor-centric manner to ensure it reaches your audience on a personal level.
This means you must meet donors on their terms, delivering the right message in the right format at the right time. In order to do so, you’ll need to employ a few specific strategies: consider your audience, use you-attitude, and create relevant visuals.
Consider your audience.
You may have some donors who you classify as “more is more” donors. These are the supporters who want all of the details about your organization’s efforts as soon as possible. These are the donors who will value and appreciate a full book-like style of an annual report with all sorts of stories, and information.
You may also have some donors who classify as “less is more” donors. These are the supporters who won’t sit down to read your newsletter, much less a lengthy annual report. You may consider sending a single page of infographics rather than a full report to these donors.
The format of your annual report is a key decision to make and the choice should be based on what you anticipate your audience will read. Understanding your audience demographics and preferences is the first step to ensuring your annual report is designed for their needs.
Use you-attitude throughout the document.
You-attitude is all about putting accomplishments in terms of your donors rather than your organization. Try to keep them at the center of the subject matter at all times. For instance, compare the following sentences:
The second sentence uses you-attitude and is more likely to hold the attention of your supporters throughout a document like your nonprofit annual report. It’s a subtle shift, but one that lets the donor know you’re truly grateful for their support.
Create visuals to feature important metrics and information.
It can be overwhelming to pick up a large packet of information that’s simply pages and pages of 12 point Times New Roman paragraphs, especially when hidden in those paragraphs are tons of percentages and numbers. Instead, break up the information with infographics, graphs and charts, images of supporters and volunteers, and other interesting graphics.
Visuals make it easier for supporters to scan through your nonprofit annual report and pull out the data that means the most to them. Plus, it breaks up the text, making the content more engaging and enjoyable for the reader.
3. Consider the nonprofit annual report requirements.
Every year, nonprofits are required to submit a Form 990 to the IRS. This document contains information about your nonprofit’s revenue and expenses throughout the year. Because this information is publically available, your nonprofit’s annual Form 990 can be used by supporters to track your financial transparency.
Technically, in many cases, the annual Form 990 is the only required annual report for nonprofits. However, your annual tax form doesn’t thank your donors, make them feel proud, or give them new reasons to engage and grow their relationship with you. That’s the job of a more comprehensive report.
You might not be technically required to file a nonprofit annual report other than your Form 990. However, this is the type of report that is more likely to engage and provide additional context for supporters.
We highly recommend including a full-fledged annual report in your annual strategy, maximizing your impact by including the following elements:
- Your organization’s mission statement. Feature this mission statement at the very beginning of the document. This will provide context for those who may not be as familiar with your organization and serve as a reminder to those who are.
- Nonprofit financial information. Again, be as straightforward as possible with these numbers for transparency with your supporters. Supporters want to know where their dollars are going, so show them that your nonprofit is responsible for its funding by explaining this information in full, providing context behind major expense information.
- Projects from the year. This is your time to explain your nonprofit’s accomplishments. What projects did you start? What did you finish? Which fundraising campaigns were most successful? What still needs to be done in order to reach your nonprofit’s goals?
- Appreciation for your contributors. This is a great opportunity to acknowledge and appreciate for your nonprofit’s major donors. You can also thank key patrons like volunteers and board members.
While you may not be entirely required to file a nonprofit annual report past your annual Form 990, you are held accountable by the expectations of the document. For instance, if you completely omit your financial information from your report, supporters may consider it fishy and start distrusting your organization, damaging the reputation you’ve built up over the years.
4. Choose a nonprofit annual report platform.
The traditional nonprofit annual report is a book-length document. While we’ll dive into some additional potential platforms in a minute, we want to first remind you that these lengthy reports aren’t a waste of time and energy.
Some donors, especially those “more is more” donors, want a lengthy description explaining everything your nonprofit has been up to.
For example, there are people like Warren Buffet who invested in IBM because they had sent him a printed annual report. “He said he had been impressed by IBM’s road map,” the BBC reported after the $10.7 billion investment was announced.
Book-length reports provide the time and space that your nonprofit needs to sell the vision of your organization so that people like Warren Buffet will feel compelled to give.
A True Story
There’s also the true story of the accidental endowment. In this story, The Rhode Island Foundation published a well-designed, well-written report. They cut down on the number of reports they mailed directly (the report is available online) but made sure to continue sending the paper version to some local lawyers.
An elderly man walked into the office of one of these local lawyers, prepared to write a will and get his affairs in order. While he waited to be seen, he picked up one of the copies of the Rhode Island Foundation annual report. He hadn’t quite known what to do with his sizable estate before that moment. Years later, upon his passing, the Rhode Island Foundation received a small fortune from that generous man, all thanks to a printed annual report.
However, that doesn’t mean you shouldn’t adapt to the times. Analyze your audience and create your annual report according to what they’re most likely to respond to. Remember that you can always post your full report online and use other formats to summarize information and invite your supporters to visit your website to view the entire document. Some other unique formats that you may use to convey your annual report include a large postcard, a self-mailer, and a video.
Postcards are designed to be shorter so that supporters can quickly and easily skim the report rather than read a lengthy document (or book). Your goal shouldn’t be to jam-pack this postcard with all of the information that you would include in a traditional report. Instead, you should use the unique format to highlight only the most important information.
Be sure your postcard does the following:
- Conveys impact and results. Due to limited space, you may need to pick and choose the most important metrics to incorporate. Remember, this is the opportunity for your nonprofit to show the world the good you’ve done in the last year.
- Graphically displays important information. Make sure the information is easy to read. Charts, graphs, and prominently displayed statistics help draw attention to the most important aspects of the postcard.
One way to make sure you get the most out of your annual report postcard (and save money while doing so) is by working with a dedicated direct mail platform. For example, GivingMail works exclusively with nonprofits to create and send high-quality marketing materials to supporters—including postcards!
While you may not have the opportunity to include every detail in your annual report if you choose this format, it just means you’ll need to leverage other strategies alongside it. For example, you may leave out the appreciation of your major supporters in your postcard, but choose to erect a donor recognition wall to show your gratitude in another way.
Another option for sending your nonprofit annual report is a 2-4 page document structured as a self-mailer and sealed with a wafer seal. Self-mailers can be incredibly useful because they bypass the issue of getting your supporter to open an envelope in the first place, a barrier that many direct mailings have difficulty overcoming. With a self-mailer, it’s easy for your supporters to simply open the document and read what it says.
When you design a self-mailer, follow these best practices:
- Include clearly stated next steps. When you designate the next steps supporters should take to further engage with your organization, you ensure the mailer won’t just get lost with the rest of their junk mail. By incorporating a list of upcoming events or the URL for your donation page, you increase the likelihood that they’ll keep the report for a longer period of time.
- Incorporate plenty of images. Break up the text with images to engage your readers without distracting them from the copy. Be sure the mailer is visually compelling and not overwhelming for your readers.
- Keep your copy concise. You have more space with a self-mailer than a postcard, but it’s still somewhat limited. Condense your copy to make sure it’s short, sweet, and to the point, but that you still cover all of the important aspects of your annual report.
While this type of nonprofit annual report is designed to be physically mailed, it’s a good idea to send a PDF version via email to gain the attention of those who might have missed it in their mailbox initially.
Pro tip: Work with a direct mail marketing company to create and send your mailers to supporters in the easiest and most affordable way possible.
A well-designed, compelling video is a great way to not only tell your supporters but also show them the impact they made on your organization’s mission. However, to make sure the video will be well-crafted, your nonprofit should:
- Be picky about your videographer. Carefully examine their past videos. If they don’t make you laugh and cry, move on. Video annual reports need to be professional in order to make an impact on your supporters and hiring a videographer will be the easiest way to ensure this. Home movie quality just won’t cut it.
- Follow a prepared script. Get your best writers to craft the script to discuss all of the important metrics and accomplishments that you want to highlight on your annual report. The other shots in the video will support the speaker’s words.
- Use relevant footage. If your organization focuses on clean water, then show footage of rushing rivers and streams. Use the video to its fullest potential by including maps when discussing location or by featuring videos of volunteers when you discuss their involvement.
Here’s a terrific example of a video nonprofit annual report example from the World Wildlife Fund. We’ll also examine the excellent qualities of this video later in the article.
Video annual reports for nonprofits are limited to digital formats. While some organizations (especially those that cater to the young, technologically savvy audiences) may find this to be a great strategy, it’s not the ideal format for all nonprofits.
Consider your own nonprofit audience and what format they will respond best to for an annual report.
5. Choose compelling visuals for your nonprofit annual report.
When it comes to images and visuals on your annual report, you need to put quite a bit of thought into the choice. You can’t just choose the first image you find and slap it on the report.
Instead, when you’re choosing graphics, your nonprofit should be sure to:
- Prioritizing branding the report to your nonprofit. Your entire annual report should flow together cohesively. This means you should make sure your logo is prominently displayed and that your usual colors and fonts are used throughout the whole document.
- Diversify the type of images you use. Instead of only including photos of your constituents or staff, diversify your images to help convey more information. For instance, pie charts are a great opportunity to display financial allocations and statistics graphics help draw the reader’s eye.
- Keep donors engaged. Don’t overwhelm your readers with too much text or too many images. Rather, there should be a healthy balance of text to images and graphically displayed text in order to best engage your supporters.
Images should never be distracting. They should be helpful guides when it comes to conveying important information within your nonprofit annual report.
Ask for volunteers to review the document and provide feedback about the imagery used before you send your report out. Or, you might hire a professional graphic designer to help organize all of the information in a visually compelling way.
6. Be honest and appreciative in your nonprofit annual report.
Honesty really is the best policy, especially on your nonprofit annual report.
Sometimes things don’t go as planned and you may not reach a specific goal or complete a certain project. Many nonprofits ran into this issue during the COVID-19 pandemic. However, if you try to cover up mistakes or missed opportunities, you’ll lead yourself down a path of distrust with your supporters.
Instead, if you haven’t quite accomplished one of your goals within the last year, briefly mention it in the annual report. Then, be sure to follow it up with a game plan to adjust your strategy and show your donors that you’re taking a proactive approach.
You should make sure to address information such as:
- What the setback was and the cause of said setback.
- Data-informed adjustments you’re planning to make to address the issue at hand.
- How and when the setback should be addressed in the future to set expectations.
In addition to honesty about financials, projects, and setbacks, make sure to honestly and genuinely thank your contributors in your nonprofit annual report.
Yes, we’ve mentioned this a couple of times, but only because it’s so important to appreciate supporters. Highlighting overachievers in your report does two different things: (1) It shows your gratitude for those who go above and beyond to support your nonprofit and (2) it gives other supporters something to strive for.
Just like a donor recognition wall, when supporters see others congratulated, they’ll naturally feel inspired to give more and receive the same congratulations on the report in the future.
7. Use your nonprofit annual report to look forward.
Remember what we said about Warren Buffet? He invested in IBM because he was impressed by their plan for the future.
Providing information about your future plans and projects will get people excited about what’s in store for your nonprofit.
When looking forward, make sure to spell out the expectations regarding your organization’s future actions and goals:
- Remind supporters about goals in progress. For example, you might provide an update as to whether or not you’re on track for the capital campaign started in 2019 and scheduled to wrap up in 2023.
- Get donors excited about the next long-term project for your organization. Explain how one project has led your team to the next one. Did you receive inspiration? Did past activities open up an opportunity for the future? Tell your donors about it!
Forward-facing plans excite your donors and inspire them to continue contributing in the future.
Make sure that after you’ve provided insight about your future plans, you also provide the opportunity for your supporters to act on it. Provide some action items that supporters can take part in right away such as the URL to your donation page, meeting dates, and upcoming event registrations so that they can show their support.
8. Consider nonprofit annual report templates to inspire formatting.
Ernest Hemingway compared a blank piece of paper to a white bull. It’s intimidating and hard to get started on a project when just looking at a blank page. That’s why it can be so helpful to have access to templates and examples to help get you started on your nonprofit annual report.
In addition to all of the images and annual report examples throughout this article, we also want to link you to three of our favorite nonprofit annual reports. You can find those below:
Rhode Island Foundation 2018 Annual Report
The Rhode Island Foundation annual report is a full-fledged, book-like document that takes a deep dive into the various projects and campaigns from the past year. Primarily, they use pictures of supporters and team members for the imagery used in the document.
However, in the page above, we can see how they used charts and spacing in the document to draw the reader’s attention to the important data points. Rather than including these statistics in the paragraph-style text on the left side of the page, they’re pulled out and made larger and more prominent.
You can access the entire report with the link above to see if this style of nonprofit annual report will be most impactful for your audience.
World Wildlife Fund 2015 Annual Report Video
The World Wildlife Fund of Canada chose in 2015 to design a video for their nonprofit annual report. This short two-and-a-half-minute video walks through the accomplishments from the previous year and pairs that information with clips of running rivers and wildlife.
The above screenshot from this annual report video shows how WWF Canada used a map to visually communicate their impact across the country. The audio over this segment of the video fully explains what the different labels on the map mean and how they connect to the larger mission.
You can access the entire WWF Canada annual report video to see how their high-quality recording and clear audio bring a level of professionalism to the video-style nonprofit annual report. Then, you can judge if it’s a format that you believe your audience will respond well to.
Literacy Volunteers of Bangor Annual Report Postcard
The Literacy Volunteers of Bangor chose to send out an annual report postcard to their supporters in 2012-2013. This example provides highlights of the important metrics and information from the previous year.
While this format doesn’t allow for as much context when compared to the book-style report designed by the Rhode Island Foundation, it does provide the information that supporters will prioritize and communicates that data clearly.
You can see in the image above how the organization used color, graphics, and charts to display the data they’ve collected over the year to their supporters. This makes it engaging and draws the reader’s eye more than paragraphs of text or lists of statistics. View the full postcard to see if this format style will best suit your organization’s needs and audience’s preferences.
These examples show how creative you can be with your annual report and the different templates you can use to design it.
People do read nonprofit annual reports, but they’ll get much more attention if the reports are well-designed! Ensuring yours is engaging and educational for your nonprofit supporters will go a long way in building your organization’s relationships.
The templates and annual report examples throughout this article should help your nonprofit get started making your annual report the best it can be. Good luck!
Tools for creating annual reports:
If you’re looking for more information about donor communications and effective resources, check out the articles below:
- Donor-Centered Nonprofit Annual Reports. Can’t get enough annual reports? Read more about how to make yours donor-centric with this article.
- Bloomerang’s Donor Retention Guide. Wondering why donor retention is so important? Looking for more strategies to improve yours? Check out this resource.
- Nonprofit Annual Reports: 7 Best Practices. If you want more information regarding your nonprofit annual report, check out this resource from our friends at DonorSearch.