It’s time to start preparing your nonprofit’s annual report

Waiting until year end to plan your not-for-profit’s annual report can lead to rushed content and overlooked accomplishments. By gathering personal impact stories and financial highlights throughout the year, you can produce a compelling report that better engages donors, volunteers, grantmakers and other stakeholders. Here’s how to turn your annual report into an effective communication and fundraising tool.

Build a strong foundation

Most nonprofit annual reports consist of several standard sections, starting with a chair of the board’s letter. This executive summary needs to provide an overview of your nonprofit’s activities and accomplishments. It should be clear, concise and written in your chairperson’s voice.

Financial information is another essential component. This generally is subdivided into three sections:

1. Independent auditor’s report (if applicable). If your organization receives an audit, review or compilation, include the auditor’s report or summarize the results. An independent audit opinion states whether your nonprofit’s financial statements are presented fairly, in all material respects, in accordance with U.S. Generally Accepted Accounting Principles.

2. Financial statements. Data should include a statement of financial position (assets, liabilities and net asset categories as of the last day of the fiscal year), statement of activities (revenues earned and expenses incurred) and statement of cash flows (changes, sources and uses of cash).

3. Footnotes. These expand on financial statement items regarding subjects such as leases, debt, and other significant accounting policies and disclosures.

You can make your financial statements easier to understand by creating an abbreviated version with a synopsis that quickly communicates your overall financial situation. Whenever possible, use simple graphs, diagrams and other visual aids to highlight specific points.

Bring your mission to life

A description is the other major section in a typical nonprofit annual report. This is where you can — and should — be creative. Explain your organization’s mission and goals, as well as strategies for reaching those goals. Then, describe who benefits from your services and how your nonprofit contributes to the community. Whenever possible, include measurable outcomes that demonstrate your organization’s impact, not just its activities.

Include client testimonials that allow those you’ve helped to tell their stories in a personal way. Or create a timeline that shows the progress you’ve made toward a long-term goal such as establishing an endowment or constructing a new facility. Your annual report should be as visually pleasing as it is interesting to read. Include captivating photos, engaging graphics and creative layouts. If your report will be distributed digitally, consider adding links or QR codes that direct readers to videos, impact stories, volunteer opportunities and online donation pages.

Start planning today

An effective annual report doesn’t come together at the last minute. By collecting impact stories and financial highlights throughout the year, you’ll have the building blocks for a publication that demonstrates accountability, celebrates your mission and encourages continued support. The earlier you begin, the stronger your final report will be. Contact us to help ensure your annual report reflects your nonprofit’s financial strength and its mission impact.