What Makes A Good Nonprofit Annual Report?

Annual reports help to share the story of the nonprofit. Good reports convey what a nonprofit does – who it served over the past year, who its key supporters and donors are, and how it spent its resources.

Nonprofit annual reports can also be an effective way to provide an overview of the organization to a potential donor. You can share these with community leaders and funders.

What content should a nonprofit annual report include?

1. Your program successes – results and testimonials
  • Results – An annual report should include program outcomes. What did your nonprofit do well this year? How many clients did you serve? How did your work change people’s lives? What are you most proud of doing this year?
  • Testimonials – It is helpful to include quotes and personal stories from your clients and other individuals who have benefitted from the work of your organization.
2. Finances
  • Your nonprofit’s annual report should provide a summary of the organization’s finances. Use uncomplicated charts (like pie charts) to show expenses and revenue. Readers should be able to discern at a glance the sources of funding and a straightforward breakdown of expenses. A straightforward table can be used to display the balance sheet.
  • Use simple category descriptions like “programs,” “fundraising,” and “administration.” Avoid the temptation to explain every expense.
3. Thank your donors
  • Annual reports give your organization an opportunity to acknowledge and thank your donors and supporters. Whether you include types of donors or just list them all alphabetically, the report is one way to thank the businesses and individuals that have helped support your nonprofit.

What else is important?

1. Photos and quotes
  • Your annual report should be visually appealing. Don’t overload it with text. Keep it simple though and avoid cluttering.
  • Include photos demonstrating your programs and activities and utilize graphics to showcase your data.
  • Get quotes from program participants.
2. Different versions – web and print
  • Consider having different versions of your annual report based on the medium. Your online version may incorporate video and other graphics that you are unable to include in a printed annual report.
3. Length
  • While lengthy annual reports were once the standard, nonprofits have been increasingly opting for shorter and more concise annual reports that range from two to four pages. Consider whether your target audience will want to read a 40-page report on your organization or if a shorter 4-page can convey your message just as well?
4. Get your donor’s names correct
  • Double check the spelling of your donor’s names. Okay, triple check. Get this right.
5. Tell your readers how they can help.
  • Include ways for readers of your annual report to get involved – whether through volunteering or attending a fundraising event.
  • Include fundraising options – do you have a new giving club or fundraising society?

Are nonprofits required to produce an annual report?

While nonprofits are not required by law to produce an specific type of official report year year, great nonprofits know the value of an annual report in place.

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The Cullinane Law Group works exclusively with the tax-exempt nonprofit sector. We provide risk management and offer practical solutions for sound governance. We help nonprofits, foundations, and professional associations throughout the United States that seek to create positive change.