How to Write a Nonprofit Annual Report: The Ultimate 2022 Guide
If your fiscal year wraps up midyear, then it’s also time to start thinking about a very strategic nonprofit document—your organization’s annual report. If the thought of tackling an annual report makes you weak in the knees, don’t worry.
Read on to gain insight into how to write a nonprofit annual report that will motivate people to action and inform your existing donors!
Let’s jump in.
What is a Nonprofit Annual Report?
An annual report is different from the IRS-990 filing which must be submitted annually. Instead, an annual report is a way of reporting back to your donors and supporters about what their gifts helped you achieve, showing the tangible impact of their generosity. It’s also a way to cultivate new donors and to lift up your brand.
A nonprofit annual report can be very simple–a small brochure or an oversized postcard–or a bigger production, such as a four-color printed booklet, a PDF, or even a professionally produced video.
The nice thing about fancier annual reports is that they can be posted on your website to help raise visibility.
Why Do You Need a Nonprofit Annual Report?
Remarkably, some nonprofits don’t bother producing an annual report.
This is a mistake.
Even a small annual report can provide essential information to your supporters and can be an effective tool for communicating to foundations and corporations:
- Your organization’s successes
- Your organization’s challenges
- Inspiring stories
- Celebrating donors
- Financial information
- Ongoing call to action
Writing an inspiring annual report isn’t easy, but it should be done. Putting a face to the people you serve or causes you advocate for helps produce an emotional response, and that kind of response often leads to philanthropy.
Being transparent about your challenges, as well as your financials helps build trust. Spotlighting a donor or a group of donors demonstrates why people give to your organization and expresses appreciation for their generosity.
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5 Key Things to Nail When Writing Your Nonprofit Annual Report
There are five things you should focus on nailing to make your nonprofit annual report stand out.
1. Have a plan
Sit down with your team and hammer out the details.
Ask your team key questions such as:
- Who is providing what data?
- Who is providing what stories?
- When is the due date?
- What are the points you’re trying to get across to your constituents?
Choose three or four key themes you want to communicate to keep your report focused and clear.
2. Use visuals
In our digital world, people tend to skim copy and pay more attention to visual images. Take a look at this page from the Natural Resources Defense Council’s 2021 annual report.
Make sure you make the most of visuals, including photographs and infographics, which are a great tool to display important numbers visually. Use photographs of your volunteers in action. Break up blocks of text with visuals and pull-quotes.
3. Be donor-centric not organization-centric
Make your donors and volunteers the heroes of the story you’re telling. In other words, don’t toot your own horn. Present the facts of what you accomplished thanks to your donors.
You wouldn’t be able to accomplish your goals without your donors and volunteers, right? Feature at least one donor profile, and don’t forget to include a list of your donors somewhere in the report.
Peers influence giving, and if your prospective donor’s name isn’t on your list (but their friend’s is) that could stimulate a new gift to your nonprofit. And it’s always nice to feature at least one heart-warming story demonstrating how your volunteers power your organization.
4. Be intentional about your tone
Much as is done in good direct response materials, using the word “you” rather than “we” can engage your readers and also signal to them your gratitude for their support.
Compare these two sentences:
“Thanks to your generosity, we were able to serve 10,000 hot meals to hungry and homeless people”
“Your generous support fed 10,000 hungry and homeless people”
Subtle, right? But effective. Don’t just make your annual report a laundry list of your accomplishments, but rather a celebration of your supporters. In other words, be careful not to pat yourself on the back.
5. Include a Call to Action
Since an annual report is focused on your donors and celebrates how they’ve empowered your mission, if you don’t include a call to action, you’re missing out.
Besides informing and inspiring people, galvanize them. Give them an opportunity to participate by giving–for the first time, or again. Mention other ways they can get involved like volunteering, participating in matching gifts, or donating in-kind gifts. If you have an upcoming special event, include that. Be sure to include your website’s URL, your phone number, and social media links.
For instance, the San Francisco Aids Foundation posted this on Facebook when it’s 2021 annual report went live online:
And Keep Austin Fed, a nonprofit that redistributes food in Austin, TX, tweeted out a promotion of their annual report.
How to Format Your Nonprofit Annual Report
When thinking about how your annual report should be presented, take into consideration two things—your audience and your budget—as you decide on its format.
Annual reports can be presented:
- On an oversized postcard in a four-color format. This is a great way to economize on both printing and postage, but be sure you choose the most important metrics since space is so limited.
- As a self-mailer. A self-mailer is a short 2 to 4-page piece that folds down and is sealed shut for mailing. One of the reasons self-mailers are so useful is your constituent doesn’t have to wrestle with opening an envelope. On the downside, self-mailers can be mistaken for junk mail and tossed. Consider emailing your constituents before the piece drops, including a PDF of what it looks like.
- As a PDF. PDFs are great because they don’t require mailing. You can also use a tool such as issuu or Yumpu to turn a PDF into an online flipbook to include on your website.
- As a video. If you choose this route, you can post your annual report to YouTube and social media, embed it on your website, as well as email it to your constituents. Be cautious, though, because you want something that’s professional and uses good lighting, rather than looking like an amateur Tik-Tok.
- As a bound magazine. A traditional way to present a nonprofit annual report is a bound, four-color magazine of 10-18 pages. This is by far the most expensive option, but it can serve as a leave-behind at meetings with donors or foundations, can be included in press packets, and can be left in reception areas as reading material.
5 Best Practices For Nonprofit Annual Reports
To create the most engaging nonprofit annual report, follow these five best practices.
1. Highlight your mission statement
Your mission statement should be up-front in your annual report to remind people what you do and why. Everybody needs a reminder sometimes.
For instance, download the 2020 annual report from Girl Scouts of America. Not only does this copy-heavy report run a mind-boggling 62 pages, but nowhere does it state the organization’s mission. Compare that with Girls Who Code’s terrific annual report which immediately reminds you of their mission, is beautifully visual, and is easy to digest.
2. Always include a letter from your Executive Director and/or Board Chair
This puts a formal stamp of approval on the report and acts as a preview of the report’s contents and important data points. It should be written in such a way that the reader can get the gist of what’s being said just by skimming the text and seeing the visuals.
3. Recap the past year’s major achievements
This is where you can get creative with storytelling and infographics to communicate vital data points powerfully and effectively. Look how Habitat for Humanity’s 2020 annual report nailed data points connected with the then-emergent COVID-19 pandemic.
4. Use transparent financials
Take a look at this beautiful financials page from the 2021 annual report of SheJumps. Nothing ho-hum about the color palette or the way the data is captured and presented.
Use a pie chart and other graphics to break down your expenses and revenues into an easy-to-understand format. And don’t forget to explain any shortfalls which may have occurred.
5. Celebrate your donors
A listing of at least your major donors should be included, including foundation and corporate gifts. Most nonprofits will rank order the gift amount and then alphabetize each list by last name.
Others simply list all gifts over $1,000 (or whatever your major gift threshold is.) Take great care to ensure that those who have requested anonymity receive it and make sure everyone’s names are spelled accurately.
7 Common Nonprofit Annual Report Mistakes to Avoid
Especially if you’re new to the nonprofit sector, it can be easy to make a few rookie mistakes when writing a nonprofit annual report. This list will help you stay on your toes.
1. Don’t write by committee.
While it’s fine to have a working group or committee, they shouldn’t be the final arbiters of your annual report’s copy. By having one or two people as the editors, you’ll avoid having groupthink taint the final product.
2. Don’t get bogged down with long sentences.
You’re not writing the Magna Carta, you’re writing a nonprofit annual report. People are often put-off by lines and lines of text. Keep your text relatively short and simple and rely on charts, graphs, compelling photographs, and other visuals to break things up and keep your annual report engaging.
3. Don’t focus on your organization only.
Very often, nonprofit annual reports (not to mention direct mail appeals) are all about the nonprofit, rather than the potential donor. Draw your readers in by thanking them for the impact their giving made, demonstrating that impact, and even sharing a donor story or two. Use words like “together” and “your” and use the word “our” sparingly.
4. Don’t overlook your annual report as a cultivation tool.
Not only does a nonprofit annual report provide financial transparency and a chronicle of the past year’s achievements, it is also a vital tool that can be used by development officers and grant writers. An annual report can also be the catalyst that converts a prospect into a donor, and it can also aid in donor retention.
5. Never be dishonest or dodgy.
Did your finances take a hit during the height of COVID? Did your CEO abruptly resign? Did something embarrassing happen? Don’t fudge. By being honest about your challenges, as well as your accomplishments, your nonprofit’s annual report can help your organization generate more trust and gain more credibility.
6. Don’t forget to include a table of contents.
If your annual report is going to be more than four pages long, a table of contents is a must, whether the report is digital or printed. It helps readers find what they’re looking for and to more easily navigate the document or site.
7. Don’t forget to publish your annual report on your nonprofit’s website.
By doing so, you can include animations, interactive visuals, a soundtrack, and more. Or, create a flip book and embed it on your site. Consult with your webmaster or IT department, as well as your marketing folks.
P.S. Don’t forget to use good SEO optimization here, either.
Successful Nonprofit Annual Report Examples
This is the fun part. We’re giving you some examples of annual reports that are absolutely spot-on with ideas you can draw inspiration from!
Some people who think of The Salvation Army as being a bit stodgy might be surprised to learn that the organization was a pioneer in digital annual reporting. It published its first digital annual report in 2009 as an antidote to people not reading an expensive publication.
Their recent report opens with the theme “Hope marches on” and is followed by letters from both the National Commander (CEO) and the chair of the National Board of Advisors. Financials are shown in both graphic and monetary forms, and broken down by category. The Army also gives viewers the opportunity to download the report as a PDF.
This is a great example of an annual report that both captures the organizational culture, as well as making it easily accessible to all.
The San Francisco AIDS Foundation uses a vivid color palette to make their work come alive. The report starts with a letter from their interim CEO, gives immediate shout-outs to their partners and supporters, and details their vision, their work, their locations, and finally, their financials.
Besides the vibrant colors used, this annual report is packed with compelling photographs, and the financial section makes good use of some graphs. The financials are the least imaginative portion of what is otherwise an excellent nonprofit annual report.
We particularly love the unique layout of the report with clickable subtitles which take you to the content.
The Animal Legal Defense Fund is a purpose-driven nonprofit that files very visible lawsuits to protect companion, wild, and farm animals from harm. In addition, they provide free legal assistance and training to prosecutors to assure animal abusers are held accountable for their crimes, support strong legislation protecting animals, fight laws harmful to animals, and offer opportunities to both legal professionals and law students to advance animal law.
Their beautiful 2021 annual report includes gorgeous four-color photographs, opens with a donor-centric message from the CEO, and highlights their legal successes during a year that was otherwise quite challenging. As we mentioned earlier, never be dodgy. COVID struck a huge blow on the entire economy and shook us all to the core.
Here’s another fine example of an excellent digital annual report. There’s no dearth of compelling photographs to be taken in a national park, and this report revels in nature’s beauty.
The artful layout connects pages by using a graphic looking like a trail map.
The Foundation’s enviable donor pool, including a legacy giving society, is thanked and recognized, and there is a call to action with a direct link to their giving page. The Foundation also thanks its numerous corporate supporters.
Its financials are presented as charts, with the option of downloading detailed financials as a separate PDF.
This artfully designed digital annual report for San Diego’s community foundation is a winner. They celebrate their donors as well as reporting their many successes.
Take a look at the donor stories—the one about a middle school student who sold packages of dried fruits and nuts and raised $450 and donated to the Foundation is compelling. She realizes her work made an impact on others and shares that with the Foundation’s friends.
The report ends with a strong call to action as well as opportunities to give or open a donor advised fund. This nonprofit annual report is beautifully imagined and masterfully delivered.
Wrapping Up: How to Write a Nonprofit Annual Report
Did we convince you that your nonprofit really should have an annual report of some type? We hope so.
A high-quality annual report helps your nonprofit stand out in a crowd, helps build your brand, assists in retaining donors and gaining new ones, lays out your financial situation, and lets you tell your donors about compelling reasons they should keep giving to you.
By avoiding common mistakes, and by following best practices for nonprofit annual reports, you’ll reap the rewards of a job well done for an organization that’s doing good.
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