Your organization’s annual report is of particular interest to stakeholders such as donors, grant makers, clients, volunteers, watchdog groups and the government. Some report elements are nonnegotiable, such as your financial reporting. But you also have plenty of creative license to make your report engaging and memorable for its wide-ranging audience.
First things first
Many nonprofit annual reports consist of several standard sections, starting with the Chairman of the Board’s letter. This executive summary should provide an overview of your nonprofit’s activities, accomplishments and anything else worth highlighting. Next is the directors and officers list. The biggest task here is to make sure all names, professional affiliations and designations are accurate and spelled correctly.
Then there’s the financial information section, which generally is subdivided into three sections:
- Independent auditor’s report. This is a professional auditor’s opinion about whether your nonprofit’s financial statements have been prepared in accordance with Generally Accepted Accounting Principles.
- Financial statements.You’ll want to 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 during the year) and Statement of Cash Flows (changes, sources and uses of cash for the year).
- Footnotes. Use these to expand on financial statement items regarding such subjects as leasing arrangements and debt.
Often, organizations choose to make their financial statements easier to understand by creating an abbreviated version with a synopsis that quickly gets to the heart of the matter. Where applicable, use simple graphs, diagrams and other visual aids to highlight specific points.
Meat of the matter
The other major section in a typical annual report is where you can — and should — get creative. First, explain your organization’s mission, goals and strategies for reaching those goals. Then, describe who benefits from your organization’s services and how they contribute to the community.
Most importantly, include client testimonials where those you’ve helped tell their own story in a personal way. You can also create a timeline that enables readers to see the progress you’ve made toward a long-term goal.
Your annual report should be as visually exciting as it is interesting to read, with engaging photos, arresting graphics and innovative layouts. Make sure your graphic designer has experience with annual reports — preferably those of nonprofits — and understands the brand, values and image your organization wants to convey.
Even if you’re proud of the finished product, make sure you survey stakeholders. Or convene a small focus group to find out what your report’s readers liked — and what they didn’t find as effective. Then apply these insights to next year’s effort.