Now that you’ve decided to publish an annual report for your nonprofit, like we discussed in Part 1 of this series, what information should you include? There’s no magic formula, and actually, it’s best to tailor the report to your nonprofit and its mission.
Typical sections of an annual report may include:
- Letters from the President, Board Chair, or the Executive Director
- Your organization’s mission statement
- Basic governance information
In your reporting, describe your nonprofit’s major accomplishments. Why did you undertake the project? What were the results? What impact did it have toward your mission? How did it add value to the community you serve? Tell the human story of these achievements. Offer tangible examples in your annual report of how the nonprofit benefited members or others. Use real examples, direct quotes, and pictures to give life to the story as you demonstrate the outcomes of important initiatives.
Annual report financials should be uncomplicated and easy to understand. Simple charts, such as a pie chart or line graph, can give a visual snapshot of the big picture. Highlight important information like sources of income, distribution of funds among programs and activities, low administrative costs, growth in people served, etc. If you are using Aplos Software for your accounting, you can customize your Income Statement and Balance Sheet reports to show the exact pieces you need, and then export them to Excel to create dynamic charts. Not sure how to customize your Aplos reports? Check out our latest Reports webinar.
Accompany charts with a brief narrative to explain what the numbers mean. Where does revenue come from and how is it spent? How does your organization make the best use of its funds? What are your primary fundraising strategies? What cost-saving measures did you implement?
Demonstrate that your financials are subject to outside verification to bolster your accountability and build trust. For example, Aplos includes several built-in internal controls, such as auditor access for a board member or accountant to review the financials. Similarly, by using a true fund accounting system, you can show financial transparency and good stewardship, and confirm funds that were given for a dedicated purpose are used correctly.
Give a heartfelt, public thanks to your donors, members, volunteers and others who help your nonprofit thrive. Organize your list of donors however it makes sense for your group (alphabetical, by contribution level, etc.). For example, pulling the Income by Person report in Aplos Software will create a list of donors with their annual contributions at the stroke of a button.
Call To Action
Now that you’ve inspired people with your good works and healthy finances, let them know how they can help! For example, provide information on how to donate their money or time, and how to use planned giving options. Be clear, specific, and make it easy.
Next in this series, we will give tips on creating a strong look and feel in presenting your annual report.
This article refers to general annual reports, typically not legally required of nonprofits. This article does not apply to legal reporting requirements, such as annual filings to the IRS via Form 990, annual financial reports to Secretaries of State, or requirements unique to your organization. Consult your attorney or tax professional for additional information.[Ghostwritten] by Dawn Spivey 02/22/2013