The annual report for nonprofit organizations is a vital tool that reflects the achievements and challenges of the organization over the year, and serves as an important bridge between the organization and its supporters, including donors, volunteers, and other stakeholders. Although some sector professionals may feel anxious about the preparation process due to its negative reputation, a well-designed annual report can become a strategic tool for enhancing transparency, building trust, and cultivating sustainable support.
The article also emphasizes the importance of transparency in including financial information to maintain donor trust and the organization's reputation, and encourages adopting best practices that make the report more impactful and effective.
While many nonprofit professionals welcome the annual report preparation process with some anxiety, this is due to the bad reputation associated with annual nonprofit reports, which are often seen as a burden on time and resources.
However, there is no need to fear preparing your annual report! When designed well, this resource can be a vital tool for maintaining and growing donor support.
This article aims to guide your organization through the process of preparing the annual report for nonprofit organizations. We will accompany you in reviewing tips that make your report as effective as possible (with helpful templates along the way to illustrate formats). Here’s what you will find:
- What is the annual report for nonprofit organizations?
- Template for the nonprofit organization’s annual report.
- Best practices for preparing your annual report.
- Tools for preparing the annual report for nonprofit organizations.
- Inspiring examples of annual reports for nonprofit organizations.
Are you ready to dive a little deeper into the world of annual reports for nonprofit organizations and learn how to prepare a report that maximizes impact in your organization? Let’s begin.
What is the annual report for nonprofit organizations?
The annual report for nonprofit organizations is an outward-facing resource that summarizes the achievements and challenges of the organization over one year. The target audience for this report includes donors, volunteers, beneficiaries, and other stakeholders who participated in the organization’s projects and programs throughout the year.
Previously, this report was prepared as a printed document or booklet distributed to relevant stakeholders. Today, formats for annual reports vary significantly. They may be presented as PDF files, videos, interactive web pages, e-books, or in other unique formats.
Are nonprofit organizations required to publish annual reports?
In short: no.
You may be thinking of Form 990 — which U.S. nonprofit organizations are required to submit annually to the Internal Revenue Service. This form contains information about your organization’s revenues and expenses for the year. Since this information is publicly available, supporters can use your organization’s annual Form 990 to evaluate your financial transparency.
Technically, Form 990 is the only annual report that is legally required from nonprofit organizations.
However, your tax form does not thank donors, does not make them feel proud, nor does it give them new reasons to engage and grow in their relationship with you.
A comprehensive annual report can fulfill this role. That is why we strongly recommend that you include a complete annual report directed at the general public in your annual strategy.
What is Form 990?
Form 990 is a tax form submitted annually by tax-exempt nonprofit organizations in the United States to the Internal Revenue Service (IRS). This form contains financial and operational information, such as revenues, expenses, salaries, and programs implemented, and is considered a public document used by interested parties to assess the level of transparency and governance within the organization.
Template for the annual report for nonprofit organizations
So, what should the annual report for nonprofit organizations include?
Below is a basic template that can serve as a starting point for building your annual report strategy:
This template outlines the essential elements that the annual report should contain, which will be explained in more detail in the following paragraphs.
Your organization's mission statement
Place your mission statement at the very beginning of the report. This will help provide context for readers who may not be adequately familiar with your organization, and also serves as a reminder to those who already know it.
Financial Information
Again, be as direct and clear as possible when presenting these numbers to enhance transparency with your supporters. Donors want to know how your organization has used their funds, so show them that you manage donations responsibly by providing clear context behind major expenditures. Be specific about what was achieved and support that with statistics such as: the number of people helped, or the number of animals rescued, etc.
Projects of the year
What projects did your organization start during the year? What was accomplished? What digital fundraising campaigns proved most successful? What still needs to be done to reach your nonprofit organization’s goals? Include images or videos that showcase your area of work to give the reader a tangible visual perspective of your efforts.
Appreciation for contributors
The annual report represents an excellent opportunity to acknowledge and thank the donors who supported your organization throughout the year. You can also extend appreciation to other key parties such as volunteers, private sector partners, and board members.
Given that there is no legal obligation for nonprofit organizations to publish annual reports, there are no specific guidelines on what should be included in the report.
However, neglecting to include financial information altogether in your report, for example, may raise doubts among some supporters.
Fully enhancing transparency is an essential element for maintaining donor trust and your nonprofit organization's reputation.
Best practices for preparing your annual report
Now that you have a basic idea of the elements that make up the annual report, you can develop your approach to make the report more appealing and effective.
Here are a set of best practices that you should keep in mind while preparing your nonprofit organization’s report:
1. Integrate the annual report into your overall strategy
The annual report achieves the greatest long-term benefit when it is a supportive part of a larger goal and comprehensive strategic plan for the organization.
Instead of being viewed as a standalone effort, the time and resources spent preparing it can be converted into an effective tool for attracting and retaining donors.
For example, the annual report can be used to support your fundraising strategy, by highlighting prominent donors and partners, and showcasing new and exciting initiatives that the public can support or participate in.
The report can also be used to enhance your organizational marketing approach.
Consider the core messages that your organization has focused on throughout the year, and think:
How can these messages be incorporated, in the same tone and visual identity, within the annual report?
Thinking deeply about the purpose of the annual report will enable you to create content that serves your other strategic goals and enhances your image with your audience.
2. Create a donor-centered annual report
Your annual report should be centered around the donors, reaching them on a personal level and strengthening their relationship with your organization.
Here are some strategies to help keep the report focused on your supporter community:
Consider your audience
The choice of the annual report format is a crucial decision, and can be determined based on what you expect your audience will actually read.
Understanding the demographics and behavioral preferences of your audience is the first step to ensuring that the report is designed to meet their needs.
Some donors, for example, prefer to get all the details about your organization’s efforts as quickly as possible. They appreciate detailed annual reports that resemble books, filled with rich stories, graphs, and illustrative charts.
In contrast, there are donors who don’t even read the monthly newsletter, let alone an extensive annual report.
For these individuals, it may be best to send a one-page infographic-style summary that highlights the main achievements and impacts.
In short: don’t prepare your report as you see it… prepare it as your audience needs it.
Use the "you" attitude in your report writing
The “you” attitude centers on presenting achievements as a result of donor support, rather than mere successes belonging to the organization.
Always prioritize keeping the donors at the center of the narrative, making them feel like they are active partners in the achievements.
For example, note the difference between the following two sentences:
- "Thanks to your support, we were able to train over 500 young men and women on charitable work skills in various regions of the kingdom"
- "Your support was the reason for producing 15 educational films that reached hundreds of thousands of viewers and changed the minds of many families — we could not have achieved this impact without you."
The difference is not in the information, but in the feeling it leaves.
Create visual elements to highlight key numbers and information
It can be overwhelming for a reader to open a massive report filled with consecutive pages and text.
Therefore, make sure to break up the content using infographics, graphs, images of supporters and volunteers, and other attractive visual elements.
Visual elements make it easier for supporters to quickly browse the report and extract the data and information that mean the most to them, without getting lost in a sea of text.
In this way, the report transforms from a boring document… to an enjoyable and compelling experience.
3. Choose the format for the nonprofit organization's annual report
The traditional annual report for nonprofit organizations is a document the length of a book. Since some donors prefer to receive extensive information about your organization, these lengthy reports are not a waste of time or effort.
Sending comprehensive annual report booklets to the right donors can pay off, as in the case of the Rhode Island Foundation. This organization published a carefully designed and well-written report. They reduced the number of copies they sent by mail (and made the report available online), but they ensured to continue sending the printed version to select local attorneys.
An elderly man entered the office of one of those local attorneys, ready to write his will and arrange his affairs. While waiting for his turn, he picked up a copy of the Rhode Island Foundation's annual report. Before that moment, he was unsure what to do with his large fortune. Years later, upon his passing, the Rhode Island Foundation received a small fortune from that generous man — all thanks to the printed annual report.
This story highlights the benefits of using the traditional format for the annual report. However, this does not mean you should not keep up with the times. Analyze your audience, and create your annual report according to what they are likely to engage with most.
Remember that you can always publish the full report online, using other formats to summarize the information and invite your supporters to visit your website to view the complete document. For example, let’s explore some other unique formats you can use to present your annual report:
Large Postcard
Postcards are designed to be concise, allowing supporters to quickly and easily browse the information without needing to read a lengthy document (or book). Your goal should not be to cram all the information in that traditional report into this postcard. Instead, you should only highlight the most important details.
Your postcard should include the following:
Communicating impact and results: Given the limited space of the postcard, you may need to carefully select the most important metrics to include. Remember that this is your nonprofit organization’s opportunity to showcase the good it has achieved over the past year to the entire world.
Presenting information visually: Ensure that the information is easy to read. Charts, graphs, and prominently displayed statistics help attract attention to the most important aspects of the postcard.
While you may not have the chance to include all the details in this format, you can take advantage of additional platforms alongside your postcard.
For instance, you might omit notes of thanks for major donors from the postcard, but you could include a QR code leading to a virtual wall of honor for donors, expressing your gratitude in another way.
Here’s a sample template of what your annual report postcard might look like:
This template includes financial information, a brief summary of accomplishments over the year, and key statistics highlighting the organization’s impact.
The Self-Mailer
Another option for sending your nonprofit’s annual report is to prepare a 2- to 4-page self-mailing document.
These documents are very useful, as they bypass the issue of requiring the donor to open an envelope by directly printing the address and postage on the document itself.
This way, it becomes easy for your supporters to open the document directly and read its content without additional hassle.
Here are the best practices when designing a self-mailing document:
Include clear steps following the report: When you determine the next steps that supporters should take to enhance their engagement with your organization, you ensure that the document doesn't end up in the junk mail. By including a list of upcoming events or a link to your donation page, you increase the likelihood that they will keep the report longer.
Incorporate plenty of images: Break up the text with images to attract your readers' attention without distracting them from the written content. Make sure the document is visually appealing and not overwhelming or cluttered for readers.
Keep your text concise: Although there is more space in the self-mailer document than in the postcard, it is still relatively limited. Keep your text short, clear, and direct, ensuring that all important aspects of your annual report are covered.
Although this type of nonprofit organization’s annual report is designed to be sent by mail, it is also good practice to send a PDF version via email to attract the attention of those who may miss receiving it in their mailbox.
Here’s an example of what your self-mailing document might look like. It contains the same information we highlighted in the postcard, but in a multi-page format:
The video
A well-produced and engaging video is a great way not only to tell your supporters but also to showcase the impact they have made in your organization’s message.
Follow these steps to create an effective video:
Be careful in choosing a videographer: Your annual video reports should be professional to leave a strong impression on your supporters, and the best way to ensure that is to hire a professional videographer. When reviewing available options, carefully examine the videographer's previous work. If it doesn’t inspire you, keep searching. Home-quality videos won’t be acceptable.
Follow a pre-prepared script: Gather your best writers on your team to draft a script discussing all the important metrics and accomplishments you want to highlight in your annual report. Other footage in the video will support the speaker's words.
Use relevant footage: If your organization focuses on reducing water pollution, include footage of rippling rivers and streams. If you are helping abandoned animals find new homes, include clips of dogs meeting their new families for the first time. Make the most of the video format, such as including maps when discussing locations, or showcasing footage of volunteers when discussing their involvement.
You can share your video report on your website, social media, and email newsletters.
4. Choose appealing images for your annual report
Images and graphics for your report should be selected with care. Here are some examples of the types of images you might include in your annual report:
Highlight images with your nonprofit's branding. Your annual report should be cohesive throughout. This means ensuring that your logo is prominently displayed, and using your organization's usual colors and fonts in the images and graphics.
Vary the types of images you use. Instead of only including images of beneficiaries or employees, diversify the images to help convey more information. For instance, pie charts provide a good opportunity to display financial distributions, and statistical graphics help draw the reader’s attention.
Keep donors engaged. Do not overwhelm your readers with too much text or too many images. Instead, there should be a healthy balance between text and images.
Images should never be a distraction.
They should instead be aids in conveying the important information within your organization's annual report.
Ask volunteers to review the document and provide feedback on the images used before sending the report. Or you may hire a professional graphic designer to help you organize the information in a visually appealing way.
5. Be honest and grateful in your annual report
Providing information about your future plans and projects will excite people about what is coming for your nonprofit organization.
When looking to the future, be sure to clarify expectations regarding your organization’s future actions and goals:
Remind donors of ongoing goals. For example, you can provide an update on whether you are on track in the fundraising campaign that started in 2024 and is intended to conclude in 2026.
Ignite donor enthusiasm for the next long-term project for your organization. What major changes are ahead for your organization? Tell donors about opportunities you will seek to achieve in the coming year, to show them that you are always looking for new ways to grow and evolve.
Future plans excite donors and inspire them to continue supporting in the future.
Be sure that after providing an overview of your future plans, you also offer opportunities for your supporters to engage.
Give them some steps they can take right away, such as a link to a donation page, meeting schedules, and registering for upcoming events, so they can effectively show their support.
Tools for creating your nonprofit's annual report
You don’t need to be a graphic design expert or allocate a large part of your budget to create an appealing annual report. There are many free and affordable ways to develop your report using user-friendly digital resources.
Some useful design tools for creating your annual report include:
Yearly is a design tool specifically tailored for nonprofit organizations. You can use this easy drag-and-drop tool to design a professional, mobile-responsive report tailored for your nonprofit organization.
Venngage is a design tool for visually storytelling. Using this platform, you can create branded graphics for your digital report without needing a graphic designer.
Canva is another free graphic design tool that helps you create your annual report in multiple formats. Canva offers templates for all types of printed and digital designs, including reports, postcards, social media graphics, and more.
Visme is a visual communication platform for developing presentations, infographics, data visualization, videos, and more. You can try this platform for free or upgrade to a beginner plan to access a broader range of features.
Choose the annual report preparation platform based on the formats of the report you wish to create.
Also, take advantage of any free trials or demos before investing in paid plans.
Inspiring examples of annual reports for nonprofit organizations
Starting a project can be daunting and challenging when faced with just a blank page.
That’s why it can be incredibly beneficial to review examples that help you get started on preparing your organization’s annual report.
Here are seven inspiring annual reports from nonprofit organizations, along with the factors that make them very effective:
The annual report of Feeding America for 2023
The annual report of Feeding America for 2023 is a classic example of a traditional annual report format in PDF format.
However, the organization elevates this basic format with engaging graphic design and vibrant imagery.
In the image above, you can see an example of the unique way the organization displays its annual financial statement.
The organization cleverly ties its mission with images of food, giving readers a more engaging way to explore the organization's financial situation.
In other parts of the report, images showing smiling faces of supporters, volunteers, and beneficiaries help strengthen the emotional connection and provide greater visual appeal.
The annual report of the Leukemia and Lymphoma Society for 2023
The theme of the Leukemia and Lymphoma Society (LLS) annual report for 2023 is "Transforming Lives".
The organization uses this theme to tell stories of patients who were supported throughout the year, from a veteran who survived blood cancer to a student-athlete who received successful treatment.
The report accurately illustrates the LLS approach to providing comprehensive support at a 360-degree angle for beneficiaries.
With colorful graphic design and a cohesive theme, readers receive a full view of the organization’s successes and financial status over the past year.
The annual report for 2023 of the World Wildlife Fund - United States (WWF-US)
The annual report of the World Wildlife Fund (WWF) for 2023 is filled with appealing images that highlight the organization’s mission of environmental conservation.
The report navigates through stories that highlight the organization's impact on both global and local levels.
This format provides readers with a better understanding of the extent and scope of WWF's projects and the various ecosystems they support.
At the end of the report, readers can view a statement of the organization's activities, which includes a clear breakdown of operational revenues, expenses, and other financial data.
The report also includes a detailed list of donation methods, providing readers who are inspired after reading the report with a clear way to show their support.
The annual report of the Rhode Island Foundation for 2022
The annual report of the Rhode Island Foundation is a booklet that deeply covers the various projects and campaigns it implemented throughout the year.
It primarily focuses on the use of images of supporters, beneficiaries, and team members to bring its message to life.
In the page above, we see how the foundation effectively used charts and spacing.
Instead of inserting these statistics within the texts in paragraph form on the left side of the page, they were highlighted and enlarged to make them more visible and prominent.
This draws readers' attention to key data points and conveys the organization's impact more effectively.
The annual report of the Georgia River Network for 2022 through video
The Georgia River Network is an organization aimed at promoting the protection of the rivers and watersheds in Georgia.
At the end of 2022, the organization released a brief video for the annual report of 2022 that included some key statistics about progress made throughout the year.
In the video above, you can see how the organization used prominent text and plenty of white space to highlight the numbers.
The video description includes an invitation to participate in supporting the organization's projects and programs in 2023 through donations, providing supporters with a clear way to get involved in the organization's future activities.
The annual report of the American Heart Association for 2022-2023
The most notable feature of the latest annual report of the American Heart Association is its comprehensiveness.
Anyone who reviews this report, whether a donor, a beneficiary, or a community or institutional partner, receives a comprehensive and detailed insight into the organization’s current status.
The organization’s major priorities, from improving health in rural areas to supporting scientific research, are presented in depth and detail.
Maps, charts, statistics, and images are used to enhance readers' understanding of the issues at hand.
The report also honors one of the most important donor categories in the nonprofit sector: corporate sponsors.
Each major corporate sponsor is specifically mentioned along with a description of its role in supporting the organization’s mission.
The annual report of CaringBridge for 2022
CaringBridge is a nonprofit organization that helps people stay connected with loved ones during a health journey through websites and digital updates.
The organization’s annual report for 2022 does an excellent job of combining images, text, statistics, and stories.
As you see in the image above, the platform provides QR codes distributed throughout the report for readers to scan and get more information about the stories that interest them.
This allows readers to engage with the parts of the report they care about most and interact with it via their mobile devices.
The annual report of Habitat for Humanity for 2023
The annual report of Habitat for Humanity for 2023 presents a unique style in illustrating the organization’s mission of providing affordable housing for those in need.
Instead of the traditional PDF format, the report comes in the form of an attractive webpage filled with text, videos, images, and other multimedia elements that bring the organization’s mission to life.
The page uses interactive elements such as prominent statistics, pull quotes, and parallax scrolling to engage readers with the content.
The report also includes a fixed top list that makes it easy for readers to navigate the page and access the sections that interest them easily.
The annual report of Girls Who Code for 2021
Many nonprofit organizations are adopting a digital-first approach to their annual reporting, including Girls Who Code.
The organization’s annual report for 2021 is an interactive and engaging webpage that includes infographics, interactive maps, videos, images, and news articles.
The result is a visually enjoyable report that provides a comprehensive and balanced view of the organization's mission of teaching girls how to code.
The annual report of Save the Children for 2021
The annual report of Save the Children for 2021 also adopts an effective digital approach, featuring a comprehensive webpage displaying financial information, a video summarizing the organization's year, and a link to the full 50-page annual report.
This gives donors several ways to view the report according to their preferences.
If they want a quick glance, they can view the financial chart and watch the short video.
However, if they are looking for a more detailed review of the year, they can browse the digital booklet.
Supporters appreciate having multiple options for how to learn more about the nonprofit organization's activities.
And before we finish:
Your organization’s annual reports will garner more attention when they are carefully crafted, appealing, and well-designed.
Ensuring that your report is enjoyable and educational for your supporters will greatly contribute to building stronger and more sustainable relationships with them.
The templates and examples of annual reports included in this article should help your nonprofit organization get started on preparing its annual report in the best possible way.
If you are looking for more information on engaging with donors and preparing effective reports for nonprofit organizations, you can check out these additional resources:
The Ultimate Guide to Engaging Donors + Best Practices
Your annual report should work in tandem with donor engagement strategies to enhance interactions with your audience.
This guide provides the best tips and strategies for activating donor engagement.
How to Develop a Successful Fundraising Strategy for Nonprofit Organizations
As mentioned, your annual report should support your fundraising strategy and other strategic goals.
Refer to this guide for more information on developing a robust fundraising plan.
The 16 Best Donor Management Software (+ Buyer’s Guide)
A donor management software can generate reports on fundraising campaigns and engagement efforts, filling your annual report with rich data.
Use this guide to explore the best donor management solutions.
About the Author:
A seasoned expert in the nonprofit software industry for over 30 years, Jay Love co-founded Bloomerang in 2012.
Before Bloomerang, he was the CEO and co-founder of eTapestry for 11 years, which was then the leading software as a service (SaaS) technology for the nonprofit sector.
Jay and his team led the company to serve over 10,000 nonprofit clients, achieving a decade of record growth.
Before founding eTapestry, Jay served as CEO of Master Software Corporation for 14 years.
MSC provided a wide variety of widely used database products in the nonprofit sector under the name Fund-Master.
Currently, Jay serves on the board of the Charitable Giving Center at Indiana University, and was previously the chair of the ethics committee for the Association of Fundraising Professionals (AFP).
He is also the author of the book Stay Together: How to Encourage a Lifetime of Donor Loyalty.
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