Five Strategies to Optimize Your Nonprofit Annual Reports

Amid all the ongoing activities your nonprofit must manage daily, it can be easy to push creating an annual report to the bottom of your priority list.

After all, nonprofits aren’t required by law to publish annual reports.

However, your annual report can be a powerful tool to inform your audience, connect with prospective supporters, and foster transparency and trust with your donors.

This guide explores the following tips for optimizing your nonprofit’s annual report to serve your goals and your audience’s needs:

1. Highlight data points that tell a story.
2. Make your report supporter-centric.
3. Choose the right report format.
4. Include both wins and challenges.
5. Share your plans for the future.

By drawing awareness toward donors’ essential role in your nonprofit’s success, your annual report can serve as an invaluable resource for supporter stewardship and recognition.

1. Highlight data points that tell a story.

Every year, your nonprofit reports on its financial standing and other organizational information via its Form 990. Because these forms are publicly available, nonprofit supporters and donors can access this information to learn more about your organization’s overhead and leadership.

However, Form 990 doesn’t tell the full story of your organization’s progress. That’s why it’s helpful to choose additional data points that provide a well-rounded look at everything your nonprofit did throughout the year.

We recommend incorporating the following data into your report:

• beneficiary data, such as how many additional beneficiaries your organization was able to help this year or how many beneficiaries successfully graduated from one of your programs;
• donor base data, including how many new donors you acquired this year, your donor retention rate, or how many donors you have in your monthly giving program;
• finances, like overhead expenses (broken down by operational expenses, fundraising expenses, and other expenses), compared to program costs (which can be classified by specific projects and initiatives); and,
• fundraising data, such as total donation amounts for specific campaigns and total funds raised through grants.

Use a variety of technology solutions, including your nonprofit’s fundraising software, accounting system, and constituent relationship management (CRM) system to gather this data. Leverage visually appealing graphics such as pie charts, graphs, and timelines to present this data in a more engaging way.

2. Make your report supporter-centric.

Although your annual report will describe your nonprofit’s activities throughout the year, the main focus shouldn’t be on your organization. Rather, it should be on the supporters—the donors, volunteers, beneficiaries, fundraisers, corporate sponsors, and other stakeholders—who breathe life into your mission and keep your organization in motion.

Keep your annual report focused on your audience by incorporating these best practices:

• Use “you” centric language. Your report should center your nonprofit’s supporters and their accomplishments rather than your organization’s. For example, instead of saying “This year, our organization built eight homes for community members in need,” you should say, “This year, the support of generous donors, volunteers, and other community partners built eight homes for community members in need.”
• Incorporate donor appreciation. Use your CRM to identify your most engaged and impactful donors, such as your monthly donors and major donors. Create a section in your report to list these donors’ names and thank them specifically for their tireless dedication.
• Make the report user-friendly and accessible. Provide a positive reading experience for supporters by using simple language, bullet points, and bold type to emphasize important points, and plenty of visuals to break up long text blocks. In addition, make your annual report accessible no matter what platform you’re sharing it on. Include alternative text for images, captions for videos, and sufficient color contrast between foreground text and background colors.

Use this basic annual report template to balance statistics and data with supporter appreciation messages:

Supporters will appreciate having their perspective included in your nonprofit’s annual report.

3. Choose the right report format.

As nonprofit software and technology have advanced over time, so has the potential for creative annual reporting. You have the flexibility to choose the format that you think will speak to your audience most effectively.

• Book/online PDF: More traditional supporters may still prefer a physical copy of your annual report or a digital PDF version they can view online.
• Video: If you’re feeling especially creative, you may consider publishing your annual report in a video format. If you decide to film a video, make sure you have access to high-quality video files and an experienced editor who can give your video report a professional look.
• Postcard or self-mailer: Postcards and self-mailers are great if your audience members prefer direct mail but don’t want to page through an entire book. These are condensed versions of your annual report that highlight the most sought-after information. If you go this route, we recommend that you also post a full-length report online that supporters can reference if they’re looking for more information.

Survey your supporters to ask them which annual report format they’d prefer. If you’re planning to make multiple versions, you can save each individual’s preferences in your donor database and present them with their desired version.

4. Include both wins and challenges.

Your annual report is an opportunity to celebrate your organization’s successes and accomplishments. Don’t be afraid to fully dive into your wins to share exactly how supporters, volunteers, beneficiaries, and other community members came together to build on your past successes and foster organizational growth.

However, we recommend recognizing your challenges as well as your wins. Addressing issues and explaining how your organization worked through them or plans to address them is a great opportunity to build trust and foster transparency with your audience.

If you did face roadblocks throughout the year, follow these steps to address them in your annual report:

• Explain the challenge. Sometimes, forces outside of your nonprofit’s control can halt your plans. For example, an unexpected economic downturn can lead to lower donation totals than you were aiming for. Whatever the issue was, explain how the obstacle interfered with your efforts this year.
• Describe how you handled the situation. Recount the remedial actions your organization took when things started to go wrong. For example, you might have sought to diversify your fundraising streams or reaffirm relationships with major donors.
• Outline your plans to mitigate this issue in the future. Show supporters that you’re always learning and evolving by outlining the strategies you’ll use if a similar situation were to arise in the future.

You don’t need to dwell on the challenges you faced, but a quick summary of your primary issues and the steps you took to address them can go a long way toward building credibility with your audience.

5. Share your plans for the future.

In addition to recapping the year, your annual report also represents an opportunity to inspire excitement about your nonprofit’s future. Sharing your plans to grow your nonprofit shows your supporters that you’re always working to improve your programs and projects and work toward your mission more efficiently.

The upcoming plans you highlight in your report could include:

• project and program growth plans;
• new goals or updates on goals in progress;
• new initiatives or campaigns you’ll be undertaking and why; and,
• new grants you’ve secured and what they’ll fund.

Whether you’re expanding your volunteer program with the help of a new software solution or taking on a major fundraising campaign, show supporters how they can get involved in your new initiatives. Provide a call to action, such as a link to sign up for your email newsletter or a volunteer registration form to get involved in your campaign.

• Gather data points that tell the story of your nonprofit’s fundraising efforts this year.
• Summarize your nonprofit’s wins and challenges from the past year as well as your plans for the future.
• Choose your annual report format and select a platform to build the report.