If you’re here, chances are, you’re a nonprofit leader. With a flurry of activity around Giving Tuesday, holiday events, and a few final efforts for end-of-year giving, you probably have a lot going on. But looking toward the end of the year, it might be a good idea to start working on your nonprofit’s annual report. When it comes to annual reports for nonprofits, you might have questions. So, first up…
Well, it depends on what you mean. As far as the government is concerned, the idea that a nonprofit is required to publish an annual report is false. Why the misconception? There might be a few reasons. First, there are some organizations that are mandated to create an annual report each year, specifically, publicly traded corporations. Second, there is some mandatory end-of-year documentation—Form 990, sometimes (confusingly) called an annual return.
When it comes to filing Form 990, working with a professional is often the best option for mid-sized to large nonprofits. However, if you’re looking to tackle (or better understand) Form 990, this guide could get you started.
So, from a legal perspective, annual reports for nonprofits are not required. But from the Amenable Team’s perspective, yes, you do really need an annual report. Why? As a nonprofit, you probably spend a lot of time talking about your mission. But an annual report demonstrates that mission. Annual reports for nonprofits can not only inspire and connect with your donors, volunteers, participants, and others interested in your organization, but they can also re-center your own team on your mission. It’s a way to analyze your work over the past year to realign your team and work to your vision.
In case you haven’t been around here long, we’ll say it again—everything starts with your people.
So, before sitting down to write a report on your own, gather your team, your leadership, or others close to your organization to think back on the year so far. Ask yourselves, “What do we want to take away from the year?” If you see your report as a list of facts, so will those reading it. Virginia Davidson, from Little Green Light, puts it this way,
“Think of an annual report as a chance to narrate your nonprofit’s story. You’re not just reporting on a completed to-do list for the past year; you’re fitting those accomplishments into the story of your organization and its impact. How will the past year’s accomplishments pave the way for your work in the year to come?”
Not only should you start with the people directly and actively involved in your nonprofit, but everything in your report should be written, not for you, but for your audience. Sure, that sounds generic—like something a high school teacher might tell you—but it plays out in a lot of specific ways. Here are a few questions to help you tailor every word and picture to your exact audience.
Still feeling lost? There are a number of free checklists or templates online to get you started—including this one from Classy that we really like.
Table of Contents
While for some formats (for example, a postcard or immersive webpage) a table of contents isn’t necessary, if you end up going with a more traditional method, such as a multi-page PDF or booklet, don’t forget this! It’s a simple addition that can go a long way when it comes to organizing information in annual reports for nonprofits.
Have you ever started a story with, “So, once my brother’s fiance’s cousin’s kids’ nanny’s dog [fill in the blank of the best story you’ve ever told].” Why do we do this? If I were to guess, it’d probably be because, generally, people love stories and storytelling. But even more so, they love stories they have a connection to. Similarly, when you’re telling your organization’s story by highlighting your work over the past year, a letter from a prominent leader in your organization can go a long way. Looking for some tips? Kimberlee Roth has some pointers to help you set some helpful context for the rest of the report while being authentic and engaging.
Mission & Vision
Your annual report is an opportunity to share your mission and vision with the people who matter most to your nonprofit as well as a chance to re-evaluate.
Listing your mission and vision statements is essential. However, take it a step further, by connecting the dots for your readers. You are likely more in tune with the ways you live out your mission and work toward your vision on a daily basis than the average person. Keep this in mind as you clearly spell out exactly how each element of your report relates back to your mission and vision.
Year in Review
If you sit down to think about everything that happened in a year, it can feel daunting to try and communicate. One way to frame your highlights and accomplishments is to ask your team, “If we could only tell our readers about one thing that happened this year, what would we tell them?” Great news—you can talk about more than one! But this approach can help you to navigate through all that happened this year.
Oftentimes, writing up the financial section of an annual report can be the most daunting. Since creating a report isn’t mandatory, you get to write the rules. But if you’re wondering what to include in your financials, many resources suggest starting with your financial statements.
The good news? When filing your Form 990, you’ll need these, so this shouldn’t require too much extra work. You can use tools like Canva or Adobe Creative Cloud Express to easily format this information into infographics to make it digestible and interesting for your annual report.
It’s cliche, but stories are what capture us and move us: What’s the most compelling story about who you are and what you do that can capture hearts and minds? In an annual report, you want people to connect to the heart of your organization and—as necessary as these sections are—your year in review or financials probably won’t stir a reader to give or get involved.
Choosing the right stories to share in an annual report is about two things: Knowing your audience and knowing the impact of your organization. (And, if you want to learn how to tell nonprofit stories that create emotional impact, check out this blog post!)
What type of story will your readers resonate with? Is your audience more interested in hearing the effectiveness of their donation (i.e. what projects have you completed with what money) or do they want to hear how you’re addressing issues their children might face? These aren’t necessarily mutually exclusive, but understanding your donors, supporters, and volunteers will help you narrow down the stories that will be most effective (Psst… we wrote a blog post recently about this).
Annual reports for nonprofits are a great way to highlight the people who are your biggest supporters. You can tell us how great your organization is, but it also means a lot to hear it from other people. A donor spotlight can have a two-fold function. First, it’s a way to show donors your appreciation of their involvement and generosity by inviting them to share their input. Second, it’s an effective way for others (think potential donors or casual supporters) to hear the perspective of someone who doesn’t work for you but is deeply committed to your work.
Again, letting other people talk about how awesome you are is a great way to move the needle when it comes to engaging new donors and allowing others to see the value of your work.
Still have questions? Our team works on a number of annual reports for our nonprofit partners each year. Hit us with all those lingering questions at email@example.com! Want to collaborate with the Amenable team on an annual report? Let’s connect!