Annual Reports – Five Keys to Creating an Annual Report For Your Nonprofit

Annual Reports – Five Keys to Creating an Annual Report For Your Nonprofit

At the start of my second year as an executive director of a housing nonprofit, I thought I had prepared well for my first annual meeting until the day of the event when I realized that we had not produced an annual report as required in our by-laws. Since this happened thirty years ago, before most nonprofits had computers, you can only imagine the work my secretary and I put into producing the basic report we needed for that evening. We met the by-law requirement but certainly didn’t produce something that showcased our organization.

Fast forward three decades…you have a good computer and printer in your office, a staff member who writes well, and the wisdom to give yourself enough time to create an annual report that will serve as both a marketing and a fundraising tool in the coming year. Unless you have abundant resources in the bank or a marketing firm that will donate their services, it is likely that you will create your report in-house. Follow these guidelines to ensure that your report will end up being “read and spread” rather than in the wastebasket.

1. Determine the message you want the report to convey.

You can do this by focusing on a specific program that has had dramatic results this year. You can also focus on your mission and highlight a few things you have done that clearly resonate with that mission. In addition, you can highlight the people you serve with various programs or the donors that have made this a great year. Just remember that this message must be consistent throughout the report, from the opening letter from the Board President to the closing financial report.

2. Avoid using too many statistics.

In the words of Mal Warwick, “If statistics could tell a story, calculators would guest on talk shows.” Your auditor may be impressed by numbers but readers of your annual report want to know about the people you have helped and the changes your nonprofit have made to make the world a better place.

3. Make sure you use an abundance of stories

If your orchestra does free concerts for inner city children, focus on one child and talk about his or her reaction to the concert. If you provide shelter for rescued animals, talk about the rescue and then the permanent home you found for the animal. If your mission is to help drug addicts recover, focus on one or two who have completed your program and show how they have become productive members of the community. Use any success story that matches your mission and you will grab the reader’s attention.

4. Include pictures that are dramatic and showcase the work you do.

Avoid the traditional group shots (board members, staff, and a neighborhood group) and use pictures that reveal strong feelings. For example, you could show delight on the face of a child hearing a live concert for the first time, the excitement of a new owner leaving the shelter with a rescued animal or the joy of a former drug addict playing basketball with a group of teens. You can also include pictures of board and staff members; just make sure they are doing something active, like participating in a board meeting or working with clients. Candid shots can be great if you can get them. One caveat here: make sure you get signed releases from the people being photographed (or their guardians).

5. Present your financial reports in a readable, interesting manner.

Most people who receive your annual report aren’t interested in your balance sheet or income statement. If you feel you have to include these, add a brief narrative highlighting what the numbers really mean about the management of your nonprofit. What does interest many readers is how much money you have spent on programs compared to the cost of administration or fundraising. The clearest way to report this is in a pie chart.

Once you have used these ideas to complete an annual report that has the potential to impress your readers, make sure you distribute it widely. Don’t just hand it out at your annual meeting. Mail it to all your donors, partners, clients and anyone you want to interest in the work you do. Also, put it up on your website for the entire world to see how you are changing the world.

©2010 Jane B. Ford

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