Best Practices for Compiling a Nonprofit Annual Report

Most nonprofit organizations release annual reports with the purposes of providing insight into the way their donations are used, and the impact of those donations. Of course, the ultimate goal of these reports is to maintain those existing donor relationships and encourage new donations.

So how can nonprofits structure their reports to help them accomplish that goal? Moms Against Poverty (MAP,) a nonprofit organization whose mission is to nurture and educate underprivileged children to their fullest potential, offers some best practices to consider:

Be Transparent – A key criticism of many nonprofits is that donors never know how that money is actually being spent; and, thanks to some dishonest activity on the part of a few organizations, some potential donors could be dissuaded by the idea that their money will just be paying astronomical executive salaries rather than actually helping people. That’s why, to truly engender trust and maintain those relationships long term, you have to provide clear breakdowns of how money is spent in your annuals report, and be transparent about your resource distribution process.

Include Multimedia – The last thing any of your donors want to do is slog through a giant list of numbers and names. Your reports should be easily digestible, but they should also be compelling and inspiring! Including infographics and charts is a great way to convey figures and financials in a more readable way, and pictures and video of the people (or animals, or whatever) your organization helps can really show the impact of your work and inspire donors to continue their support.

For instance, in our MAP annual reports, we love to include snapshots and video interviews with happy families who know their kids will have three nutritious meals a day, and our donors are gratified by the knowledge that they are making a difference to real children and families in need.

Show Impact – When you do include numbers, providing evidence of your organization’s impact is a great way to communicate that mission and encourage more donations in the future. Consider presenting KPIs and benchmarks at the start of the year and then reporting on how your organization measured up. Make sure that data is clearly distinct from your general financials so your readers can see clearly the measurable impact of their support.

Engage on a One-to-One Basis – Sure, a standard report thanking donors for their support is nice, but imagine the kind of response you could get by reaching out on an individual basis to not only thank your donors but engaging with them about their own reasons for supporting you, their concerns, their ideas? Making them feel like part of the team rather than a mere check writer?

So while these are recommended best practices, the best practice of all is to tailor your annual reports to the needs of your specific donor base, and to engage with individual donors as much as possible.

For a group like MAP, whose donor base is a tightly knit group of individuals who communicate regularly with each other and the organization, the annual report is about engagement and collaboration. We include our complete financial breakdowns and other important impact data of course, because, as noted above, we believe in transparency. But we also celebrate our wins and praise our contributors, invite insight and feedback from everyone, and constantly reaffirm our belief in the importance of nurturing underprivileged children to their potential.

No matter how you structure your report, it’s crucial that you convey WHY your organization does what it does, and why your donors should support your mission. They do want to know you’re effective, but more than anything, they want to know you believe in what you do—then they’ll believe in you too.

To learn more about MAP’s efforts, please visit: Momsagainstpoverty.org.