Creating a nonprofit annual report can often feel like a daunting task, but it doesn't have to be. While traditionally viewed as a drain on resources, a well-crafted annual report can serve as a powerful tool to engage donors and stakeholders, showcase achievements, and foster transparency. In this guide, we'll walk you through the process of creating an effective nonprofit annual report, providing tips, templates, and inspiring examples along the way.
Understanding the Nonprofit Annual Report
At its core, a nonprofit annual report is a reflection of an organization's accomplishments, challenges, and financial status over the course of a year. While not mandatory, it serves as a means to communicate with donors, volunteers, and other stakeholders, reinforcing trust and highlighting the impact of their support.
Traditionally, this report was a printed document or brochure shared with relevant stakeholders. Now, annual reports come in many different forms like PDFs, videos, interactive websites, or online booklets.
Are nonprofits required to publish annual reports in Canada?
In Canada, there is no legal requirement for nonprofits to publish annual reports. However, depending on their legal structure and funding sources, they may have reporting obligations to regulatory bodies or funding agencies. For example, registered charities in Canada must file an annual information return with the Canada Revenue Agency (CRA), which includes financial statements and other information about their activities.
Many nonprofits choose to produce annual reports voluntarily as a means of transparency and accountability to their stakeholders.
Key Elements of a Nonprofit Annual Report
So, you are ready to start working on your nonprofit’s annual report. But what should a nonprofit annual report include? Here is the basic template to kick off your annual report and help craft a compelling story for your stakeholders:
Include a letter from the President or Board Chair: The opening letter sets the tone, introduces the theme, and adds a personal touch to the report. Make an introduction that's engaging, transparent, and filled with enthusiasm for what's to come! Keep it Concise - Just a few paragraphs are enough. No need to fill a whole page; Friendly - Let your personality shine through with a warm, welcoming tone; Aware - Briefly acknowledge any significant events or challenges; Honest - It's okay to mention setbacks, but always remain positive and hopeful about the future.
Your Organization’s Mission Statement: Begin with a clear and concise statement of your organization's mission, providing context for those who may not be as familiar with your organization and serve as a reminder to those who are.
Clear Financial Information: It’s important to present your financial information in a way that makes sense to your audience. Give them an overview of where the revenue comes from, how funds were utilized and the impact achieved. You could do this with traditional financial statements, visual charts and graphs or infographics. Get specific about what you were able to accomplish by including statistics about the total number of people you helped, the success of your programs, etc.
Recap events and milestones: What were your projects throughout the year? Which initiatives did you initiate and complete? What's left to do to meet your nonprofit's goals? Share key initiatives, successes, and challenges from the year. And don’t forget to include photos or videos showcasing your efforts.
Celebrate your contributors: Take the opportunity to express gratitude to donors, volunteers, partners, and board members who have supported your organization.
Nonprofits aren't obliged by law to release annual reports, meaning there aren't strict rules on what to include. However, leaving out financial details might raise suspicions among supporters. Being transparent is important for building and keeping trust with donors and maintaining your nonprofit's great reputation.
Best Practices for Creating an Engaging Annual Report
Here are a few best practices to keep in mind when developing your nonprofit’s annual report:
1. Make your annual report work smarter, not harder!
Use your annual report as a powerful marketing and donor engagement tool. Align it with your organization's bigger goals and strategic plan for maximum impact. By doing this, you can turn the effort put into creating the report into a powerful tool for engaging and retaining donors. Here's how:
Boost your fundraising: Use the report to enhance your fundraising strategy. Highlight top donors and partners to show appreciation and inspire others to get involved in exciting upcoming projects.
Strengthen donor retention: Showcase the great work you've done and the impact of donor support to encourage continued involvement.
Amplify your marketing: Infuse your report with the same messages, tone, and visuals you've used throughout the year to maintain consistency and reinforce your brand.
By carefully considering the purpose of your annual report, you can create a resource that not only informs but also actively supports your organization's strategic goals. Make every page count!
2. Think about your audience when choosing the format
Tailor the format and content of your report to suit the preferences and interests of your audience, whether it's through printed materials, digital formats, or multimedia presentations.
The traditional annual report is a comprehensive booklet filled with information. But let's face it: not everyone has the time or interest for book-length documents. Since some donors enjoy having extensive information about your organization, it's not a waste of time. You can always share your full report online, and use other formats to summarize information in a fun way and invite your supporters to visit your website to view the entire document. Here are some fun ideas to consider:
Infographic Postcard
Infographic postcards or large postcards are a great way for nonprofits to share their achievements quickly and attractively. They're short, cost-effective, and easy to distribute to a wide audience, including volunteers and community members.
When creating a postcard, keep in mind that your goal shouldn't be to jam-pack it with all the details from a typical report. Instead, you should highlight only the most crucial details.
The postcard would be emailed, sent in the mail in hard-copy format, posted on your website, and shared on social media.
While you may not have the opportunity to include every detail in this format, you can leverage other mediums to provide more information. For example, you may mention how many people you have helped in your postcard, and include a QR code leading to a webpage on your site with client stories to make the stats more impactful.
Self-Mailer
A self-mailer is a simple 2-4 page document that you can send without an envelope. It's useful because the address and postage are printed directly on it, making it easy for supporters to open and read.
Normally, 40% of nonprofit mail doesn't get opened, but without envelopes, the open rate soars to 98%.
Here are some tips for creating a self-mailer:
Clearly state the next steps: Tell supporters what they can do next to engage with your organization, like attending events or donating online.
Use plenty of images: Make the mailer visually appealing with images that complement your message.
Keep it short: While you have more space than a postcard, keep your message concise and to the point.
Don't forget to also send a PDF version via email to reach those who might miss it in their mailbox.
3. Digital or Paper?
Traditionally, annual reports were printed and mailed. These days, simply going digital is becoming more popular.
Why go digital? It's cheaper, better for the environment, saves time, and makes it easier for prospective members to access and read.
If some of your donors still want paper, you can offer that option (and also make the report available online). And don't forget to ask your audience what they prefer through a quick online survey. After all, annual reports are about connecting with supporters!
One more format to consider...
Another great way to not only tell your supporters but also show them the impact they made on your organization’s mission is a dedicated webpage.
It transforms your annual report into an engaging experience, making a lasting impact on your audience. Here's how a dedicated webpage beats traditional reports:
It is more visually appealing: You can use images, videos, and infographics to make your achievements shine. Check out how Girls Who Code creates beautiful web pages for their annual reports.
It allows you to tell a more compelling story: The webpage enables you to share links to client stories, programs, news mentions, testimonials and more to vividly illustrate the impact your work is making.
It is Easy to Share and Get Involved: Anyone with the internet can view and share the report effortlessly, extending its reach and attracting new supporters. Plus, you can encourage people to take action, like donating or volunteering.
Tools for Creating Your Annual Report
While designing an annual report may seem daunting, numerous user-friendly tools can simplify the process. Consider utilizing these platforms to create professional-looking reports without the need for extensive design expertise.
Storyraise which is an annual report design tool that allows you to create web-based reports using drag and drop.
Canva, which is a free graphic design tool that offers templates for all types of printed and digital designs, including reports, infographics, postcards, social media graphics and more.
or Visme, another graphic design platform that allows you to design professional reports, and presentations, visualize data and more. You can try it for free and upgrade to access more features.
Inspiring Nonprofit Annual Report Examples
Drawing inspiration from successful examples can provide valuable insights into crafting your own annual report. Here are a few standout examples:
Habitat for Humanity did something special for their 2021 annual report. The organization's mission is to provide affordable housing for those in need. So, instead of using regular reports, they used drawings made by kids who live in Habitat homes. Each drawing has a short note from the child about what their home means to them. It’s a very unique way to showcase your work and provoke a strong emotion. At the end of the report, readers can find details on how to get involved, whether by donating, volunteering, or advocating. This gives motivated readers an immediate way to show their support.
Sometimes it’s best to keep it simple. Charity Water's Annual Report is a perfect example of keeping it simple but effective. Their report is a classic example of the traditional PDF annual report format. The nonprofit lets the impact stand on its own: minimalistic, with very little language. Here is an easy-to-follow formula to show the impact the organization made that your nonprofit could use as well.
It shouldn’t be surprising that a nonprofit focusing on closing the gender gap in technology has a beautifully coded annual report built right into its website. Creating a dedicated web page for an annual report on your nonprofit’s website has several advantages. Girls Who Code’s annual report is a living, breathing section on their website which improves transparency and makes it easier for supporters to interact with the report. And it looks amazing, making their story even more compelling, and impactful.
By following these guidelines and drawing inspiration from successful examples, your nonprofit can create an annual report that captivates stakeholders, fosters donor relationships, and amplifies your organization's impact.
