Tips for A Better Annual Report
Do you think about your not-for-profit’s annual report as a yearly obligation or even an unpleasant chore? If so, your annual report likely isn’t much fun to read — and you’re missing a chance to attract and engage critical audiences. Instead, embrace this opportunity to communicate the good your organization does and promote your mission and programs. Here’s how to write an annual report that will keep readers’ attention.
Tackle First Things First
Most nonprofit annual reports consist of several standard sections, starting with a Chair of the Board’s letter. This executive summary needs to provide an overview of your nonprofit’s activities, accomplishments and anything else worth highlighting. It should be direct and to the point, but also reflect the chair’s personality.
Financial information is another essential section. This generally is subdivided into three sections:
- Independent auditor’s report. This CPA report states whether your nonprofit’s financial statements have been prepared in accordance with Generally Accepted Accounting Principles.
- Financial statements. Data should include a Statement of Financial Position (assets, liabilities and net asset categories as of the last day of the fiscal year), Statement of Activities (revenues earned and expenses incurred during the year) and Statement of Cash Flows (changes, sources and uses of cash for the year).
- Footnotes. These expand on financial statement items regarding subjects such as leasing arrangements and debt.
You can make your financial statements easier to understand by creating an abbreviated version with a synopsis that quickly communicates your overall financial situation. Whenever possible, use simple graphs, diagrams and other visual aids to highlight specific points.
Describe Your Work with Words and Images
A “Description” is the other major section in a typical nonprofit annual report. This is where you can — and should — get creative. Explain your organization’s mission, goals and strategies for reaching those goals. Then, describe who benefits from your organization’s services and how your services contribute to the community.
To do justice to this work, include client testimonials where those you’ve helped tell the story in a personal way. Or create a timeline that enables readers to see the progress you’ve made toward a long-term goal such as establishing an endowment or constructing a new facility. Your annual report should be as visually pleasing as it is interesting to read. Include engaging photos, arresting graphics and creative layouts.
Reward Your Audience for Reading
The audience for your annual report may be larger than you think. Ensure it offers something to grab the attention of donors and other supporters, clients, community members, charity watchdog groups and the media. Otherwise, you could be wasting an important opportunity. Contact us for assistance.