For nonprofits, annual reports play an important role in maintaining both financial transparency and donor trust. As the name implies, most organizations create and publish these reports once a year, making them a staple that any nonprofit professional could benefit from brushing up on.

To help you develop or improve your own impact reporting skills, this guide will explore the annual report creation process step by step. We’ll also provide tips for ways you can communicate impact more effectively, whether you’re creating your first annual report or your fifteenth.

1. Choose annual report components to include.

The goal of any nonprofit annual report should be to steward donors by demonstrating transparency, impact, and mutual trust. However, you may have additional goals beyond this main objective, such as highlighting an upcoming capital campaign or honoring a lifelong donor who recently passed away.

Based on your goals, your annual report might include the following components:

  • Your nonprofit’s mission statement and goals for the year
  • An opening thank-you letter to donors
  • Results of the year’s programs, initiatives, campaigns, and overall achievements
  • Impact stories about how your work affects beneficiaries
  • A breakdown of your organization’s finances, including donation revenue, grant funding, and spending
  • Lists of your board members and leadership
  • At least one donor list that recognizes your biggest contributors for the year

Don’t be afraid to go beyond this list if there are other components you feel would help you meet your nonprofit’s goals. For instance, you might include a page recognizing your nonprofit’s corporate partners or a story about your new and improved volunteer program. 

Annual reports are essentially a blank canvas for you to tell your nonprofit’s story for the year, so there’s plenty of room to get creative and tell your organization’s story in your own way.

2. Gather impactful data, stories, and visuals.

Once you know which components you want to include, start collecting data and visuals that will help you tell your story to donors in compelling ways. 

Hard, quantifiable data about your programs, activities, and finances is crucial for remaining transparent, while emotionally appealing stories and images help you connect with donors and demonstrate the impact of their gifts more tangibly. 

To compile data, impact stories, and visuals, search through resources like:

  • Your nonprofit’s website
  • Your fundraising software solutions
  • Donor and volunteer testimonials, interviews, and survey answers
  • Event and program photography
  • Your bookkeeping or accounting software
  • Social media, direct mail, and email marketing content
  • Program and campaign dashboards and reports

Choose images and data points that will strike a chord with both longtime supporters and brand-new donors. For instance, you might share the impressive results of your GivingTuesday campaign in which you raised more than ever before, and pair the data with a photo of smiling beneficiaries whom the funds will support.

3. Format and draft your annual report.

Next, determine how to format your annual report and start drafting the copy. These days, most nonprofits publish their annual reports online, but you may decide to create physical copies as well to send to certain donors or funders if you have the budget to do so. Even if you opt for a digital version only, consider multiple digital formats to find the best one for your organization.

For instance, if you plan to send both digital and print copies of your annual report, a PDF document would streamline the distribution process. If you want to create a more interactive report, however, you might format your annual report as a microsite or an eBook. 

Using your chosen format, draft the text for each section and pair it with the visuals and data you compiled. Once your team has a final draft ready, run the copy by any relevant parties for feedback and revisions. This might include board members, your development director, or even your funders. If necessary, consult your grant management checklist to ensure that you’re following any reporting guidelines when discussing your grant funds.

4. Make a distribution plan.

Finally, plan multiple ways to distribute the report once you publish it. Since the goal of your annual report is to engage and strengthen relationships with donors, aim to share the report with as many donors and prospects as possible. 

In your distribution plan, you’ll need to decide:

  • Where the annual report will live permanently on your website. You might include your annual report in a publications section, add a link to it in the navigation bar, or publish it on your blog.
  • Who should receive the report via what channels. Which donors might want a physical copy? Which donor or volunteer segments warrant personalized emails and download links?
  • How you’ll announce and promote the publication of your annual report. Draft and schedule content promoting the report on your website, social media, and other marketing channels.

Use your CRM and marketing tools to help you manage annual report distribution. For example, say that you included a page in your annual report about the dedication and success of your peer-to-peer fundraisers and want to send personalized emails to everyone who participated. To do so, you might create a segment in your CRM for peer-to-peer fundraising volunteers and use a marketing automation tool to easily include each volunteer’s fundraising total in the email.

Just like any other fundraising and development skill, improving your impact reporting skills is an ongoing process. Adopt a mindset of continuous improvement, and be open to feedback from both donors and peers about the annual reports you produce to help you improve your skills further.


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