Creating a Successful Annual Report

I first started working in the nonprofit sector over 20 years ago. My work computer was a beige behemoth, and my colleagues and I used floppy disks to save our data. The office was littered with cardboard boxes full of program brochures, appeal letters and envelopes, and, of course, annual reports. 

Technology has come a long way since then, and our organizational communications have, too. In particular, today’s most impressive annual reports are a far cry from the imageless documents we sent in the early 2000s. Now, it’s not uncommon to receive a glossy report full of photos or an online report that incorporates videos or interactive elements. 

When it comes to annual report planning, some elements have stayed consistent over time: the report’s purpose, intended audiences, and key topics. 

Many organizations have also embraced creative new ideas in sharing that content with their communities. 

Read on for a summary of tried-and-true elements of a successful annual report to help ensure you’re sharing the most important messages for your audiences. Also find suggestions about how to enhance your annual reporting to make it more meaningful to your stakeholders. Hopefully, you’ll feel confident about what you’re doing and excited to test out engaging, contemporary tactics for sharing your nonprofit’s accomplishments.

Let’s get started: 

1. Define the Purpose
2. Identify Your Audience
3. Key Elements of an Annual Report
4. Format
5. Leveling Up Your Annual Report
6. Action Items for Your Next Annual Report 

Define the Purpose

First things first: Identify why you want to create and disseminate an annual report. 

Most often, organizations’ primary objectives include:

• Share their organization’s work and impact in their community. 
• Draw attention to the progress they’ve made towards their mission.
• Engender transparency in what they’re doing and how they do it, which builds trust and confidence in their efforts.
• Steward their current donors and cultivate new ones.

Your organization might choose to publish an annual report to achieve such aims, or you might have other goals. Regardless of your objectives, identifying your intent up front will help you more easily determine your audience, content, distribution method, and more.

Identify Your Audience

Next, determine the target audience for your annual report. Often, annual reports are shared with stakeholder groups that include: 

• Current donors and funders
• Prospective donors and funders
• Sponsors
• Volunteers
• Community partners
• Other organizational champions and supporters

By identifying your audience, you can further tailor your messaging to engage them as fully as possible. Those groups should determine much of what goes into your annual report, as well as how it is delivered to them.

Key Elements of an Annual Report

Much of the content in an annual report has remained the same since my early days as a nonprofit staffer. 

Typically, annual reports include a combination of many of the following elements: 

• A table of contents outlining the major sections of the annual report. 
• A message from organizational leadership. This is often provided by the executive director, board president, or both. It is typically friendly and positive in tone and inspires readers in its storytelling and call to action. 
• A reminder of the organization’s mission, long-term vision, and key values. A best practice is to summarize this information near the beginning of the report and continue to reference it throughout. 
• Important accomplishments from that year. Often, organizations benchmark such accomplishments against their target goals and objectives to demonstrate their progress to readers.
• Success stories about those served. Most organizations include multiple stories; some complement those stories with quantitative data about client services. Nonprofits might include donor or volunteer stories as well. 
• A summary of relevant issues or challenges facing the organization and/or its constituents. For example, in 2020 and 2021, some organizations discussed the implications of the COVID-19 pandemic on their clients and the organization. 
• Recognition and gratitude towards donors. Most annual reports include lists of all types of donors; many incorporate thank-you messages to donors, volunteers, partners, and other supporters throughout the document. 
• A description of the organization’s governance body and practices. This is most often an overview of the board of directors and sometimes outlines the governing principles or values. 
• A snapshot of important financial reports including expenses and revenue. These often capture costs and income per key organizational departments, such as programs, fundraising, and operations.
• Other updates relevant to the organization or mission, including information related to memberships, events, communications, resources, advocacy efforts, or partnerships.

Format

These days, most organizations provide their annual reports electronically, with some opting to make print copies available by request. 

Organizations creating electronic annual reports typically host them on their websites as PDFs or eBooks, or sometimes, as encouraged below, as microsites.

Your organization’s decision about offering an online versus print annual report depends on your intent and audience (which you’ve hopefully identified in advance). 

You might consider the following when determining print quantities: 

• Print a small number of annual reports for use in constituent cultivation, solicitation, and stewardship.
• Print annual reports for those who specifically request hard copies. 
• Use your constituent relationship management (CRM) software to note—ideally via a reportable field—who in your database prefers printed copies.

Leveling Up Your Annual Report

Want to make your organization’s annual report stand out among those that your constituents receive? Many nonprofits have capitalized on technological advancements and leading-edge ideas to create highly engaging pieces. You might incorporate one or more of the following in your organization’s next annual report to really make it shine. 

• Build a microsite—a website within your organization’s website—to showcase your annual report. At the time of publication, highlight your microsite on the organization’s home page to draw attention to it.
• Create a video recording of the message(s) from your organization’s leadership. 
• Spotlight one or a few major accomplishments from the past year with compelling stories that incorporate supporting data points. 
• Lead with a client testimonial, then scatter them throughout the report. 
• Ensure that all stories reinforce your mission, vision, and values. Don’t hesitate to mention those specifically in your storytelling. 
• Instead of buying stock photos, use images of the organization’s actual clients, donors, volunteers, and partners (with their permission, of course).
• Incorporate videos, moving photos, or animations to draw even more attention to your messages (see accessibility guidelines for moving, blinking, or scrolling content). 
• Include mini-stories in photo captions: just a few sentences describing the client, activity, outcome, or whatever is most relevant. 
• If your organization’s work is place-based, create maps—which could be interactive depending on your format and design choices—to describe where the organization has had an impact in the community. 
• In client stories, give special thanks to any individuals or groups that made those specific efforts possible. 
• Use simple graphics, such as pie charts, to explain organizational finances. Keep displays of other quantitative data, including program statistics, simple as well.
• Locate donor information in the beginning or middle of the document, instead of at the end, to emphasize your appreciation for their contributions. Or include donor stories early on and donor lists toward the end. 
• Whenever appropriate, link information in your annual report to areas of your website where readers can learn more. 
• Don’t forget to include call(s) to action! Encourage readers to donate, volunteer, share about your organization with others in their network, or whatever else is relevant to your organization and intent. 

Action Items for Your Next Annual Report

It’s never too early to plan for future communications—especially when it’s a key publication, such as your organization’s annual report. 

When you’re ready to plot out your next annual report, remember to: 

• Identify why you’re creating the document and specify the target audience.
• Determine your distribution method.
• Decide the key elements of your annual report. Start gathering and organizing that information early in the process.
• If appropriate, adopt some of the suggestions above to take your organization’s annual report up a notch. Make it as compelling as possible to help your organization achieve its identified aims! 

This blog is an original work of the attributed author and is shared with permission via Foundant Technologies' website for informative purposes only as part of our educational content in the philanthropic sector. The views, thoughts, and opinions expressed in this text belong solely to the author and do not necessarily reflect Foundant's stance on this topic. If you have questions or comments, please reach out to our team.