A nonprofit annual report is an excellent tool for showcasing the impact of your organization, highlighting your program initiatives, financials, goals, and major gifts over the past year. When done well, an annual report helps build trust with your supporters, thereby increasing their potential to give again.
Keep reading to dive deeper into:
- The purpose of a nonprofit annual report
- How to write a nonprofit annual report and key sections to include
- Nonprofit annual report templates and examples
- More tips for building lasting donor relationships
Do I have to write an annual report for my nonprofit?
Well, technically you don't have to write an annual report, but it’s certainly in your best interest.
While all registered 501(c)(3) tax-exempt organizations are required to submit an annual filing of all financial info from the past year to the IRS, annual reports aren't mandated by the government. Instead, nonprofit annual reports are documents shared with current donors and funders, board members, potential donors, and other key stakeholders each year.
While optional, an annual report is a best practice for any nonprofit organization, providing financial transparency on how all contributions are allocated. As with any relationship, your supporters’ loyalty relies on transparency. You must be clear with donors regarding current initiatives, how funds are used, and your future goals.
When divulging all of these details to your current base, nothing says "We've got our ducks in a row!" quite like an annual report.
What's the purpose of nonprofit annual reports?
Your annual report gives your supporters an update on your organization's accomplishments from the past year, your current programs and goals, and a summary of how their funds were spent. Annual reports serve many purposes, including:
- Inspiring your supporters 💪 Revisit the organization’s mission statement and describe how current initiatives work to support that mission to make donors proud to be a part of your work.
- Thanking your donors 🙏 Show appreciation by highlighting major donor partners, corporate sponsorships, or other individuals who helped close the gap toward the year-end fundraising goal.
- Putting your money where your mouth is 🙊 Donors want to be certain that their contributions will support your mission. Feature current programs and other initiatives and show how those hard-earned dollars make a real difference in your community.
Ultimately, the purpose of your annual report is to attract and retain loyal supporters by proving the effectiveness of your organization and showing that your programs are delivering on what you promised.
How to write an annual report: A sample table of contents
Your nonprofit annual report will differ slightly depending on the kind of work you do and at what scale, but we recommend including the following six sections in every nonprofit annual report.
1. Welcome message 📣
This is a brief letter from your executive director that introduces your annual report to current and potential supporters. It doesn’t have to be overly long or in-depth (a half-page is fine), but it should thank current supporters and provide a broad overview of the past year’s accomplishments.
2. Mission and values 💕
As a nonprofit, every move you make—all of your programs, volunteer opportunities, and campaigns—should be in service of your mission. However briefly, you'll want to review your mission, vision, and values early on in your report so that everyone is clear on your why.
Why does your organization exist in the first place? What are you hoping to accomplish? Revisit these areas to remind donors of how their contribution makes an impact.
3. Executive summary 👀
Here is where you get into the details of the past year, starting with a yearly recap of your program initiatives. Depending on the size of your organization, you may not have space to dive into every program. Instead, review the key objectives from last year and which programs most successfully delivered on those goals.
Since this section attempts to compress a lot of information into easily-digestible chunks, consider supplementing with visual aids, such as pie charts, infographics or photos that show your programs in action.
4. Financial statements 📊
Donors want to know how their contributions are put to use. Be sure to include a financial report, including a breakdown of your income and expenses. Financial statements might include a balance sheet, cash flow statements, or income statements.
You may also want to consider showing financial metrics from the previous year to show how these numbers have changed over time.
5. Donor appreciation 💌
Time for some shoutouts! Loyal donor relationships are the backbone of your organization—use your annual report to give a special message of thanks to your supporters. Set aside a section highlighting your volunteers, corporate partnerships, and major-gift donors.
If you run a mid-sized to large nonprofit, it may not be realistic to thank every single person. Instead, stick to the major individual or corporate partners—no need to have 9 pages of names.
6. Looking forward to next year 📆
Conclude your annual report with a look toward next year, including year-end objectives or fundraising goals for the upcoming year and what you plan to do to achieve these goals.
Most importantly, note any ways that you plan to shift your annual giving strategy in the coming year and for what reason. If there were certain programs, campaigns, or other initiatives that fell flat this year, explain how you plan to remedy those efforts within the next twelve months.
Nonprofit annual report templates and examples
Need some inspiration as you start building your nonprofit's annual report?
Yearly offers full annual report templates that you can customize to fit your organization. With Yearly, you can view nonprofit annual report examples, add images, videos, graphs, and other features, then fill in your own information. Plus, Yearly offers a free trial, so you can start customizing your own nonprofit annual report template right away.
Build lasting donor relationships with an annual report
Your annual report updates your supporters on your fundraising goals, financial statements, and current programs. While publishing an annual report isn’t mandatory, it’s an excellent tool to help establish trust with your supporter base. For more ideas on how to build lasting relationships with supporters, be sure to check out the Givebutter blog.
Givebutter is the all-in-one, donor-centric fundraising platform that brings out the changemaker in all of us. Complete with hundreds of free fundraising tools, a built-in CRM (donor management), and marketing automation, we're here to take your fundraising and donor engagement to the next level—all for free.
Ready to see how Givebutter can help your organization raise more in the coming year? Create your free account and get started today! 💛
Kylie thrives on supporting others, making everyone’s jobs easier, and cinnamon in her coffee.