For nonprofits, the annual report is a beacon of transparency and gratitude, sharing the organization's mission, challenges, and triumphs throughout the year. These reports are also windows into the heart of your organization's work, with captivating narratives, striking visuals, and detailed financial breakdowns to engage stakeholders.
Here’s how to create one.
What is an annual report for a nonprofit?
Due to the nature of working with donors and grants, nonprofits face additional scrutiny to showcase that they are making an impact with their annual resources. A nonprofit annual report is an externally-facing audit that recaps an organization's mission, challenges, and accomplishments each year.
While a yearly report for nonprofits isn't strictly required, annual reports showcase your achievements and thank donors, board members, and volunteers for their hard work throughout the year.
This report was a printed document or brochure that could be handed out in the pre-digital era. Nowadays, annual report formats are digital, presented as PDF, video, interactive web page, or in other unique formats. Read on to explore best practices for writing your nonprofit annual report!
What should be in an annual report for a nonprofit?
Since there are no legal requirements to publish your nonprofit’s annual report, there isn't a required format. But an impactful annual report will showcase some essential information your donors, board members, and volunteers expect to see.
These include a compelling story of your organization's success and financial data that will inspire donors to pledge their ongoing support. Nonprofit annual reports can also support fundraising events and campaigns throughout the year, so provide a little teaser of your upcoming projects.
Here are some essential items to include in your nonprofit annual report:
- Your mission statement. Start strong by reminding everyone of your organization's mission. This is typically a 1–2 sentence blurb that you use to describe the purpose of your organization.
- Financial information. This section is meant to communicate full transparency to your donors. They want to feel confident that their money has made an impact, so provide context behind your major purchases, investments, and projects and clearly show where the money is going.
- Statistics. Brag about your accomplishments once you've shown where your organization spent money this year! How many people did you help? How many new volunteers pitched in to help this year? Did you expand to any new locations?
- Photos and videos. A picture is worth a thousand words, and this is especially true for nonprofit work! Your donors want to see visual proof of your organization's impact, so include photos of major projects, volunteers, and people you've helped (all with permission, of course)!
- Gratitude! Take a moment to thank your biggest donors and volunteers for their time and investments! Talk about how grateful you are to have such a great community and what your organization plans for its next steps.
3 nonprofit annual report examples
To help you get started on your journey, let's explore some of the best nonprofit report examples from recent years. We've chosen these examples because they each showcase different strengths, so read through these descriptions to see what aligns with your nonprofit's vision.
1. Bill & Melinda Gates Foundation annual report
A great example of a simple—but compelling—nonprofit annual report is the one from The Bill & Melinda Gates Foundation. Every year, they provide audited financials, graphs, and relevant information showcasing how they're making a difference. The nonprofit annual report also famously includes a breakdown of global trends and how their efforts play into the big picture.
They also provide links to past annual reports so donors can click back through and see progress throughout the years. While linking to your past annual reports is optional, it's a minor lift for your web team that can drive home your organization's transparency and openness.
2. The Nature Conservancy annual report
Another excellent nonprofit annual report example comes from The Nature Conservancy. Their annual report does a fantastic job of incorporating statistics and photography that tell a compelling story of their nonprofit impact.
Notice that, though they do a wide breadth of work across the world, they focus on 3 or 4 key stories that can genuinely highlight their efforts. This is an excellent example of sticking to a few concrete narratives instead of spreading the focus too thin, even when you have a wide range of projects.
3. Habitat for Humanity annual report
If you're looking for great examples of statistics, look no further than Habitat for Humanity! Their nonprofit annual report includes clear callouts of how many homes they've built and how many lives they've changed.
Even though they include a few focus pieces on specific families that they've helped, they then pivot to provide key statistics and quantitative data that display their impact within each region. They also include some pages for corporate partners within their full annual report PDF, which may be a key strategy if you have organizational donors who want a new level of recognition.
How to write an annual report for a nonprofit organization
Writing a nonprofit annual report is quite simple when you break it down into sections, especially when you can make it a collaborative effort.
Step 1: Delegate tasks to gather information and compelling visuals
Have your account department pull the financial statements, your community coordinator gather information on your organization's impact and mission, and your volunteer coordinator reach out for photos and videos. Remember to include a compelling intro from your leadership team to start things off!
Step 2: Highlight your major accomplishments
Break down your major accomplishments for the past year into three compelling items that highlight your impact. Did you run an annual gala that brought in a lot of donations? Did one of your projects gain significant media attention? Did you help a record number of causes this year? Did you experience a dramatic increase in volunteer hours?
Asking these questions can drive you toward the compelling annual report content your donors, volunteers, community members, and other key stakeholders will want to read.
Step 3: Organize financial information
While compelling stories and images are the meat of your nonprofit annual report, they're the easiest step. Gathering your financial information is a much larger lift for most nonprofit organizations, but keeping donations flowing is essential.
Having this financial information at your fingertips makes it easier to apply for future grants, so take this annual opportunity to ensure your finances are neatly in order!
Pulling your financial information is a headache when using a manual process, but if you automate your accounts payable through BILL, this step is much simpler.
You can easily break down your spending by vendor, GL code, or custom categories, making it easier to see where your money is going. From there, you can easily export the files to Excel to create bar or circle charts to showcase in your nonprofit annual reports.
Step 4: Report on expenses
While your nonprofit annual report will focus on major projects and accomplishments, remember to include recurring monthly expenses like employee salaries and overhead costs. This is the least exciting part of your report, but it helps to account for the last part of your budgets.
Looking for ways to improve spend and expense management? Check out our guide just for nonprofits.
Nonprofit annual report best practices
To simplify your nonprofit annual report for the year, here are some best practices:
- Keep your nonprofit annual report to about 5–7 pages. Going into even more detail may be tempting, but even your most dedicated major donors will lose interest after page 5. The Bill & Melinda Gates Foundation tends to be about 7 pages every year and only lists their high-level financial breakdowns by initiative.
- Maintain the same format every year. If your donors and volunteers are happy with last year's nonprofit annual report format, there's no reason to reinvent the wheel. If you want to deliver something extra, consider linking to an external video or slideshow that provides additional information.
- Include a downloadable PDF. While hosting your report on a web page is great, many of your donors will want to save the nonprofit annual report PDF directly to their computer. Include a link to a downloadable PDF to save your donors a step.
- Be honest about any setbacks. With any complicated project, setbacks can happen. If any significant initiatives stumbled in the past year, talk about it in a sentence or two, but then focus on how you'll solve the problem in the future.
- Focus on the "we"! Your existing donors and volunteers want to feel proud of the work they accomplished last year. Keep a positive "we did it!" attitude and humbly thank those who helped out the most.
- Highlight the big picture. While an annual nonprofit report is a recap, it should tie into the overall mission statement of your organization. Talk about how this year's accomplishments tie into the next big strides that your organization will take.
How do I find the financial information for my nonprofit annual report?
Financial transparency is critical to your fundraising efforts in the coming years, but gathering the financial information you need can be a headache for smaller organizations. Often, small nonprofits rely on spreadsheets that don't convey complex data and details for each payment, making it difficult to see where money is going.
If you're working from these manual processes, ask your organization for a list of vendors and accounts that most payments would go to. Then, start highlighting these payments in different colors to categorize where your money is going and gain deeper financial insights.
If you need more time chasing down this information manually, consider trying an accounts payable automation system like BILL! BILL imports and categorizes each invoice while providing timestamped comments and approvals so it's easy to see where each payment is going. This can help provide financial transparency into your payments and prepare for next year's report.
“Streamlined financial automation platforms like BILL are here to stay. We’re sticking to this and not looking back.” — Kayla Jackmon, Director of Finance, Bloomingdale School of Music
Nonprofit annual report FAQ
Now that we've covered the basics, here's a quick FAQ to help you write your nonprofit annual report.
Are nonprofit annual reports public?
Yes, nonprofit annual reports should be public, as they are essential to how nonprofit organizations communicate with existing donors, board members, volunteers, and the community. Nonprofit annual reports can also be crucial in your fundraising campaigns with major and potential donors. Host your yearly nonprofit report on your website and email it to your organization's contacts to showcase your hard work and keep current donors engaged.
What 4 financial statements must a nonprofit organization prepare annually?
To fully understand your organization's finances, you should complete these basic financial statements: A balance sheet, income statement, and cash flow statement. There is also a fourth statement unique to nonprofits called a statement of functional expenses.
These statements help to provide visibility into your cash flow and funding that can help prepare for major projects. For more information on how many nonprofits prepare these statements, check out these 5 steps to creating a financial plan for your nonprofit.
