How to Create a Nonprofit Annual Report

An annual report tells your donors what happened last year because of them. Done well, it's one of the best thank-yous you'll send all year, and it sets up the next gift. Done poorly, it's a list of activities and a pie chart nobody reads.

Here's how to create a nonprofit annual report your donors will actually read, what to include, where to find the stories and how to share it.

Annual report or impact report?

An annual report covers your whole organization's year: results, stories, finances and the people who made it possible. An impact report focuses on outcomes, often for one program, one campaign or one major donor. Many nonprofits now combine the two and call it an impact report. Whatever you call it, write it for donors, not for your board minutes.

What to include

• A thank-you up front. Open by thanking the donor, not by describing the organization.
• Accomplishments, not activities. Not "we held 40 trainings," but "40 mothers now feed their children five meals a day."
• Stories of people you serve. One or two people the reader will remember.
• Stories of donors. Show a donor like the reader, and why they give.
• Financials that build trust. A simple summary of income and how it was used. Keep it honest and readable.
• Gratitude, again. A list of supporters, if you have permission, or a clear "you made this possible."
• A next step. An invitation to give, volunteer, visit or simply reply.

Leave out what doesn't serve the donor. Staff org charts, long board lists and every program statistic can live somewhere else.

Report in the donor's terms

One donor I worked with didn't measure his giving in dollars. His goal was to provide clean water for a million people in his lifetime. Once we understood that, we stopped reporting what he had given and started reporting how many people had received clean water through the projects he funded.

Your whole donor file won't have goals that clear, but the principle holds: report what the gift did, in terms the donor cares about. "Your gifts provided 12,000 meals" means more than "Program expenses rose 8 percent."

Where the stories come from

The hardest part of an annual report is often finding stories. When you ask people in the field for "a story," they often say they don't have one. What they see every day feels ordinary to them.

At Serving Orphans Worldwide, we needed stories for an impact report for a donor who supported several homes. Our coordinator asked a home director for stories and heard, "I don't have any stories." So she changed the question. Could you update us on the student whose scholarship we funded? Is there something new at the home, like a washer and dryer or a water pump? Are there children who were recently rescued? Once the request was specific, the home director came back with several.

Don't ask, "Do you have a story?" Ask about a specific person, change, milestone or object.

It also helps to build story collection into work you already do. Every home SOW supports sends a monthly report that includes prayer requests and praise reports. Those reports are a steady source of stories worth following up on.

Protect the people in your stories

Get permission before you tell someone's story. At SOW, we only tell a child's story when the child's caregiver or guardian has agreed. We may change a name and say so, or leave out a location. Remove details when you need to, but never invent new ones.

Print, digital or both

• Print still works well for older and major donors, who often keep it on a coffee table.
• Digital makes it easy to add video, share on social media and send by email. A simple web page works as well as anything. If you want a page-turning version of a PDF, here are tools to create a digital annual report.
• Both is common: a short printed piece for top donors and a fuller version online.

Shorter is usually better. A few well-designed pages beat a 40-page document no one finishes.

When to send it

Send it early in the year, while last year's results are fresh, and well before your spring appeal. Many nonprofits send it within the first quarter. Some send a one-page "year in review" in January and the full report later.

Then use it. Share it in email and on social media, send it to new donors as part of their welcome, bring it to major donor visits and give it to your board.

Get started

• Use the nonprofit annual report template to outline yours section by section.
• See examples of great nonprofit annual reports for ideas.
• Remember that an annual report is part of how you keep donors giving.

If you want a complete system for thanking and reporting back to donors all year, The Gratitude System walks you through it.