Some of your non-profit’s communications are of interest only to a select group of your supporters. But your organization’s annual report is for all stakeholders — donors, grantmakers, clients, volunteers, watchdog groups, and the government.
Some report elements are nonnegotiable, such as financial statements. But you also have plenty of creative license to make your report engaging and memorable for its wide-ranging audience.
First things first
Most non-profit annual reports consist of several standard sections, starting with the Chairman of the Board’s letter. This executive summary should provide an overview of your non-profit’s activities, accomplishments, and anything else worth highlighting. Next, is the directors and officers list. The biggest task here is to make sure all names, professional affiliations, and designations are accurate and spelled correctly.
Then, there is the financial information section, which generally is subdivided into three sections:
- Independent auditor’s report. This is a professional auditor’s opinion about whether your non-profit’s financial statements have been prepared in accordance with Generally Accepted Accounting Principles.
- Financial statements. You will want to include a Statement of Financial Position (assets, liabilities, and net asset categories as of the last day of the fiscal year), Statement of Activities (revenues earned and expenses incurred during the year), and Statement of Cash Flows (changes, sources, and uses of cash for the year).
- Use these to expand on financial statement items regarding such subjects as leasing arrangements and debt.
You can make your financial statements easier to understand by creating an abbreviated version with a synopsis that quickly gets to the heart of the matter. Where applicable, use simple graphs, diagrams, and other visual aids to highlight specific points.
Meat of the matter
A “Description” is the other major section in a typical annual report, and it is where you can — and should — get creative. First, explain your organization’s mission, goals, and strategies for reaching those goals. Then, describe who benefits from your organization’s services and how they contribute to the community.
So that your report does justice to this work, include client testimonials where those you have helped tell their own story in a personal way. Or create a timeline that enables readers to see the progress you have made toward a long-term goal.
Your annual report should be as visually exciting as it is interesting to read, with engaging photos, eye-catching graphics, and innovative layouts. Make sure your graphic designer has experience with annual reports — preferably those of non-profits — and understands the brand, values, and image your organization wants to convey.
Even if you are proud of the finished product, make sure you survey stakeholders or convene a small focus group to find out what your report’s readers liked — and what they did not find as effective. Then apply these insights to next year’s effort.