Your annual report: essential, not expensive

For many of us, the words “annual report” suggests a substantial writing/editing assignment and the customary expensive color printing and delivery. Certainly large, institutional-stage nonprofits and corporations often publish stunning, award-winning products with photography or design costs that are probably more than your annual marketing budget. But the truth is, a small or midsize nonprofit’s annual report can be as simple as a well-written letter—even a single page with a financial summary.

Like preparing your first common grant application, this is a discipline that will pay off handsomely as you move on to other documents. And yes, even mid-summer is a good time to tackle this report (there is no bad time). If you struggle with compiling the financials or in summarizing your nonprofit’s impact, then mid-year affords you time to consider what needs to improve in your data gathering and monthly financial process before too many more months go by.

Have you postponed preparing an annual report because you think it is too much to take on—or too expensive? Put aside your hesitations and consider this table of contents. This is not the time to write the Great American Novel, but to deliver essential information on the who-what-when-where-why of your organization. Keep it short. Some of these can be single sentences.

1. Your mission statement. Include, if you have them, values statement(s). If the reason your nonprofit exists (the problem you address) is not readily understood, then include a concise fact, i.e., “95% of girls in Tanzania are not able to complete high school.”

2. History. How and when were you founded, and by whom. Briefly describe whether your programs have evolved, where your operations have been located, whether you own your own building. Keep it brief but cover the essentials.

3. A roster of your board members, including their professional job titles. Depending on the size of your nonprofit, include a list of your senior staff members with titles and degrees.

4. The core information on program. Strangely, this can be a weak point in nonprofit communications. Do not simply parrot your mission here—but rather, provide specific data on impact, including people served, program participation, success rates, and mid- and long-term outcomes. Numbers alone almost always require context, i.e., “We counseled 1,119 families this year, an increase of 12% over 2013.” Highlight specific programs, classes, services, or successes you consider most important. Be careful not to relay on abbreviations or industry jargon.

5.  Where the money goes. Summarize expenses in three main headings: program costs, fundraising costs, and management/administration. The classic graphic for this is a pie chart of how a single donated dollar is used. Your program costs should be at least 75% (depending on the life cycle evolution of your organization).

6. Where the money comes from. Summarize revenue across three general headings of donors and sponsors, grants or contracts, and fees or program income. Be concise and very clear (again, a pie chart for income and a pie chart for expense is customary.) Your ability to demonstrate a crisp, well-managed balance sheet will be the difference between winning new fans and funders in the year ahead . . or leaving critical questions unanswered.

7.  Desirable details: Consider photographs of the people you serve, a testimonial from a funder or person served; 1-2 sidebar success stories. Some organizations also thank donors from the past 12 months by name/gift level.

8.  Essential details: Don’t forget a concise statement of your tax status, your physical address, and contact information. Note whether you completed an audit. Date the document to ensure credibility.

9.  A call to action: A compelling annual report will inspire donors and volunteers, so you should include a call to action in the form of a web link, a donor envelope and/or a box of bullet points with “How you can help.”

10.  Now what? In a few sentences, space permitting, you could also include “On the Horizon” or “Next Steps”–where you are headed, strategically, in the next 12-18 months.

You will find that a well-written, fact-filled annual report will be invaluable for outreach in the community, volunteer and staff recruitment, potential government or corporate partners, and of course funders. Set a realistic timeline now to get yours researched, written and published soon.


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