You devote a lot of effort to your not-for-profit’s communications strategy, but even the most informative and engaging program brochures, newsletters and blog posts are read by only a portion of your intended audience.
Your annual report is another matter. Everyone, from major donors to grantmakers, from charity watchdog groups to the government, may read your not-for-profit’s annual report — and use it to make important decisions affecting your organization. So it is critical that this publication be professional, substantive, accurate and interesting enough to grab and keep readers’ attention.
The basics
Most not-for-profit annual reports consist of several standard sections:
Chairman of the Board’s letter. This is typically an executive summary of the pages that follow. Your annual report may be the best chance you have to tell the complete story about your organization, this letter should provide an overview of your activities, accomplishments and anything else worth highlighting.
Directors and officers list. This is the face of your organization and can have a big impact on potential donors. Make sure all names, professional affiliations and designations are accurate and spelled correctly.
Financial information. This generally is subdivided into three sections:
1. The independent auditor’s report, states the CPA firm’s opinion about whether your not-for-profit’s financial statements have been prepared in accordance with Generally Accepted Accounting Principles.
2. The financial statements, include:
• A Statement of Financial Position — a record of your organization’s assets, liabilities and net asset categories as of the last day of the fiscal year,
• A Statement of Activities, which records revenues earned and expenses incurred during the year (grouping expenses in the categories of “program,” “fundraising and management” and “general”), and
• A Statement of Cash Flows, which shows the changes, sources and uses of cash and cash equivalents for the year.
3. The footnotes expand on financial statement items regarding such subjects as leasing arrangements, commitments 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. If applicable, use simple graphs and diagrams to highlight specific points.
Creative content
The “Description” is the other major section in a typical annual report. This 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 entire community. Conveying your not-for-profit’s accomplishments educates the community and its leaders on the work you have done.
So that your report does justice to this work, consider including such elements as client testimonials, where those you’ve helped tell the story in a personal way. Or create a timeline that enables readers to see the progress you’ve made toward a long-term goal.
While this section should be clear and concise, there’s nothing wrong with using imaginative language. Metaphors can make otherwise mundane subjects vivid and interesting.
Style matters
Your annual report should be as visually pleasing as it is interesting to read. Engaging photos, arresting graphics and creative layouts can go a long way toward that goal.
Make sure your graphic designer has experience with annual reports — preferably those of not-for-profits — and understands the values and image your organization wants to convey. Keep in mind that many people will view the report online, so the PDF document must be as easy to read and navigate as a printed copy.
A must-read
Don’t underestimate the power of a great annual report. This is a communication that your constituents will read, so start planning early and be sure to dedicate sufficient resources to the project.
To learn more about this topic, please contact Matt Brackman at [email protected].
