For many nonprofits, their annual report is a multi-team project that takes a good deal of time, effort, and coordination – and for good reason. The annual report is not only an opportunity to check the pulse of the organization, but also to display to its many stakeholders the hard work the organization has accomplished over the course of the year and in working toward its mission. As a consequence, annual reports are worth the effort and should be taken as a great opportunity to further engage donors, grantmakers, employees, clients, volunteers, watchdog groups, and the government.
At its core, the nonprofit annual report will feature your applicable financial statements, but there is much more room to create a project that is compelling and visually appealing for its many different audiences. With all the energy that goes into its creation, your annual report can become a labor or love that helps your nonprofit better connect with its community, instead of simply being filed away the moment it is finished. Read on to learn how the different components of your annual report can work to engage your supporters.
Nonprofit Annual Report Components
Chairman of the Board Letter – This is an introduction to and summary of your nonprofit’s activities for the year, as well as a place to showcase any noteworthy events or accomplishments.
Directors and Officers List – As straightforward as it sounds, this list of your nonprofit directors and officers needs only the extra attention it takes to ensure the titles are accurate and names are correctly spelled.
Financial Abstract – It can be helpful to create a synopsis of your financial statements with complementary visuals in order to make your financial information explicable and meaningful for supporters who do not have a background in finance. This abstract can be excerpted for other purposes as well.
Independent auditors report – This part of the annual report can fortunately be outsourced to professional nonprofit audit services. Essentially, the independent auditor’s report is the double-check on your organization’s compliance with Generally Accepted Accounting Principles in the preparation of your financial statements.
Financial statements – These reports include assets, liabilities and net asset categories as of the last day of the fiscal year; revenues earned and expenses incurred during the year; as well as all changes, sources, and uses of cash for the year. Simple, colorful graphs and charts can accompany and enhance the financial data.
Footnotes – Only really needed when expanding on financial information such as leasing arrangements and debt, footnotes will round out the financial information section.
Description – This section of the annual report is the narrative accompaniment to all the figures in the financial information section. Here you can state your mission, your progress in achieving it, and offer testimonials from those in your community impacted by your organization. It can be helpful to work with a graphic designer who can not only make this section visually striking, but also unify the annual report as a whole with consistent graphics, fonts, and branding.
Reach out for feedback
Fortunately, the yearly deadline of your annual report gives you a lot of room to improve the project year over year. In addition to working with California nonprofit audit service professionals, consider also reaching out to your stakeholders to get feedback about what they did and didn’t like in the report, so your nonprofit can continuously improve.
Ernst Wintter & Associates LLP specialize in California nonprofit audit and tax preparation services. Contact us today for help with your non-profit audit or tax prep needs.