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Annual Reports – Five Keys to Creating an Annual Report For Your Nonprofit

At the beginning of my second year as executive director of a housing nonprofit, I thought I had prepared well for my first annual meeting until the day of the event when I realized we had not prepared an annual report as required by our article of law. Since this was thirty years ago, before most nonprofits had computers, you can only imagine the work my secretary and I put into producing the basic report we needed for that evening. We met the charter requirement, but we certainly didn’t create something that showcased our organization.

Fast forward three decades…you have a good computer and printer in your office, a staff member who writes well, and the wisdom to give yourself enough time to create an annual report that will serve as both a marketing tool and fundraising tool in the coming year. If you don’t have ample resources at the bank or a marketing agency to donate their services, it’s possible to build your report in-house. Follow these guidelines to make sure your report ends up “read and spread” and not in the trash.

1. Specify the message you want the report to convey.

You can do this by focusing on a specific program that has had dramatic results this year. You can also focus on your mission and highlight a few things you’ve done that clearly resonate with that mission. Additionally, you can highlight the people you serve with various programs or the donors who made this year a great year. Just remember that this message should be consistent throughout the report, from the opening letter from the Chairman of the Board to the final financial report.

2. Avoid using too many statistics.

In the words of Mal Warwick, “If statistics could tell a story, calculators would go on talk shows.” Your auditor may be impressed by the numbers, but readers of your annual report want to know about the people you’ve helped and the changes your nonprofit has made to make the world a better place.

3. Make sure you use multiple stories

If your orchestra does free concerts for inner-city children, focus on one child and talk about their reaction to the concert. If you shelter rescued animals, talk about the rescue and then the permanent home you found for the animal. If your mission is to help addicts recover, focus on one or two who have completed your program and show how they have become productive members of the community. Use any success story that fits your mission and you’ll grab the reader’s attention.

4. Include images that are dramatic and showcase the work you do.

Avoid traditional group shots (board members, staff and a neighborhood group) and use images that reveal strong emotions. For example, you could show the joy on the face of a child hearing a live concert for the first time, the excitement of a new owner leaving the shelter with a rescued animal, or the joy of an ex-drug addict playing basketball with a group of teenagers. You can also include photos of board members and staff. Just make sure they’re doing something active, like attending a board meeting or working with clients. Candid shots can be great if you can pull them off. A word of caution here: make sure you get signed releases from the people being photographed (or their guardians).

5. Present your financial reports in an easy-to-read, engaging way.

Most people who receive your annual report are not interested in your balance sheet or income statement. If you think you should include them, add a short narrative that highlights what the numbers really mean for running your nonprofit. What many readers are interested in is how much money you’ve spent on programs compared to administrative or fundraising costs. The clearest way to report this is in a pie chart.

After using these ideas to complete an annual report that has the potential to impress your readers, be sure to distribute it widely. Don’t just hand it out at your annual meeting. Send it to all your donors, partners, clients, and anyone you want interested in the work you do. Also, post it on your website so the whole world can see how you’re changing the world.

©2010 Jane B. Ford

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