Annual Reporting for Nonprofits
Annual Reports Bring Credibility
There is absolutely nothing more important to a nonprofit’s credibility than a solid reputation. This reputation is built through years of hard work, documenting performance measurements, keeping accurate financial records, honoring volunteers, and having a strong board of directors. Producing an annual report to showcase your nonprofit’s accomplishments will solidify its professional status and attract new donors and volunteers.
Annual reports do not have to be expensive, glossy publications. It is nice to have a publishing budget, but, most small nonprofits or civic groups do not have money to spend on professional publications. An annual report can be created in a PDF format and listed on the organization’s website, therefore, bypassing the cost of publishing hard copies.
If your budget is small, but you feel a need for a hard copy, costs can be saved by creating the report in-house with desktop publishing software. A color laser printer can produce fantastic results costing only pennies per page. Even if color is not an option, a black and white report is still better than no report. Donors may even find the more cost effective report as a sign of good money management.
Structure of Report-Civic Organizations
Structure of the annual report is based on what kind of nonprofit is being represented. Both brick and mortar nonprofits and civic organizations can have a 501c3 status but be managed remarkably differently. Therefore, the annual reports created by each organization will differ and be specific to the nonprofit’s style and causes.
Civic Organizations, such as clubs, can benefit from producing an annual report of their charitable works. Most civic organizations are managed entirely by volunteers and on shoestring budgets. The majority of funds raised goes into the projects which the organization undertakes. Such nonprofits are truly grassroots organizations and can benefit by creating an excellent annual report. Most of these groups have websites and/or Facebook pages that a PDF can be placed on for public viewing.
The first page of the annual report should include the mission statement, vision statement, and a list of focus areas or departments. The first page of the report should showcase what your group is focused on and its reason for existing.
Civic groups are managed by volunteer executive boards. The standard board includes a president, a vice-president, a secretary and a treasurer. This of course can vary from organization to organization. The annual report should begin with a letter from the current president or from the former president who presided over the organization during the time period covered by the document. Either president is an acceptable option for representing the group in the report.
Immediately following the president’s letter, the highlights of the year’s projects should be focused on. After all, humanitarian projects are the basis for the organization existing. This is the “meat” of the report and should include descriptions of the projects, volunteer hours that were donated, and monies spent on each project. Each organization should have a form of keeping key statistics of their volunteer work. Simple spreadsheets can be kept by each department chair and entered in to a database. You should always be able to show actual numbers for the charitable works completed. This will build integrity for the organization and attract new members and donors.
After the project focus area, a financials section should be included. Remember, transparency should always be standard practice for nonprofits. A nonprofit that does not show transparency warrants suspicion. You never want to lose a donor’s trust by not fully disclosing business practices. This section should include how much money was donated to the organization, the line items the money was filtered into, how much was actually spent, and the ending balance when the year was over. This section can also include the fundraising events the group conducted with the amount raised per event.
Next in the report should be the section honoring the donors and supporters which made the projects possible. If pressed to shorten the report, this section can be left out, but, please honor your supporters in another, highly public way. It cannot be expressed enough that supporters and donors should be recognized in a timely manner and in a public way. Some donors may want to remain anonymous, and their wishes should be honored, but all others need to be recognized.
The final section is listing group members starting with the executive committee, department chairs, and members-at-large. People want to know who makes up the group and what positions are held. Many people list civic held positions on their resumes and having an annual report to add to a portfolio is a reward for members who do so much to the organization. As you never want to forget honoring your donors, you never want to slight the people who make the group possible.
Structure of Report-Nonprofit Corporations
The structure of the annual report for a nonprofit that is incorporated is similar to the previously mentioned example but with a few differences. Such an entity is usually managed by an executive director instead of a president. A governing board of directors is over the executive director. If there are volunteers, they are secondary to the paid staff.
The first page of the report can be the mission statement, vision statement, and programs which the nonprofit runs. The opening letter will be from the executive director and can include an additional letter from the president of the board.
The following section will be showcasing the programs the nonprofit manages. This is a bit different from civic group’s listing of projects in that a nonprofit company has paid staff to manage its programs. Each program should have an allotted section listing the staff which manages the program, the description of the program’s activities, and the accomplishments for the year being reported.
Next in the report would be the financials which can include the grants, fundraising efforts or whatever else the company has received to operate. You can enter a line item for combined salaries and benefits but no need to list individual’s wages. Charts are always helpful because people want to look at graphics instead of reading copy. Keep the financials to one page but include what came in and what went out so that donors can reference how their money was used.
Next you should include your contributor list including companies, businesses, and individuals. Since you listed your staff in a previous section, this allows room for full recognition of all donors. This section should also include your volunteers even if they did not give a monetary donation, they gave their time, which is just as important.
End the report with the listing of the nonprofit’s board of directors. List the executive board, committee chairs, and members-at-large.
The suggestions in this article are merely guidelines to assist in the planning of the report. Each organization can customize the document by incorporating company logos, pictures of events and volunteers, basic charts that are easy to read and engaging, and of course the stories of the group’s accomplishments.
Everyone loves a cheerful, heart-warming story. New volunteers and donors will be drawn to your organization by seeing the good it does through pictures and stories. Never be afraid of using volunteer or recipient testimonies. Your organization is in the business of charity, and each document created should always support its mission and accomplishments. Keep in mind, for legal purposes, to have each person sign a waiver for pictures and quotes that are used for public viewing.
With each annual report completed and published, your organization will grow in credibility and stature within the nonprofit community. Keep in mind people like to hear about good happening, but, they respond to seeing charity in action.
About the Author
Catherine Dean is a freelance writer, gardener, quilter, and blogger. Her professional background includes nonprofit program development, grant writing, and volunteer management. She holds a Bachelor of Science in Mass Communications from Georgia College & State University.
Her blog, Sowing A Simple Harvest, chronicles a modern couple trying to live a simplistic, sustainable life. To explore Catherine's professional credentials, visit her website. She can also be followed on Google+.
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