5 Metrics to Include in Financial Reporting – Yearly
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New to the industry space and tackling financial reporting for nonprofits? If so, you might feel lost in the sea of advice.
While annual reports can take many forms (postcards, brochures, pdfs, etc.) most all have a few financial metrics in common.
Why is financial reporting for nonprofits important?
Financial reporting for nonprofits is crucial. Most 501(c)(3) nonprofit organizations are required to submit financial statements. But, the annual report serves to contextualize and connect with supporters about this data in a more reader-friendly way.
The annual report is a perfect opportunity to tell your nonprofit’s story, show gratitude, and much more. That’s why financial data is crucial. Mainly because that financial data shows a commitment to transparency. And transparency is key to building trust with donors.
Now that we know showcasing final data in an annual report is important, let’s dig into the details. In this blog, we’ll unpack exactly what information to share.
5 metrics to include in your financial reporting
For most nonprofits, financial data usually falls within two categories: expenses and revenue. These two categories show supporters exactly how much money you made/received, and how much you spent. That way, donors can see exactly where their money is going.
Revenue
Some nonprofits rely on huge endowments and federal grants as their source of income. Others rely on peer-to-peer fundraising, online campaigns, matching gifts, and more. All these fundraising tools generate revenue or “income” for nonprofits.
When writing your annual report, consider including metrics like:
- Income from peer-to-peer fundraising vs. organization-led fundraisers
- Amount of money from major donors vs. small giving
- How much money you receive in grants (if any)
- How much money was received through membership fees (if any)
Expenses
Every nonprofit’s expenses are different. Expenses are dependent on operating costs, mission, and more. But, there are some key metrics that are usually worth including, if they’re relevant to your mission.
When writing your annual report, consider including these metrics:
- Program costs, or the number of resources needed to fund and operate specific initiatives and programs
- Administrative and staff costs, or the cost of employees and other business-operating expenses
- The amount of money spent on grants or scholarships
Though every organization is different, it’s important to consider including more granular detail in your financial reporting. This allows supporters to trust your work and mission, and continue to donate.
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