5 Steps to Create a Nonprofit Annual Report

Need to create an annual report for your nonprofit, but not sure where to begin? In this blog post, we’ll cover the 5 steps to creating an award-winning report, including covering topics like:

• What is a nonprofit annual report?
• Why are nonprofit annual reports important?
• What makes a good annual report?
• How do you write a nonprofit annual report?

Let’s dive in!

What is a nonprofit annual report?

Unlike Form 990, which is required by the IRS, a nonprofit annual report is an optional yearly review of a nonprofit’s activities. 

A nonprofit annual report is a document that outlines the achievements of a nonprofit organization over the course of a year. It typically includes financial statements, such as income and expenditure reports, as well as summaries of events and activities organized by the nonprofit. The annual report also provides information about how funds were used and what impact the organization had on its community. 

Creating a nonprofit annual report can be a daunting task, particularly for organizations with limited graphic design resources. Fortunately, there are now tools available to help simplify the process, such as an annual report builder. This type of software is designed specifically to make it easier for nonprofits to create attractive and professional-looking reports that will showcase their work and accomplishments. 

Why are nonprofit annual reports important?

Nonprofit annual reports are important documents that provide an overview of a nonprofit organization’s operations, achievements, and activities over the course of a year. The report helps inform stakeholders including donors, volunteers, members, and other supporters about the organization’s progress and performance. It also provides transparency to the public by offering an accurate account of how funds were used and what impact they had on the organization.

What makes a good annual report?

In the last few years, expectations and trends within the industry have changed. Prior to the popularity of social media, many nonprofits opted for paper reporting—meaning, their annual reports were printed to send via snail mail or handed out at events. However, with new technology and tools, more and more nonprofits are beginning to create digital annual reports.

A great digital annual report accomplishes a few things:

It’s engaging

Unlike paper reports, a digital annual report has the ability to really excite and engage stakeholders. While many paper reports can often feel dry and text-book like, a great digital annual report is full of clickable content, videos, infographics, and more. 

It’s actionable 

Though paper digital reports can be informative, they aren’t as actionable as a digital annual report. A digital annual report, with clickable links and custom donate buttons, not only encourages readers to take action but gives them the opportunity to do so—right from the report.

It’s emotional

Nonprofit veterans know that creating an emotional connection between supporters and the organization is essential. Creating an emotional connection helps encourage donations, brings in new partners, and even helps recruit volunteers. Digital annual reports allow nonprofits to include videos of beneficiaries, interactive testimonials, and more, creating a strong emotional bond.

How do you write a nonprofit annual report?

While every nonprofit is different, most follow these steps when creating their annual report.

How to Create an Annual Report in 5 Steps

1. Identify stakeholders to enlist 

Creating a nonprofit annual report can be a daunting task. That’s why many nonprofits enlist the help of a few stakeholders in the process. 

Before beginning to decide on the annual report theme, what information should be included, etc. consider who might need to partake in the ideation process. Stakeholders that might be recruited include:

• Board members
• Volunteers
• Internal staff members

Each person might provide a different set of skills or insights into your annual report which will make the creation process a breeze.

2. Create an outline

Before diving into the nitty-gritty of the annual report, take time to consider what sections you’ll be including. Most nonprofits follow this annual report checklist:

1. Cover photo/design
2. Table of contents
3. Message or letter from leadership
4. Statement of mission and values
5. Accomplishments
6. Impact stories and testimonials
7. Accurate financial data
8. Volunteer and donor recognition
9. Staff and board lists
10. Future goals
11. Contact page

3. Gather the correct information

Once you’ve recruited the right partners to help partake in the project, it’s time to decide what information you’d like to include, and why. Though annual reports are a comprehensive look into the organization over the course of the year, it’s important to only include necessary information. This helps readers remain interested and engaged in your report.

When gathering information and data, consider the answers to questions like:

What information is important to share with stakeholders?

What information best represents our accomplishments?

What information best represents our mission and values

What information will create an emotional bond with stakeholders?

4. Decide who will prepare the annual report

Once you’ve decided on the outline, and gathered the correct data, it’s time to create the annual report. But who usually prepares the nonprofit annual report?

Though every nonprofit is different, the preparation of a nonprofit annual report is typically handled by either an on-staff professional graphic designer, a freelancer or contractor, or by an annual report builder.

To better understand each option, let’s take a look at the pros and cons of each.

Nonprofit annual report builder

While hiring a full-time graphic designer or a contractor might be good options for some nonprofits, one of the best options is to use an a nonprofit annual report builder for your next project

Pros of using a nonprofit annual report builder

• Collaborative: allows multiple people in the organization to contribute to he annual report in real-time
• Cost-effective: while pricing varies depending on the software, annual report builders like  offer a free 14 day trial 
• Annual report templates: for nonprofits that need an extra hand, great annual report builders have built-in templates 
• Drag and drop editors: long gone are the days of actually having to learn graphic design. With an annual report builder, anyone in your nonprofit can create an award-winning digital annual report with just a few clicks.
• Scalable: unlike hiring a full-time graphic designer or a freelancer/contractor, investing in software is a long-term solution. From creating board reports to impact reports, a digital report builder can be used as a solution for every nonprofit’s digital reporting needs. 
• Industry vetted: unlike great designers and freelancers who have graphic design knowledge, not all of them have industry knowledge too. By investing in an annual report builder that’s specifically designed with nonprofits in mind, organizations can rest assured that they’re creating the best product possible.
• Real-time customer service: if nonprofits have equations or need advice about their annual report, exerts are standing by to advise.

Some of the best annual reports have been created with a digital software—let’s take a look at some amazing examples!

 Top 5 Digital Annual Report Examples [Created with Yearly, an Annual Report Builder]

1.  Episcopal Day

This annual report—built with templates and drag-and-drop editing—is interactive, transparent, and engaging. With custom brand colors saved to their account, Episcopal Day can create annual reports, impact reports, and more.

2. Central Lake Ontario Conservation Authority

Without hiring a contractor or a full-time graphic designer, this nonprofit create a donor-centric report all on their own. By embedding this report right on their website, stakehodlers can freely read and engage with this nonprofit right form their phones.

3. Change the Air Foundation

One of the most important, and often most difficult parts of an annual report is creating infographics. But, by using pre-made annual report templates, and utilizing the built-in stock image library, this nonprofit was able to communicate big data with ease.

3. Catholic Community Foundation 

This annual report is jam-packed with clickable links. Meaning, readers can take immediate action—and contribute—all wihtout leaving the report itself!

5. Keshet

This nonprofit’s annual report is bright, bold, and engaging. Their annual report design choices make this a fun and exciting read, turning readers into donors.

On-staff graphic designer

If you already have a graphic designer on staff, then the simplest option is to assign the task of creating the annual digital report to them. 

But, for nonprofits that don’t have a graphic designer on staff, here are some pros and cons to consider before hiring one:

Pros of hiring graphic designer

• They’re professional
• They offer an expert view on design quality
• They can be utilized for other design projects once the annual report is finished (impact reports, board reports, etc.)

Cons of hiring graphic designer

• They can get extremely expensive (the average salary in 2023 for a graphic designer is $105k)
• There might not be enough work to justify their employment 

Freelancer or contractor

Many organizations with limited budgets opt for hiring a freelancer or contractor to create their nonprofit annual report. While this might be the right option for some nonprofits, it’s not a one size fits all.

Pros of hiring a contractor

• Offers an objective third-party view of your org
• Might have fresh and creative ideas
• A budget-friendly option 

Cons of hiring a contractor

• Not familiar with org
• Can be unreliable 
• Takes time, effort, and energy to find and vet the right fit 
• Takes time, effort, and energy to “onboard” contractor for the project

5. Publish and share the annual report

There are lots of ways to share your annual report once it’s finished. Some of the best ways include:

On social media (LinkedIn, Twitter, or Instagram)

On your website

Wrapping it Up: How to write a nonprofit annual report

A nonprofit annual report is an important document that provides information about the performance of a nonprofit organization over the course of a year. It typically includes financial statements, statistics on programs, and details about accomplishments achieved during the reporting period. It is also used to communicate with stakeholders and donors, who rely on it to assess how their investments are being used.

Creating a nonprofit annual report can be complex, but with a digital annual report builder like Yearly, it doesn’t have to be.

Ready to get started on your digital annual report? Start with Yearly’s 14-day free trial!

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Josh Kligman is the CEO of Yearly, a platform for nonprofits to create their own digital reports. Josh has been working with nonprofits on annual reports, brand and partnerships since 2011. He is helping nonprofits create more engaging, digital annual and impact reports with Yearly. Throughout his career, Josh has helped launch and run nonprofit brand campaigns and media partnerships nationally and locally, using television, radio and web, to amplify the reach of campaigns and provide demonstrated value for non-profit stakeholders. Josh received his B.A. from American University in Communications and his M.B.A. from American University in Marketing Management and Entrepreneurship.