Creating an excellent annual report is somewhat of a balancing act between two competing extremes: too much information and too little content. When evaluating your reporting efforts, you should keep in mind whether main stakeholders, and members of the public, can review your annual reports and come away with a clear understanding of your organisation’s mission, the challenges that you face, your board’s decision-making processes, and the reasons behind your actual financial performance? If not, the following tips will help you to increase everyone’s understanding with your annual reporting.

Get Everyone on the Same Page with a Concise Summary

The first several pages of your annual report should begin with a summary that lets others know about the purpose of your organisation and the vision of its founders and current board. It should talk about the current year’s objectives and strategy and include a list that highlights the NFP’s areas of exemplary performance. It’s also a good idea to include the obstacles and other risks the NFP faces and offer to look at where the organisation is headed in the future and what the board would like to achieve going forward.

This summary provides valuable context for the rest of the information that will be included in the report, helping readers to have a greater understanding of the NFP’s mission, objectives, strategy and results.

Increase the Accuracy and Transparency of the Financial Information Included in the Annual Report

Visual aids, such as charts, can make complicated information much easier to understand. But, remember, that any information included in a graph or other infographic must match the data released in your organisation’s financial statements. To ensure accuracy, transparency and full disclosure, always include audited financials, as well as the auditor’s report, in your Annual report to reduce the chance you might accidentally mislead or confuse donors and other stakeholders.

In addition to financial statements, don’t forget to include a copy of your organisation’s objectives, and budget, in the Annual report so that readers can make a more informed judgement on your NFP’s financial performance.

Make sure that your report clearly defines the role between any parent and chapter organisations and discloses any other relationships between related parties to make it easier to spot potential conflicts of interest, as well as make it easier to interpret financial data and additional information in the report.

Inform Others of the Risks and Potential Obstacles

Readers of your report should also be informed about key risks and other challenges, that threaten your organisation’s stability and sustainability. Disclose major donors and sources of funding, as well as discuss the potential consequences that could occur should one or more of these funding sources disappear. Talk about your organisation’s backup plans and risk management strategies so that others can have a reasonable expectation of what actions the board will take should specific risks occur and become a reality.

Bring Clarity to Your NFP’s Fundraising Results

To increase transparency, always include your organisation’s fundraising goals and actual results, in your report. Be sure to include the specific sources of revenue, the expenses and actual costs associated with your fundraising efforts. Using ratios makes it easier for readers to understand what percentage of revenues goes to cover specific costs and offers insight into how effective and efficient your organisation is at making an impact in the community.

Analyse and Discuss the Results of Your NFP’s Performance

As you bring your report to a close, include a section that talks about your organisation’s overall performance and contrasts it with your specific mission, budget constraints, and challenges. Discuss your nonprofit’s specific “wins and losses” for the year, and how each affected overall performance. This section of the report should evaluate the current year’s performance, placing it in context with prior years, and, offer insight into the NFP’s future performance.