Guide to your nonprofit’s annual report: Examples and best practices

Whether you’re part of a nonprofit team creating an annual report or reviewing one to decide where to give your support, it’s important that you understand how these reports work.

As you might expect, annual reports are crucial in encouraging supporters to stay invested in a nonprofit’s mission and impact.

But what exactly should it cover, and how can you create one that truly stands out and captures your audience’s attention?

This guide will explore what nonprofit annual reports are, why they’re important, and how to create ones that truly make an impact.

Here’s what we’ll cover

What is a nonprofit annual report?

Nonprofit annual reports are comprehensive documents highlighting your organization’s activities, financial performance, and achievements over the past year.

Think of it as a snapshot of how your nonprofit fulfills its mission.

It is designed to inform donors, stakeholders, and the public.

These reports typically include financial statements, major accomplishments, and details about resource allocation.

By promoting transparency and accountability, annual reports help build trust with your current supporters and attract new donors.

A well-crafted report not only showcases your nonprofit’s impact but also invites stakeholders to stay engaged and inspired by your mission.

The annual report might sometimes overlap with the impact report; however, these are different.

While the annual report provides a “big picture” overview of your organization’s progress throughout the year, a nonprofit impact report focuses specifically on measurable positive outcomes and social change achieved through programs and initiatives.

It is often geared toward a more targeted audience, such as funders, donors, or stakeholders concerned with social impact.

An impact report can offer stakeholders a closer look at the short-term results of their support.

Benefits of annual reports for nonprofits

Taking the time to create a high-quality annual report is more than a box to check—it’s a powerful tool for your nonprofit.

Here are some of the key benefits your organization can get out of a good annual report:

Strengthening donor trust

By demonstrating the tangible impact of donor contributions, you reassure supporters that their generosity is making a real difference.

For example, if a donor funded a literacy program, your report could include stats like, “Thanks to your support, we provided books to 500 children and conducted 300 hours of tutoring sessions this year.”

These insights build confidence and strengthen long-term donor relationships.

Showcasing impact and achievements

An annual report is the perfect opportunity to spotlight your nonprofit’s milestones and success stories.

Did you reach a fundraising goal, launch a new program, or expand your outreach?

Share these wins with photos, testimonials, or before-and-after comparisons.

For instance, you might highlight a story of a community member whose life improved thanks to one of your programs.

Boosting future fundraising efforts

A compelling annual report doesn’t just celebrate past achievements—it also sets the stage for what’s next.

Clearly outlining your financial transparency, future goals, and ongoing needs can motivate donors to contribute again or even increase their gifts.

For example, “With your help, we aim to build three new shelters next year to support families in need.” It’s also a great way to attract new donors who see the meaningful work your organization is doing.

10 best practices for creating effective annual reports for nonprofits

When creating your nonprofit’s annual report, aim to captivate and engage your audience while showcasing your organization’s impact.

To help you and your team create a report that truly resonates, we’ve compiled the following ten best practice tips:

1. Outline a clear reporting strategy

Start by defining the purpose of your annual report and identifying the key metrics and stories to include.

This step will help keep your report focused and aligned with your nonprofit’s mission.

For example, if your goal is to highlight how donations funded community programs, make sure to include specific data and success stories that emphasize this impact.

Take the time to truly understand your audience.

Are you speaking to long-time donors, potential supporters, or community stakeholders?

Tailoring your messaging to their interests and concerns can make all the difference.

By thoughtfully outlining your report’s purpose, you’ll create a resource that strengthens donor engagement, enhances your marketing efforts, and helps achieve your broader goals.

2. Add a table of contents to enhance flow and readability

A table of contents is a simple yet effective way to make your annual report more reader friendly.

It provides a clear roadmap, helping readers know exactly what to expect and making it easy to find the sections that interest them most.

By listing the main topics alongside their corresponding page numbers, you improve the overall flow of the report.

Whether someone wants to dive straight into financial details, read inspiring success stories, or learn about your future goals, they can quickly access the information they’re looking for.

3. Include your supporters and donors

Avoid focusing solely on your nonprofit’s achievements; take the opportunity to highlight how projects were made possible thanks to your supporters and donors.

Recognize every form of support, including monetary gifts, in-kind donations, volunteer time, and active participation.

Expressing gratitude helps donors see the impact of their support, fosters loyalty, and inspires them to stay involved.

Recognizing their contributions shows genuine appreciation and strengthens their connection to your mission.

4. Acknowledge significant contributions

Include a dedicated section in your report to showcase significant donations and the invaluable support of outstanding partners and volunteers.

High-impact contributions deserve special recognition beyond a traditional thank-you note.

When donors see the real difference their contributions make, they feel valued and even more connected to your nonprofit’s mission.

5. Clarify how you manage donations to maximize impact

Be clear and specific about how your nonprofit allocates donations to demonstrate the tangible difference they make.

Include concrete examples of how donations were directed toward projects or initiatives.

Share real-life stories, highlight successful campaigns or events, and use case studies with visuals to make donors feel involved.

Incorporating graphics will further enhance the connection, helping them see the impact of their support and feel part of these achievements.

6. Use engaging visuals to illustrate the impact

Facing a wall of text can be overwhelming and often leads to readers losing interest.

That’s why incorporating visuals into an annual report is essential—it makes your content more accessible, engaging, and enjoyable to explore.

Infographics, charts, and photos are great tools for bringing your nonprofit’s story to life. Here’s how visuals can enhance a report:

• Simplify complex data, making it easy to understand at a glance.
• Break up long sections of text, creating a more inviting and reader-friendly layout.
• Highlight your mission with impactful and memorable imagery that resonates with the audience.

7. Showcase success through personal stories

Bring your nonprofit’s impact to life by sharing personal stories from beneficiaries and testimonials from those you’ve helped.

Highlight the experiences from donations by dedicated donors, loyal volunteers, or long-serving board members.

These narratives create an emotional connection with your audience and emphasize the human side of your mission, making your work more relatable and memorable.

For example, if your nonprofit focuses on education, you could share a story about a student whose life was transformed by your scholarship program:

“Meet Sarah, who, thanks to your donations, graduated as the first in her family to earn a college degree.”

Stories like these create an emotional connection with your audience, highlighting the personal side of your mission.

8. Be transparent with financial operations

Provide a detailed breakdown of income and expenditures and explain any significant financial changes.

This level of transparency gives an honest view of your organization’s progress.

Being open about challenges and setbacks won’t drive your donors away; it will help them stay informed and reassure them that you are committed to accountability.

Acknowledge any missteps and share your strategy for addressing them moving forward.

This approach shows donors that your team is proactive and focused on finding solutions.

To give a comprehensive picture of your financial situation, include the following:

• The root causes of any challenges faced.
• Your plan to resolve issues and improve what isn’t working.
• Your openness to feedback from supporters and your commitment to incorporating it into your operations.

Being transparent about successes and difficulties builds trust and demonstrates your dedication to continuous improvement.

9. Simplify financial information

Present your financial information in a way that’s easy for anyone to understand, using simple, straightforward language to give a clear view of your nonprofit’s year-end financial performance.

For example, instead of listing a dense table of numbers, you could include a pie chart showing how donations were allocated:

“50% supported education programs, 30% funded community outreach, and 20% went to operational costs.” Pair visuals like this with brief explanations to help readers grasp the big picture easily.

10. Drive your audience to get involved

Your annual report shouldn’t just inform—it should inspire action.

Think of it as an opportunity to invite your readers to take the next step in supporting your nonprofit’s mission.

Wrap up your report with a clear and compelling call to action, encouraging them to donate, volunteer, or share your work with their network.

Here are a few ideas to make it easy for your audience to get involved:

• Invite them to upcoming events: include a link or details about your next community fundraiser or open house.
• Encourage volunteer sign-ups: share volunteers’ impact and how they can join.
• Simplify donations: for digital reports, add a clickable link or QR code that takes readers directly to your online donation page.

Don’t forget to share your website, contact details, and social media accounts so your audience can stay connected and up-to-date on your latest initiatives.

By making it simple and inviting, you’re more likely to turn readers into lifelong supporters of your cause

Elements to avoid in your nonprofit annual report

Now that you know what to include, it’s just as important to consider what to avoid.

Steering clear of common mistakes will help make sure your annual report is as effective and engaging as possible:

Too much corporate jargon or overly formal language

Keep the language accessible and relatable.

Avoid excessive use of technical or corporate terms and acronyms that may alienate your audience.

Overwhelming amounts of data without context

Data is crucial but can be overwhelming.

Ensure all data is explained, easy to understand, and related to the nonprofit’s mission and impact.

Excessive focus on internal activities rather than impact

While it’s important to acknowledge the work behind the scenes, the focus should remain on your organization’s impact and the difference it has made.

Types of formats for your charity annual report

Knowing your audience helps you choose the format they’re most likely to appreciate.

The right format should align with your audience’s preferences while also staying within your budget. Here are the two main options

Hard copy annual reports

Printed reports are a classic choice.

They’re tangible, professional, and perfect for donors or stakeholders who enjoy having something physical to read.

Hard copies are also great for presenting at events or sending directly to your most loyal supporters.

Digital annual reports

Digital reports are all about flexibility and accessibility.

They can be emailed, shared on social media, or posted on your website to reach a wider audience. Plus, they let you get creative

Add videos, hyperlinks, or interactive graphics to make your report more dynamic and engaging.

Nonprofit annual report template

A well-structured NPO annual report template allows you to communicate your organization’s achievements, financials, and overall impact.

To help you create a comprehensive and professional report, here’s a sample nonprofit annual report outlining key sections to include:

• Cover page: title, logo, and branding elements.
• Table of contents: a clear roadmap for navigating the report.
• Mission statement: a brief overview of your nonprofit’s purpose and goals.
• Executive summary: a concise summary of the past year’s highlights and accomplishments.
• Major achievements: a detailed section highlighting significant milestones and successes from the past year.
• Financial information: this section includes an income statement, expense breakdown, and balance sheet to provide a transparent overview of your financials.
• Donor recognition: recognize fundamental donors and supporters who made a significant impact.
• Looking forward: outline future goals and initiatives for the upcoming year.
• Call to action: encourage readers to get involved, whether through donations, volunteering, or sharing the report.

Nonprofit annual report examples

Still wondering what a nonprofit annual report actually looks like?

Before deciding on the narrative for your report, it’s a good idea to explore different nonprofit report examples.

This will inspire you to structure your own and what key elements to include.

Here are some general examples that highlight different approaches to presenting your organization’s story, achievements, and financial transparency.

Each style has its strengths, depending on your nonprofit’s goals, target audience, and resources:

The story-driven report

If you feel your audience would respond well to a storytelling approach, this might be the perfect option for your nonprofit.

A story-driven report focuses on creating an emotional connection with the reader through compelling narratives.

It highlights personal stories, testimonials, and quotes from beneficiaries, volunteers, and staff to bring your mission to life.

These reports often include a simplified financial section with easy-to-read charts showing how funds are being used.

This makes it simple for readers to understand your financials while staying focused on your work’s impact.

The visual and interactive report

If your audience is younger and immersed in the digital world, they’re likely drawn to interactive and engaging formats.

A visual and interactive report lets you embrace a digital format and include multimedia elements like videos and interactive infographics.

This approach makes your report more dynamic and keeps your audience engaged.

Many small nonprofits using this style opt for a simplified financial section with clear, visually appealing charts that illustrate how resources are allocated.

It’s a modern, exciting way to share your impact while catering to tech-savvy readers.

The impact-focused report

On the other hand, if your goal is to attract larger supporters, an impact-focused report might be the way to go.

This style centers around data-driven storytelling, highlighting key metrics and measurable outcomes to show the tangible results of your nonprofit’s efforts.

This type of report often includes various data visualizations, like bar charts and pie charts, to present statistics about the number of people served, projects completed, and funds raised.

Boost your nonprofit annual report with accounting software

Creating an engaging annual report doesn’t have to be overwhelming.

Technology can lighten the load and help you create a stand-out report.

Using intuitive accounting software, for example, can be a fast and efficient way for your team to gather and organize financial data for your annual report.

Our nonprofit accounting and management software is here to simplify the process and take your reporting to the next level.

With built-in templates, you can easily organize data, outline a clear strategy, and craft a cohesive narrative.

The software also makes tracking and highlighting major contributions simple, making sure donors feel appreciated and valued.

Plus, you can showcase your financials effortlessly with automated income statements, expense breakdowns, and balance sheets—all designed to build transparency and trust with your audience.

These digital resources make it simple to create clear, accurate financial statements and visually appealing reports that align with the latest nonprofit technology trends.

Ready to make your next report truly shine?

Explore how Sage software can empower your team to create compelling annual reports communicating your nonprofit’s achievements and impact.