The title of the text next to an image of an outstretched hand under circles that represent donor profiles.

Year-end is one of the busiest periods for your nonprofit’s fundraising team. Not only is it a time that inspires generosity from your donors, but it’s also when you’ll compile statistics and fundraising data from the year to summarize your successes and identify opportunities for the future in an annual report.

Your annual report keeps your supporters aware of your nonprofit’s general state, but it can also help your organization retain these supporters for the long haul.

In this guide, we’ll discuss three best practices for compiling your annual report to improve your relationships with your donors and increase your donor retention rate:

  1. Communicate organizational impact.
  2. Prioritize transparency with supporters.
  3. Create a digital format to reach broader audiences.

Your annual report can do more than tell your supporters how your nonprofit’s programs and campaigns progressed throughout the year. Follow these strategies to get the most out of this useful tool.

1. Communicate organizational impact.

When donors give to your organization, they want to help you achieve your mission. Show them the direct impact their donations have on your mission to highlight how they’re making a meaningful difference.

For instance, let’s say a supporter contributes to your initiative that funds performing arts programs in underserved schools. When you tell this supporter how their donation helped a middle school in the Philadelphia area start a band, they’ll feel good about their contribution.

Because you demonstrated exactly how your nonprofit used this individual’s donation to carry out your mission, that same donor may also become interested in supporting your organization’s other initiatives such as one that improves physical education in schools. Just by communicating the impact of their donations, you’ve secured additional funding and retained a donor.

When communicating impact in your annual report, you should:

  • Cite statistics. Including clear statistics in your report allows you to demonstrate your impact on the greater community in a tangible way. For example, if 40% of the students in a particular district now have access to school music classes thanks to your donors, share that number with your supporters.
  • Use storytelling strategies. Pull at your supporters’ heartstrings and help them form an emotional connection to your cause with storytelling. People are much more likely to remember a story than a statistic; so, while you’ll want to share facts and figures with your supporters, tie them to specific stories when possible. For example, you could follow up the previous statistic with a story about how donors’ contributions provided a student with a tuba they now play in the school’s band.
  • Highlight major contributors. Use your nonprofit CRM to identify supporters who have gone above and beyond for your cause and showcase their contributions. These supporters may include major donors, devoted volunteers, or longstanding board members.

Remember to thank all of your supporters when communicating impact. For a personal touch, you can include thank-you messages directly from leaders within your organization, such as your executive director or chief fundraising officer.

2. Prioritize transparency with supporters.

Supporters who donate to your nonprofit trust that you’ll use the funds they contribute to reinvest in your mission and do important work in the community. Your annual report provides an opportunity to prove that you’re using donors’ hard-earned dollars for good.

To promote transparency with your supporters in your annual report, follow these tips:

  • Acknowledge your organization’s wins and challenges. When you reflect on the past year, you may think about large successes, such as breaking your annual gala’s fundraising record or launching a new program for your beneficiaries. However, you may also remember setbacks, such as having to cut a longstanding program or downsizing to a smaller facility to save funds. Highlighting both wins and challenges promotes honesty and gives stakeholders a realistic view of your nonprofit’s year as a whole.
  • Clearly present financial information. One of the best ways to promote transparency with your donors is to show them the financial data that proves your careful stewardship of funds. Include information from financial statements such as your statement of financial position, statement of activities, and statement of cash flows to show how you’ve allocated your resources and where those funds came from.
  • Include your future plans and goals. While the main goal of your report is to show stakeholders what’s occurred in the past year, it’s also important to be open about your organization’s future plans. That way, you can keep them updated and excited about what’s to come. For instance, you may share about an upcoming capital campaign you’re hosting to fund a new building and inspire donors to lend their support when the time comes.

When you’re transparent about all areas of your nonprofit’s operations in your report, you can increase donors’ trust in your organization and encourage them to lend their support again in the future.

3. Create a digital report to reach broader audiences.

Some supporters may want to read your report in a format different from the printed version you’d send via direct mail. Younger donors—including Millennials and Gen Z—are especially drawn to digital engagement opportunities. So, give them an additional way to view your report by creating a digital option.

Present the information in a way that’s easy for supporters to understand, and consider incorporating the following elements to hold readers’ interest:

  • Infographics that spotlight important statistics
  • Video testimonials from your nonprofit’s leadership, volunteers, or beneficiaries
  • Photos from your organization’s events, volunteer opportunities, and other gatherings

Keep track of which annual report format each supporter prefers in your donor management software. Bloomerang recommends looking for a solution that allows you to segment your donors into relevant groups. That way, you can create segments depending on which annual report format supporters prefer, making it easier for your team to cater to their preferences.

In addition to sending the annual report in different formats, we also recommend creating a downloadable version of the report and putting it on your website for anyone to access. 

By offering a few different annual report options, your organization can engage all of your donor segments, helping you reach and retain more supporters.

Your annual report is an important tool that you can use to communicate your nonprofit’s impact. Use the tips above to create a report that helps build strong relationships and retain your donors. Supporters will appreciate your ongoing efforts to promote transparency and appeal to their interests.

Jay Love

Jay Love

Co-Founder and current Chief Relationship Officer at Bloomerang He has served this sector for 33 years and is considered the most well-known senior statesman whose advice is sought constantly. Prior to Bloomerang, he was the CEO and Co-Founder of eTapestry for 11 years, which at the time was the leading SaaS technology company serving the charity sector. Jay and his team grew the company to more than 10,000 nonprofit clients, charting a decade of record growth.