An annual report is one of the most important communication tools a nonprofit has. While many people think of it as just a dry financial disclosure document, in reality, an annual report is a vibrant opportunity to tell your organization’s story. It’s a chance to demonstrate transparency, build trust with donors, inspire confidence among board members, and celebrate the lives changed through your mission.
At its core, an annual report answers four key questions:
- How did we use the resources entrusted to us?
- What did we achieve together this year?
- How are we accountable to our community and supporters?
- Where are we headed next?
For nonprofits using DonorPerfect fundraising CRM,
the annual report also becomes a strategic tool. By pulling accurate data on giving history, donor retention, campaign outcomes, and program-related results, nonprofits can present a polished and compelling report to their stakeholders.
The sections below explore the major components of nonprofit annual reports, along with best practices and examples
Financial Report
A financial report is the backbone of accountability in an annual report. It demonstrates how the nonprofit managed its funds over the past year. While board members and regulators may comb through this section, it should also be accessible and understandable for donors, volunteers, and the community.
What’s included
- Statement of activities (Income statement) – Shows total revenue and expenses, often broken into program services, management/general, and fundraising
- Statement of financial position (Balance sheet) – Offers a snapshot of assets, liabilities, and net assets
- Statement of cash flows – Explains how cash moved in and out
- Notes to financial statements – Context on accounting methods, restricted funds, or special situations
Significance
A clear financial report shows donors that the organization is a responsible steward of their gifts. Research shows that transparency is one of the top factors influencing donor trust and loyalty (National Council of Nonprofits).
Making numbers donor-friendly
Too often, nonprofits bury donors in spreadsheets and technical jargon. A best practice is to:
- Use visuals such as pie charts showing program vs. overhead expenses.
- Add a short narrative in plain language: “Of every $1 raised, $0.84 went directly to program services.”
- Include comparisons: “Revenue grew by 12% compared to last year.”
Example
DonorPerfect can automatically generate charts of revenue by source, campaign performance, and year-over-year trends. Including these visuals in your financial report makes the data accessible without hours of manual design.
Fundraising Report
A fundraising report complements the financial section by showing how the funds were raised. It highlights campaigns, donor behavior, and the organization’s ability to sustain generosity.
What’s included
- Campaign performance – Outcomes of major initiatives like GivingTuesday, year-end appeals, or special events
- Donor segments – New donors, retained donors, lapsed donors, major donors, monthly donors
- Average gift size and frequency – Donor behavior insights
- Cost to raise a dollar (CRD) – A benchmark for fundraising efficiency
Significance
Donors want to feel confident that the nonprofit is effective at engaging supporters. Grantmakers and foundations also look at fundraising capacity as a measure of sustainability.
Storytelling in fundraising reports
Numbers are important, but narratives bring them to life:
- Highlight a donor’s personal story: “Jane, a first-time donor, was inspired by our GivingTuesday campaign and now volunteers weekly.”
- Showcase campaign milestones: “Our year-end appeal exceeded its goal by 22%, thanks to 1,450 generous gifts.”
Best practices
- Show ROI: “For every $1 spent on fundraising, we raised $5.40.”
- Connect outcomes directly to impact: “Donations from the spring gala funded 120 new art therapy sessions for veterans.”
- Use retention data from the Fundraising Effectiveness Project (AFP) to benchmark progress.
Example
With DonorPerfect’s reporting, you can quickly pull campaign summaries and donor retention rates. Including a “donor journey” visualization from this data can make this section highly engaging.
Annual Giving Report
The annual giving report zeroes in on the backbone of nonprofit fundraising: donors who give consistently year after year. While major donors and capital campaigns make headlines, it’s the loyal base of recurring givers who sustain most nonprofits.
What’s included
- Annual donor count – Growth or decline year-over-year
- Recurring giving programs – Highlight monthly giving clubs or sustaining donors
- Loyalty recognition – Celebrate donors who have given for 5, 10, or 20 years
- Participation rates – Especially relevant for schools or alumni organizations
Significance
Annual donors provide predictable income that allows nonprofits to plan programs with confidence. They are also the most likely to upgrade to major giving or leave planned gifts.
Storytelling in annual giving reports
- Share the story of a long-time donor: “Tom has given $50 every December since 1997. This year, his gift helped provide winter coats for 40 children.”
- Show the power of collective impact: “Together, 1,200 recurring donors gave $360,000 — enough to fund an entire after-school program.”
Best practices
- Highlight donor retention rates honestly, but focus on progress: “We retained 58% of donors this year, above the national average.”
- Recognize loyalty, not just large gifts.
- Demonstrate how even modest recurring gifts build sustainability.
Example
DonorPerfect makes it simple to track recurring donations and create recognition lists. Consider adding a sidebar in your report celebrating “Sustainers of the Year” or “Decade Donors,” using DonorPerfect exports.
Impact Report
The impact report is often the most inspiring section of the annual report. It answers the question: “What difference did our work make this year?”
What’s included
- Outputs vs. outcomes
- Outputs = activities completed (meals served, clients trained)
- Outcomes = real-world results (reduced hunger, increased employment)
- Beneficiary stories – Real stories from people served by your mission
- Community impact – Broader effects, such as economic improvement or policy changes
Significance
Donors don’t just want to know that you raised money — they want to know that their gift made a difference. The impact report connects dollars to lives changed.
Storytelling + Data
- Pair statistics with stories: “92% of graduates secured jobs within 6 months. Meet Maria, who…”
- Use clear visuals: infographics, maps, before-and-after photos
- Be honest about challenges: supporters respect transparency
Best practices
- Balance head and heart: data builds credibility, stories build emotion
- Include progress toward strategic goals, not just one-year wins
- Consider third-party evaluation resources, such as the University of Wisconsin Program Development & Evaluation
Example
Use DonorPerfect’s custom reporting to tie donor segments directly to impact: “Monthly donors provided 40% of funding for our food pantry expansion.” This makes supporters feel like true partners in the mission.
Triple Bottom Line
The Triple Bottom Line (TBL) framework expands annual reporting to include not just financial outcomes but also social and environmental performance. It’s an approach that resonates strongly with today’s values-driven donors.
What’s included
- People (Social impact) – How the nonprofit improved lives and supported communities
- Planet (Environmental impact) – Sustainability practices such as recycling, energy reduction, or eco-friendly programs
- Profit (Financial sustainability) – For nonprofits, this translates to long-term viability and responsible resource management
Significance
Many donors, especially younger generations, want to see organizations take responsibility for their total footprint — not just mission outcomes but also how they operate. Incorporating TBL elements can set your nonprofit apart as a leader.
Best practices
- Tie TBL to your mission. For example, an education nonprofit might report on reducing paper use by shifting to digital.
- Share both accomplishments and goals: “We reduced energy use by 15% this year and plan to invest in solar panels in 2025.”
- Be authentic; don’t “greenwash.” Transparency is key.
Example
Track volunteer engagement (people) in DonorPerfect, connect operational costs (profit) through your accounting system, and record green initiatives (planet). Combining these into a visual summary can make the TBL report concrete.
Additional relevant terms
- Form 990 – A required IRS filing for U.S. nonprofits that provides detailed financial and governance information (IRS)
- Audited financial statements – Independent verification of financials, often required by funders
- Donor stewardship – The process of thanking, recognizing, and engaging donors, to which annual reports contribute
- Transparency and accountability – Core values demonstrated through annual reports
- Program service accomplishments – Often highlighted both in annual reports and in IRS filings
Overview
An annual report for nonprofits is more than compliance — it’s a storytelling opportunity. By combining financial transparency, fundraising performance, donor loyalty, impact narratives, and even Triple Bottom Line (TBL) reporting, nonprofits can craft a document that inspires confidence, builds trust, and deepens donor engagement.
For organizations using DonorPerfect, the process is streamlined: fundraising outcomes, donor trends, and revenue data can be pulled directly into visual, easy-to-read formats. This ensures that the annual report is both accurate and compelling.
When supporters finish reading your annual report, they should walk away thinking:
- “I understand how this nonprofit uses resources wisely.”
- “I see the real difference my gift makes.”
- “I want to continue being part of this mission.”
That’s the true power of a well-crafted annual report.