Tyler Fugazzie

What is an Annual Report and Why Do Companies Make Them

An annual report is a comprehensive document prepared by an organization at the end of its fiscal year to provide stakeholders with detailed information about its financial performance, operations, and strategies. It is typically aimed at shareholders, investors, employees, and other interested parties.

Public companies are required to produce annual reports by the SEC and private organizations can voluntarily publish them. The nonprofit I worked for was based in New York City which means an annual report was a legal requirement but for nonprofits it’s a best practice to publish annual reports in order to demonstrate transparency and accountability as well as to build trust with current and future stakeholders.

When people grant or donate money they want to know where their money is going and how it’s being used. Everyone wants to maximize their ROI (return on investment) which for nonprofits means “how does every dollar spent meet the nonprofit’s mission?” 

Demonstrating successful mission operations and impact can happen throughout the year through news, social media, blogging, emails, meetings, and targeted grant reports but an annual report is a great way to give people an overview of where a nonprofit is at as a milestone in the lifespan of an organization.

Key Components of a Typical Nonprofit Annual Report

• Mission and Vision: A statement of the organization’s purpose.
• Letter from Leadership: A message from the executive director or board chair reflecting on the year.
• Program Highlights: Information on initiatives, activities, and outcomes achieved.
• Financial Summary: A simplified breakdown of income and expenses (often derived from Form 990).
• Donor Acknowledgments: A list of major contributors or sponsors.
• Impact Stories: Testimonials or case studies showing the organization’s effect on individuals or communities.

Let’s Look at Three Years of an Educational Nonprofit’s Annual Report Components

2020-2021

• Welcome Message from the President
• Timeline
• 20-21 Snapshot (key data and facts)
• Making a Difference in a Difficult Year
• Featured Students
• Partners & Supporters
• Financials
• Board & Staff

2019-2020

• Welcome Message from the President
• 19-20 Snapshot
• Transforming the VE Experience
• Opportunity Fund
• Partners & Supporters
• Financials
• Board & Staff

2018-2019

• Welcome Message from the President
• 18-19 Snapshot
• VE & HSBC: Building the Future Workforce
• VE Top 50
• News & Events
• Partners & Supporters
• Board & Staff

Some elements remain the same each year to meet expectations of a typical annual report but each organization can get creative with which operations, developments, and stories are featured. One good way for determining the content to use in a report is to find a theme for the year; what was new, what was relevant, what stood out the most, what were you most likely to share with as many people as possible.

Common Steps in Developing an Annual Report

1. Meet with leadership
2. Make an outline
3. Determine information sources
4. Meet with contributors
5. Set milestone dates
6. Build the report
7. Publish the report
8. Promote the report

I have a soft spot for annual reports and I really enjoyed making them since they are publications that have relevance for a whole year and can be used to promote your organization for that timeframe in a detailed way. I grow frustrated going to a nonprofit’s website and not seeing an annual report; it makes me feel like there is a big missing gap in what I can learn about the organization and how well they’re accomplishing their mission. In an era where people fiercely compete for short form content to be consumed, having something that goes broader and deeper offers a significant advantage for the communication goals of an organization.

I can help you make an annual report 🙂

Email me if you want more advice or if you want to hire me for a flexible fee to help you develop any piece of your annual report to wow your stakeholders and delight everyone involved with your company mission.