The purpose of an annual report is to show your current donors and future donor prospects how you use the money which they have invested or will invest in your agency. Never ask for money in an annual report. Do thank your donors and show them that you have used their donations wisely and effectively in a simple, concise, and convincing manner. The following tips will help you write an effective annual report:

1. Use a Template. Request annual reports from other agencies to select one as a template for your report or combine the best of all of them in your report.

2. Prominently display the Mission Statement. Tell the reader what type of nonprofit agency it is (i.e., nonprofit human service agency); who you serve (families in crisis), how you serve them (transitional housing and comprehenensive support programs); and your geographic service area (metropolitan Chicago area).

3. Review the past year's achievements. Tell the reader about each of your agency's programs. Highlight new programs. Place vital statistics about all your programs in a box: # people served; # of volunteers; # of meals served, etc.

4. Briefly report on finances. Use pie charts to show income and expenses. If your agency had a budget deficit, show it as a transfer of funds from the fund balance. If your agency has significant excess income, show it as an operating reserve. Finally, tell the reader that a copy of the agency audit or financial statements is available by calling your office.

5. List major foundation, corporation, and individual donors. Ask permission to list all donors first. This list will show broad support for your agency.

6. List all staff and board members. Be sure to list the board officers. This information is usually required by federated campaigns and the United Way.