Are Annual Reports Necessary for Nonprofits?
January 12, 2022
The short answer is yes, an annual report is necessary for nonprofit organizations. Most nonprofits are required to submit an annual filing to the IRS. It’s known as Form 990 and it serves as an accounting of income, expenses, assets, payroll and other financial measurements. It also includes fields for an organization’s mission and program descriptions, so this informational tax form is also a marketing opportunity!
Many donors will review an organization’s most recent 990 before they make a financial gift. The form must be submitted with many grant applications and corporate gift solicitations. Prospective board members may even examine past forms before accepting a seat.
Make sure your Form 990 includes a robust description of your organization’s mission and highlight key program outcomes achieved over the last fiscal term.
While the Form 990 satisfies the IRS’s requirements for an “annual report,” you may still want to create a formal year-end review in the form of a document, presentation or video to share with your audience through your website, social media and direct mail.
A well-crafted annual report can be an invaluable marketing, fundraising and recruitment tool. Use it to recap the year with a wider lens, provide context to financial figures and build trust with your current and prospective constituents. You can also use the report to:
- Highlight macro and micro outcomes
- Thank major donors and sponsors
- Outline future plans or upcoming changes
- Make a case for donations
The MadAveCollective can help you determine what to include, which format the report should take, and how best to distribute it. We’ll even write it and design it! Give us a call today at 419.725.6500 or email email@example.com.