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Background Research for Annual Report: Elements of an Annual Report

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The Elements of an Annual Report

Background

An annual report is intended to provide a snapshot of a business' or organization’s performance with key stakeholders (donors, alumni, supporters, prospects, etc.). The information contained in an annual report should give stakeholders a clear idea of how the organization is performing and how it plans to grow and improve its enterprise in coming years. 

Contents

An annual report typically includes the organization’s operating budget (projected/actual), a balance sheet, an independent auditor’s report, a statement of income and a report on company operations. This information can be expanded by including reports from senior executives, such as the chief executive officer and chief financial officer.

The report might also include:

  • Members of the board of visitors
  • Chief academic officers
  • Executive cabinet members
  • Deans
  • Others in leadership positions

Letter to Stakeholders

A letter to stakeholders is a valuable introduction to an annual report, providing an overview of the company’s performance and future prospects. The letter outlines major achievements, such as the launch of new programs, degrees, services, etc., student success stories/wins and significant management appointments. It also describes factors in the academic enterprise environment, such as funding issues that affect the organization’s results.

Operating Review

Annual reports can provide a detailed review of operations, including information on recruitment, academic initiatives, new academic program plans, strategic planning process, investment programs and research and development activities. The goal is to communicate an image of a well-managed organization that is taking steps essential to growth and stability.

Financial Statements

An annual report provides a detailed account of financial performance over the previous accounting period. It typically includes pie charts showing the flow of income, expenditures, cash flow statement, equity statement and current audit reports.

Market & Brand Strategy

Information on a company’s marketing and branding strategy is an important indicator of its achievements and future prospects. This information also demonstrates how the company stacks up against its peers; what the organization is doing differently to stand out in the marketplace.  

Digital Content

Small organizations that produce online versions of their annual report, rather than printed copies, can take advantage of digital communications technology to add further valuable content to the annual report and make it easier for readers to understand complex financial information. For example, designers can include links to videos or audio recordings of the chief executive presenting highlights of the report and links to more-detailed content, such as financial analysis.

Annual Report Conceptualization

An annual report serves as a summary of the past year's work and a vision for the coming year. Organizations' annual reports are designed to show donors, volunteers and other audiences that the organization is using its resources wisely as it carries out important work. Annual reports normally have a theme for the report that changes each year.

Purpose of Using a Theme

Annual reports can be long and difficult to read. They serve an important purpose, but that purpose is negated if no one reads the report. Choosing a yearly theme for annual reports allows nonprofit organizations to add an interesting angle to each year's publication that keeps recipients interested and engaged.

Themes . . . Based in Organization’s Mission

Nonprofits are mission-based organizations, and their annual reports should be related to the mission of the organization. Organizations that choose themes that are incongruous to the vision of the organization will confuse donors and lessen the impact of their message.

Themes Should Be Interesting

The theme of a nonprofit annual report should make the recipient want to read the report. The theme, therefore, should be interesting and compelling while remaining relevant to the mission. For example, one nonprofit organization fighting child abuse commissioned a children's story about courage and designed an annual report that was shaped and illustrated like a children's book, with the commissioned story on one side and the report on the other. Previous themes used at NSU include a review of key historical happenings since the university’s founding, the 75th anniversary was also used a theme for an annual report.

Report Design

When designing a report theme, the physical design and layout of the report should match the chosen theme. Colors, artwork and even the shape of the report can complement the theme that was chosen.

Standing Out Many donors and other key stakeholders support multiple causes, charity events and campaigns so they often receive several annual reports each year. To have your report read from cover to cover, your organization will need to design a theme that stands out from the crowd, draws the recipient in and convinces the recipient that the organization is a wise investment of time and resources.

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