Five Elements of Every Successful Nonprofit Annual Report (2024)

FAQs

What are five elements that should be included in an annual report? ›

Your annual report should include four main components: the chairman's letter, a profile of your business, an analysis of your management strategies, and your financial statements.

The major elements of the financial statements (i.e., assets, liabilities, fund balance/net assets, revenues, expenditures, and expenses) are discussed below, including the proper accounting treatments and disclosure requirements.

Financial statements

This is perhaps the most important section of the annual report. A company presents three financial statements - income statement or profit and loss account (P&L), balance sheet and cash flow statement. Apart from these, there are also notes to financial statements.

An annual report begins with a letter to the shareholders, then a brief description of the business and industry. Following that, the report should include the audited financial statements: balance sheet, income statement, and statement of cash flows.

The key elements of a good report include accuracy, objectivity, clarity, conciseness, continuity, and a well-organized layout and format.

The four essential nonprofit financial statements are statements of financial position, activities, cash flows, and functional expenses.

What is typically included in an annual report? ›

Annual reports are comprehensive documents designed to provide readers with information about a company's performance in the preceding year. The reports contain information, such as performance highlights, a letter from the CEO, financial information, and objectives and goals for future years.

Annual reports typically include financial statements, statements from the CEO and Board Chair, and key activities and accomplishments. Generally, annual reports are intended to offer a transparent view of an organisation's activities over the course of a financial year.

A good annual report communicates more than just financial performance and forecasts. It provides stakeholders with a deeper understanding of what you do, why you do it, and how well you do it — and gives them a reason to trust, invest in, and/or work with your brand.

The following table shows the possible elements of a report in the order they would usually occur. The essential elements (introduction, body, conclusion, and reference list) are shown in red and bold in the table on the next page.

The four financial statements contained in most annual reports are: (1) balance sheet; (2) income statement; (3) cash flow statement; and (4) statements of shareholders' equity. The balance sheet provides an overview of company assets and liabilities. The income statement provides an overview of sales and expenses.

There are five elements of a financial statement: Assets, Liabilities, Equity, Income, and Expenses.