Nonprofit organizations need to ensure that they have an accountant or bookkeeper who is in charge of the financial aspects of the organization’s operations. This work varies from tallying incoming donations to compiling the more complicated annual financial reports. The Chief Financial Officer (CFO), treasurer or even a third party might be required to perform this task.
Annual Reports
A nonprofit organization’s annual report is designed to keep interested parties informed as to the progress the organization is making on their stated mission. It should be widely distributed to board members, constituents, members, and the IRS (as part of annual Form 990 filings).
The form of the annual report generally follows the same template that is used by publicly traded companies.[i] It often begins with a summary of the contents of the report, and then is followed by a letter from the president or founder. A separate message from the CFO might precede the financials section. The financial segment of the report should include charts, balance sheets, and general statements. Before the current financial records are given, a brief history of the NPO’s finances should also be outlined. These historical figures may include a discussion of receipts and expenditures as well as charts and spreadsheets with data. Financial statements are an important part of most annual reports, and including opinion letters from accountants regarding the fiscal health of the organization is also considered de rigueur.
The next major section of the annual report is a summary of the fund-raising and marketing activities of the NPO, along with an outline for future activities and goals. A review of the activities of the NPO over the course of the year may be presented in report form and may or may not include the price of membership in historical and projected terms as a function of demand for the NPO’s stated charitable function. A typical report closes with a list of directors and officers, followed by a list of any feeder organizations, brands and addresses.
Nonprofits are required to make their records available to the public upon request. If a copy is available online, it is usually heavily edited, because very few organizations include financial statement information in the online version.
